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U.S. wasted $43 million on doomed Afghan gas station, report shows

The pumps at the compressed natural gas filling station constructed by the Task Force for Business and Stability Operations. (Credit: Central Asia Development Group/SIGAR)

The U.S. spent nearly $43 million on what a government-funded watchdog is calling “the world’s most expensive gas station” in Sheberghan, Afghanistan. The government cannot account for how the money was spent, and an investigation reveals that the project was doomed from the start.

The Department of Defense “spent $43 million on the gas station, without determining it would be a good idea, and now claims it knows nothing about the project,” said John Sopko, the special inspector general for Afghanistan reconstruction (SIGAR), to the media.

The $43 million is not the most damning part of the report. When the SIGAR office sent questions to the Department of Defense about the project, it responded that it could not answer any of the questions about the project, because it “no longer has the expertise” after the project closed in March. The military branch of the U.S. government spent $43 million and does not know how it was spent nor have the staff to tell them.

“Frankly, I find it both shocking and incredible that [the Department of Defense]asserts that it no longer has any knowledge about [Task Force for Business and Stability Operations], an $800 million program that reported directly to the Office of the Secretary of Defense and only shut down a little over six months ago,” according to Sopko in his report.

The intent of the program was to test whether natural gas as a car fuel was commercially viable in Afghanistan. The country has large natural gas reserves, it burns cleaner than gasoline and costs half as much for the consumers. A similar station was built in Pakistan for $500,000.

Sheberghan, located about 300 miles northwest of Kabul, was selected as the pilot city because of its proximity to Afghanistan’s natural gas fields. If the station proved successful, another was to be built in the the country’s second largest city, Mazar-i-Sharif.

However, things did not go according to plan. The initial project contract was awarded for less than $3 million to Central Asian Engineering. Construction was completed and the station opened in May 2012. The budget for the project ballooned to $42,718,739 between the start of construction in 2011 and when Qashqari Oil and Gas Services took over in 2014. Why the project ended up costing so much money and how the money was spent remains unknown, but there are some clues.

According to the SIGAR investigation, no feasibility studies were conducted prior to the project. Existing research shows that what seemed like a good idea may not have been all that practical. Despite having massive reserves, Afghanistan lacked the ability to transmit and distribute natural gas. An analysis by the International Energy Agency in 2010 concluded that such gaps eliminate financial advantages of natural gas over gasoline.

“The cost of distribution of natural gas to a large number of small consumers can be expensive. The development of such markets often depends on the proximity of gas transmission pipelines which have been financed already through major gas supply projects to the power and industrial sectors,” according to a World Bank study, quoted in the report.

And even if the pilot station worked, the city of Mazar-i-Sharif would struggle to keep up a regular supply of natural gas for a station. Further, Afghanis would have to cough up $700 to convert their cars to be able to use natural gas – about as much money as the average Afghani makes per year. Before even considering where all the money went, the report concludes that there is little reason for it having existed in the first place.

Tens of millions of taxpayer dollars were wasted.

“There may be fraud. There may be corruption. But I cannot currently find out more about this because of the lack of cooperation,” Sopko said in an interview with NBC News.

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About Author

Tom Murphy

Tom Murphy is a New Hampshire-based reporter for Humanosphere. Before joining Humanosphere, Tom founded and edited the aid blog A View From the Cave. His work has appeared in Foreign Policy, the Huffington Post, the Guardian, GlobalPost and Christian Science Monitor. He tweets at @viewfromthecave. Contact him at tmurphy[at]humanosphere.org.