Wednesday, March 29, 2023

China’s Investment in Afghanistan’s Extraction Industry Sparks Hopes for Economic Recovery

Immigration News

Nizamuddin Rezahi
Nizamuddin Rezahi
Nizamuddin Rezahi is a journalist and editor for Khaama Press. You may follow him @nizamrezahi on Twitter.

Despite many odds, the Afghan Taliban interim government signed its first major foreign investment project with a Chinese firm last month, a 25-year-long multimillion-dollar contract to extract oil from Amu river oil field.

Many experts believe that although Chinse companies have not been very honest in executing deals, the project will create jobs and bring income for the local people, which is a positive move in many ways.

The interim regime of Afghanistan signed a contract with Xinjiang Central Asia Petroleum and Gas Company (CAPEIC), a subsidiary of the state-owned China National Petroleum Company (CNPC) to extract oil from the Amu Darya basin on January 6.

There will be an initial $150 million investment in the initial stage of the project in Afghanistan and $450 over the next three years, a Taliban spokesperson said on Twitter.

Taliban spokesperson Zabihullah Mujahid on Twitter said the daily rate of oil extraction will be from 1,000 to 20,000 tonnes, 20 percent of which will Taliban’s share, and the deal will later be extended to 75 percent.

“Considering the dire economic situation in the country, and the way ordinary people are struggling, this project can be a source of revenue that provides economic relief to some extent,” Abdul Jalil Jumrainy, an industry expert and the former director general of the Afghan Petroleum Authority at the Ministry of Mining and Petroleum said.

According to economic experts, the signing of such projects is of paramount importance for the ruling regime, because such projects not only bring revenue to the government but also encourage potential investors to consider investing in Afghanistan in the future as well.  

The initial deal brings optimism to the people of Afghanistan, however, it is believed that China is yet to see through any of its investment in the country’s mining sector. The previous Afghan government had called off a deal with a Chinese company on account of corruption.  

Under the previous government, in 2011, the exploration and production sharing deal was struck between China’s CNPC and an Afghan company called Watan Group for the “Kashkari block”, one of the three blocks now part of the recent Amu Darya tender.

The Afghan government at that time asked CNPC to partner with the tendering process, but they rejected it, and the project ended with a complete failure in which Afghanistan missed a great opportunity to develop its petroleum industry.

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