Afghanistan pushes for investment as it waits for peace

Afghanistan unveiled 43 tenders for natural resource projects on Monday in a drive to attract investment in a country ravaged by decades of war.

Afghanistan’s mineral assets, estimated to be worth as much as $1 trillion, are seen as key to the country’s economic viability. But development has been blocked by poor security, rampant corruption, and a lack of infrastructure.

The tenders, ranging from mineral to oil and gas projects, were announced in Dubai, a major Middle East investment hub, by Afghanistan’s acting Minister of Mines and Petroleum Nargis Nehan.

“We have a good package of incentives for investors,” Nehan told Reuters in an interview.

Afghanistan is opening 14 tenders for large-scale projects to international companies through a competitive bidding process, with the remaining small-scale projects to be awarded to local companies.

The projects have generated interest from US, European, and Gulf companies, Nehan said.

The announcement of the tenders comes amid peace talks between the Taliban and the United States, which wants to exit the country it invaded to overthrow the Taliban nearly two decades ago.

The two sides are scheduled to meet again this month.

“There are two ways of looking at the issue ... the situation might deteriorate,” Nehan said amid the uncertainty of what the two sides might agree and whether the United States will soon pull-out.

“There is another perspective to look at it, and that is actually finally having peace,” she said.

The government hopes a royalty rate from 2.5 per cent to 7.5 per cent and an import duty exemption on machinery used to work on the projects will encourage investment.

The tenders cover projects in 16 of the country’s 34 provinces and the government estimates $100 million will be spent over the next year on initial assessments, exploration, and evaluation work.

A tender can be awarded within six months and work is expected to start within a further six-month period, Nehan said.

The government will invest in some tender-related infrastructure but expects many companies will choose to do it themselves. Security on the projects will only be provided by local forces, she said.

“The Afghan Public Protection Force ... will asses the areas and based on the needs of the area they will submit a budget and proposal to the company.”

Reuters