Development News from Afghanistan

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ECC set to approve new oil pricing formula: Govt to impose duty on diesel export to Afghanistan

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* $100 per barrel crude oil cap proposed for oil marketing companies
* ECC to consider banning maize export

By Sajid Chaudhry and Zafar Bhutta
Daily Times (Pakistan) / July 30, 2008

ISLAMABAD: The government is likely to impose a regulatory duty of 35 percent on the export of diesel for NATO forces in Afghanistan in the meeting of the Economic Co-ordination Committee (ECC) of the Cabinet being held today (Wednesday), sources said.

They said the duty would be imposed to discourage subsidised diesel exports and to avoid diesel shortages in the country, adding that the committee was also likely to approve a new oil pricing and margin mechanism.

As per special authorisation of Prime Minister Syed Yousuf Raza Gilani, Finance and Revenues Federal Minister Syed Naveed Qamar would chair the ECC meeting. Sourced said the ECC planned to reduce local duties and margins of the oil marketing companies (OMC) and dealers of petroleum, oil and lubricants (POL) products.

They claimed that Pakistan was suffering by the export as well as the smuggling of diesel to Afghanistan where the price of diesel was Rs 95 per litre and 15 percent of the total requirement of Pakistan was being smuggled to Afghanistan.

OMC: According to the proposal, a cap of OMCs’ margins on diesel and motor spirit at $100 per barrel of crude oil is to be imposed as against the existing practice of allowing margins on import value of the oil.

The ECC is also expected to cut the margin on diesel from Rs 1.55 per litre to Rs 1.13 per litre and from Rs 2.12 per litre to Rs 1.60 per litre on motor spirit.

Dealers’ margins are also likely to be lowered from existing capped margin of Rs 1.77 per litre on diesel and Rs 2.43 per litre on motor gasoline.

ECC may consider a proposal for reduction in Deemed Duty from existing 10 percent to 5 percent to reduce the gains of oil refineries of the country, the official added.

Maize export: The ECC is also likely to consider a proposal submitted by the Ministry of Commerce for imposing a ban on the export of maize to reduce poultry feed prices. Due to the increase in poultry feed in the country the prices of farm chicken and eggs have registered a sudden increase in the month of July.

The government has recently allowed duty-free import of maize to save locally produced wheat, which was being used as poultry feed at an estimated quantity of 1 million tonnes annually.

However, the Ministry of Food, Agriculture and Livestock (MINFAL) is set to oppose the move by the Commerce Ministry for a possible ban on maize export.

MINFAL authorities fear that a ban on maize export would severely hurt the crop’s sowing in the next season and farmers would be left with no option but to convert to sowing sunflower instead.


Written by afghandevnews

July 30, 2008 at 3:09 pm

Posted in Trade

Pomegranates: A Fruitful Trade

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TIME.COM / Wednesday, Dec. 05, 2007

A week or so ago I bought some pomegranates in my local fruit market in New Delhi. They were huge and glowed bright red, and the small juicy crystals of flesh inside tasted as good as they looked. But the most remarkable thing about the fruit was the box they came in. It was stamped in big, bold letters with the words “Kandahari Pomegranates. Export Quality. Products of Afghanistan.”

It’s not often that you see a product made in Afghanistan. The country is the world’s biggest opium producer, but that’s not an export government officials shout about. Yet before its descent into chaos in the late 1970s, Afghanistan was famous for its pomegranates, grapes, apricots and other fruit. Since then, as war cut the old trade routes and Afghanistan became isolated, traditional markets have been lost. So what were these pomegranates doing in my local fruit shop? And if they were available in Delhi, why aren’t they in North America or Europe, where pomegranate popularity has boomed thanks to their health properties (mmm, antioxidants!), use in cocktails (mmm, pomegranate Manhattans!) and the recent revelation by California scientists that pomegranate juice may be a good alternative to Viagra (ahem)? Could Afghanistan be on the brink of a pomegranate-led recovery?

Not quite. The pomegranates I enjoyed were shipped as part of a USAID-funded Alternative Livelihoods program. The idea, explains Loren Stoddard, head of USAID’s Alternative Development and Agriculture program in Afghanistan, is to restore “some of the old trade routes that were broken.” Since the Taliban regime fell six years ago, USAID has helped plant more than a million pomegranate trees, Stoddard claims, and this year Afghan farmers harvested between 33,000 and 44,000 tons (30,000 and 40,000 metric tons) of the fruit, of which some 1,102 tons (1,000 metric tons) were flown or trucked out. Most of it went to India, Dubai and Singapore, but tiny quantities found their way to London and Vancouver. Alas, strict phytosanitary requirements, which guard against the importation of bugs, have so far kept Kandahari pomegranates out of the U.S. Stoddard predicts that next year’s harvest will be as big as 68,000 tons, with exports rising to as much as 3,000 tons. “The demand we’re seeing has been incredible,” he told me by phone from Kabul. “And this is a licit agricultural product … something that there’s a lot of pride in.”

All that said, pomegranate exports this year will bring in about $1 million for Afghanistan, a blip compared to the more than $1 billion that poppies will earn. Stoddard says that farmers who manage to export their fruit can make as much as poppy farmers per acre — around $1,600 to $2,000 per year. The problem is that most farmers are not selling for export, and earn just a few hundred dollars per acre a year from fruit. That keeps poppies looking pretty attractive.

It’s not all about price, though. Sarah Chayes, a former reporter for National Public Radio of the U.S., has worked with Afghan business partners over the past two years to produce fruit-based soap and body oils. Their Kandahar-based cooperative Arghand now exports to Canada and the U.S. “You don’t even need to compete with opium on a straight price level, since there are other risks and taboos associated with growing opium,” explains Chayes. “The best way to combat opium production is to expand the market for Afghanistan’s fruit.”

There’s a big problem, of course. As Chayes says, “expanding in an active theater of war is an increasingly tricky notion.” At the moment, Arghand relies on the generosity of the Canadian army, which lets Chayes use its post office for shipping. A commercial air-freight service, she says, would give a huge boost to the growing number of Afghan traders who want to export. It’s a classic catch-22: freight companies shy away from Afghanistan because it’s so unstable, but stability will come only when Afghanistan’s economy improves, which will require more investment, such as freight services.

So what to do? Afghanistan’s pomegranates are not going to drag the country out of poverty or end the drug trade any time soon. But perhaps the countries fighting extremism in the region could look at some sort of regularized freight service to boost the economy. Even better would be for foreign companies to see opportunity and profits in Afghanistan despite its problems. If, like me, you love pomegranates and want to help one of the most neglected places on the planet, then demand that your local shops stock the Kandahari good stuff — the fruit that’s better than any drug you could ever try.

Written by afghandevnews

December 10, 2007 at 8:17 pm

Posted in Agriculture, Trade

Turkmenistan-Afghanistan-Pakistan Gas Pipeline Project In Trouble

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All Headline News (AHN)
November 29, 2007 7:50 a.m. EST

Siddique Islam – AHN South Asia Correspondent

Islamabad, Pakistan (AHN) – The Turkmenistan-Afghanistan-Pakistan (Tap) gas pipeline project is unlikely to materialize due to Russian gas giant Gazprom’s fresh agreement with Turkmenistan for increased Europe-bound gas supplies at higher rates.

Pakistan was weighing the new developments in the background of a just postponed ministerial meeting of the three countries and a revised agreement between the Russian company, Gazprom and Turkmenistan, the Dawn, a local newspaper, reported quoting government sources.

Under the revised understanding with Gazprom, Turkmenistan would increase gas deliveries to it to about 50 billion cubic meter (BCM).

Gazprom that delivers about one quarter of Europe’s total gas needs would now pay US$130 per 1,000 cubic meters to Turkmenistan early next year and then $150 per 1,000 cubic meter by the end of the next year instead of current rates of $100 per 1,000 cubic meter, according to reports.

Turkmenistan and Gazprom have a 25-year gas supply agreement valid until 2028 but Ashgabat uses export projects like TAP to improve its price with Gazprom.

The world’s 10th largest gas producer, Turkmenistan’s total gas output currently is slightly higher than 60 BCM a year. Last year, its total exports stood at around 45 BCM.

Pakistan has planned to complete the project by 2012 under a energy security plan, but the deadline is becoming beyond imagination, an official said.

The 1,680 kilometers (1041.6 miles) TAP pipeline of 56-inch diameter needs at least 30 BCM of gas per year from Turkmenistan to Pakistan via Afghanistan.

The project cost has now been estimated at $5.3 billion. India had also been invited to join the project last year that started attending steering committee meetings as an observer.

“Further progress will depend on the robustness of the gas reserves data, certification of the reserves, extent of possible private interest, ability and willingness of Turkmenistan to fulfill its commitments to Gazprom and still supply Pakistan” the World Bank (WB) said according to the newspaper reports.

Challenges in the TAP project also include mitigation of the security risk in Afghanistan, improvement in India-Pakistan relations, and programs to minimize or phase out fuel subsidies in both countries and finally the ability of the pipeline options to withstand competition from liquefied natural gas (LNG) in the long run, the WB noted.

Written by afghandevnews

November 29, 2007 at 7:34 pm

Posted in Economy, Trade

Afghanistan to boost agri exports

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By Indian Financial Express
Monday November 26, 2007

Afghanistan wants to boost its exports of dry fruits, fresh fruits and vegetables, marbles and natural stones to India, and in return is seeking greater Indian investments in the agro processing, construction sector, and in trade and services.

“Our exports to India have declined since over a decade due to the disturbed situation in our country. Now our exports to India are only around $30 to $40 million. We want to increase our exports to India and want to attract more of Indian investment, which is now flowing at the rate of $10 to $15 million,” Omar Zakhilwal, president and CEO, Afghanistan Investment Support Agency (AISA), told FE.

He said that his country has exportable varieties of dry fruits like almond, fig, raisins, apricot, pistachio, and fresh fruits like grapes, pomegranates, melons, apples, and medicinal herbs. “The growing middle class in India, with their rising income, would like to consume these healthy food from Afghanistan,” he said, and added that Indian investors can also take the opportunity to invest in the agro processing sector in his country.

Zakhilwal was in India last week and addressed the representatives of the Indian industry at an interactive session hosted by the Federation of Indian Chambers of Commerce and Industry (FICCI). The Afghanistan government has launched a regional economic cooperation programme, which includes countries like Pakistan, India, Iran, Tajikistan, Turkmenistan, Uzbekistan, and West Asian countries. The first meeting of this group was held in Kabul in December 2005, followed by a meeting in Delhi in November 2006. The next meeting is in Islamabad in March 2008.

Afghanistan expects that with its new membership to SAARC, its trade relations with India and other countries of South Asia would get a boost.

Written by afghandevnews

November 27, 2007 at 3:08 pm

Posted in Agriculture, Trade

Prized Afghan pomegranates offer export hope to farmers

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$120-million USAID development project aims to start fruitful export

CBC News (Canada) / November 22, 2007

Ruby-red pomegranates famously grown in Afghanistan are part of a new development project aimed at starting a fruit export market after years of the illegal opium trade.

Treasured as the best in the world, Afghanistan’s prized pomegranates — grown from shrubs in Kandahar province — will for the first time this year make their way to the lips of Canadian, European and Asian consumers.

“It’s very good fruit. It’s good for health, it’s good for the blood and digestion,” farmer Akhtar Mohammed said, cracking open one of the baseball-sized pomegranates to show off the red kernels inside.

Boxes of the pomegranates will play the latest role in a $120-million United States Agency for International Development project aimed at keeping the war-torn country out of the Taliban’s grip.

While Afghans have long known how tasty Kandahar’s pomegranates are, the fruit has largely been closed off from the rest of the world after nearly three decades of conflict and chronic drought. Shipments have only made it as far as Pakistan and India.

Now USAID is paying to box and ship the age-old crop to more foreign markets. The American government agency has helped open a new cold storage facility near Kandahar city to store the fruit.

Soon, shipments of pomegranates stamped “Product of Afghanistan” already resting in a hangar at the main military base near Kandahar will be loaded onto planes destined for markets in Vancouver, London and Singapore.

$1 million from pomegranates

It’s hoped that sustained economic growth from legal crops could help abolish the opium business.

“It’s very important because the main profit is going to the farmers,” Mohammed Gula, a program manager with USAID, told CBC News. “They’re the ones affected with the war, so with these pomegranates going on to international countries, they’ll earn some good money.”

An export market for the pomegranates will be expected to draw in at least $1 million for the local economy this year, following years of illegal cultivation of opium from poppy fields that dot much of the country. Poppies produce the raw ingredients for heroin, and Afghanistan accounts for 93 per cent of the world’s opium production.

Compared with the $1 billion generated by the poppy trade, though, exporting fruit may not seem so lucrative.

Still, fruit trader Haji Nasuallah said he was thrilled with the prospects.

“My hope is not only for pomegranates but for other fruits in our country, like grapes that we can peacefully export … which is very good for Afghanistan,” he said. “We don’t have fuel or gas or other exports to make our country famous. The only thing we have is fruit.”

Kandahar Gov. Assadullah Khalid said he hoped that in the next year, the market could expand to include grapes.

Written by afghandevnews

November 23, 2007 at 1:03 pm

Posted in Agriculture, Aid, Economy, Trade

Afghanistan’s fruitful presence at IITF

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The Times of India / November 22, 2007

NEW DELHI: Afghanistan may not conjure up great images in the mind, but at IITF, the country is putting its best foot forward. The result is impressive as its stall in Hall No. 8 is being supported by United States Agency for International Development.

From exotic Afghani melons and pomegranates to jewellery studded with the blue lapis lazuli stone, authentic Afghanistan is on display here.

One of the most striking sights in the Afghanistan pavilion are the large bright melons. These musk melons, the traders promise, are the sweetest someone can ever find. At Rs 40 per kg, they are precious, but the trader assures that the fruit is so wholesome that an entire family will have a hard time finishing the melon.

Hand woven Afghani wool carpets have a certain earthiness which makes them different from the exquisite Persian ones. However, they are not less expensive. “Some of the carpets are made from German wool, while others are indigenous. The good ones cost Rs 10,000 and more. They take at least a month to be completed,” said an Afghani carpet exhibitor.

With the lapis lazuli jewellery, a little patience while looking can suddenly reveal excellent craftsmanship. Hard bargain here is also easy since most Afghanis understand English as well as Hindi.

Adjoining the Afghanistan pavilion are the khadi and herbal stalls. Khadi here is not what is used to be. Its expensive and exquisite, and blended with silk. Many khadi garments are painted with natural pigments that are the result of work put in by the Forest Research Institute. Handmade paper, pottery, herbal shampoos and soaps, all these stalls had eager buyers leaving with large shopping bags.

Written by afghandevnews

November 23, 2007 at 1:02 pm

Posted in Economy, Trade

‘Afghanistan to benefit from zero import duty’

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Country to become 8th member of SAFTA from Feb

The Hindu Business Line
November 22, 2007

New Delhi, Nov 21 Afghanistan’s economic engagement with India will receive a major boost from February when the nation becomes the eighth member of SAFTA.

As a member of SAFTA, Afghanistan will receive the benefit zero import duty by India on 4,536 tariff lines, Mr Jairam Ramesh, Minister of State for Commerce, said here on Wednesday.

Speaking at a seminar on ‘Doing business with Afghanistan’ organised by the FICCI along with the Afghanistan Investment Support Agency (AISA) and USAID, he said currently under the preferential trade arrangement with Afghanistan, the rules of origin stipulate 50 per cent domestic value addition for export within the South Asian region.

Once Afghanistan comes under the SAFTA fold, this would come down to 30 per cent.

“This would mark a significant step forward for the Afghan economy and help boost its export to India,” he added.

The Minister also announced that India would undertake a review of the 744 items in sensitive list of export, largely in the areas of agriculture and textiles.

“We are currently working on a review of the negative list particularly with regard to least developed countries in the South Asian region,” he added.

Mr Ramesh observed that the track record of Indian investment in the least developed countries of the region was not positive.

He urged the Indian companies to make pro-active investments for the development of the Afghan economy.

Written by afghandevnews

November 23, 2007 at 1:01 pm

Posted in Economy, Trade