Balancing Electricity Supply and Demand in Afghanistan

Abstract

Afghanistan's power sector continues to suffer from a persistent imbalance between increasing demand and inadequate supply, with over 80 percent of the demand met through imports. Access remains limited, losses are significant, and Da Afghanistan Breshna Sherikat (DABS) remains financially fragile despite substantial donor investment. This thesis examines the structural, economic, and institutional factors contributing to the imbalance, employing a mixed-methods approach. Quantitatively, Autoregressive Distributed Lag (ARDL) models are applied to annual data from 1980 to 2023 for electricity consumption, GDP, imports, generation, and losses. The method, known for its efficiency with small samples and mixed integration orders, indicates that import dependency influences long-term electricity demand, while GDP has limited explanatory power. System losses are significant in the short term but diminish over time. The import share itself shows no balance, highlighting its sensitivity to policy changes and external shocks. Qualitatively, a review of policy guidelines, donor evaluations, audits, and household studies uncovers reinforcing governance and institutional barriers. These include fragmented mandates, politically motivated tariffs, weak enforcement of efficiency measures, and persistent delays in implementation. Donor-driven projectization has provided assets but weakened ownership and sustainability, with rural electrification goals still considerably below target. Combined, the two strands of analysis indicate that Afghanistan's power crisis is not merely about capacity shortages, but also about deep-seated governance issues and regional dependence. The evidence suggests that recovery requires reducing losses, reforming tariffs, implementing more effective regulation, and diversifying power sources, along with diplomatic and institutional reforms.