Afghanistan must improve power supply to win investment-World Bank

KABUL, March 14 Thu Mar 14, 2013 11:40am EDT

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KABUL, March 14 (Reuters) - Afghanistan must make improving its power infrastructure a top priority to exploit vast mineral deposits and attract more foreign investors, the head of the World Bank said Thursday.

Kabul hopes Chinese and Indian investments in iron ore and copper mining will help offset a dip in its economy when most foreign combat troops leave the country by the end of 2014 and donors begin to reduce aid.

Along with the issue of security, the country's unreliable electricity supply is one of the biggest turn-offs for international companies looking to tap its rich resources.

"It's almost impossible to have robust economic growth if you don't have enough energy," Jim Yong Kim told Reuters during a visit to the Afghan capital.

Only a quarter of Afghanistan's 30 million people currently have access to the power grid, which is for the most part supplied by its neighbours such as Uzbekistan.

The mountainous country produces its own hydro-power, but plans to build more plants have been disrupted by the Taliban insurgency.

Insurgents have been also trying to stop the flagship government mining project, the $3 billion Aynak copper mine. Work on the project, which has been under way since 2007, was temporarily halted last year after Chinese workers were attacked by Taliban fighters.

Insurgents have fired rockets at mining projects, planted improvised explosive devices along roads and arrived armed on motorcycles to threaten people.

Poor security has also made it difficult for donors to reach agricultural projects, Kim said. Farm products currently provide the bulk of Afghanistan's exports.

"While mining holds great promise for the future, in the short term it's going to be agriculture that provides the most jobs, especially for women," he said. (Editing by Jeremy Laurence/Jeremy Gaunt.)

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