The Asian Development Bank (ADB) has signed an agreement to provide a loan to the Afghan Power Plant Company (APPC) for the Mazar gas-fired power plant in Afghanistan.

ADB’s financing package of $10m aims to support Afghanistan’s efforts to achieve energy security through its own power sources.

The ADB loan will finance the construction and operations of a 58.5MW gas-fired power plant near Mazar-i-Sharif in northern Afghanistan.

The plant will be cost $89m and will use indigenous gas for generating electricity. Once operational, it is expected to generate 404GWh of power annually.

Owner APPC is a special purpose vehicle, jointly owned by Ghazanfar Group and Egyptian construction company Hassan Allam Holdings.

APPC chairman Ismail Ghazanfar said: “Ghazanfar Group is honoured to have the support of international development banks including ADB for this first-of-its-kind project in Afghanistan.

“This is the first step in Ghazanfar Group’s vision of helping to develop 5,000MW of energy generation facilities in Afghanistan through partnerships with international development banks, local and international companies, and the Government of Afghanistan.”

International Finance Corporation (IFC) and Deutsche Investitions und Entwicklungsgesellschaft (DEG) are co-financing the project.

Additionally, ADD will administer a $10m loan for the project provided by Asia’s Private Infrastructure Fund (LEAP).

ADB Private Sector Operations Department Infrastructure Finance, South Asia, Central Asia, and West Asia director Shantanu Chakraborty said: “This project is definitive proof that indigenous gas-based power generation is capable of displacing electricity imports in Afghanistan and helping to deliver energy security.

“Its success will send an important signal to the market that Afghanistan’s power industry is now ready to attract more private sector investment and financing.”