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Development projects are inefficient

Thursday, 14 August 2014

Economic commentators discussed the issues confronted by development projects such as the Ainak Copper Mine and the Hajigak Iron Mine, stating that foreign investors have backed out of honoring their initial commitments. 

In addition, they asserted that since the projects are under the supervision of foreign companies, the government cannot interfere or cancel the contracts. 

China's largest equipment manufacturing company, Metallurgical Corporation of China (MCC), is responsible for the Ainak Copper Mine project includes the establishment of a railway track and a power generating firm, but reports indicate that MCC has amended the existing contract ignoring its previous commitments to provide benefits to the Afghan government. 

Furthermore, the Indian consortium responsible for the extraction of the Hajigak Iron mine announced that the investment money would be half of what they had initially agreed on. Analysts emphasized that investments on mines were crucial in meeting the country's national budget from the domestic sources in the upcoming years. They add that mismanagement, malformed contracts and insecurity have posed major threats to the country's mining businesses. 

"We have not received any benefits from the Ainak Copper Mine yet," economic analyst Syed Masoud said. "Everything is in the hands of the foreign companies. Foreign companies such as MCC would do anything to keep the projects."  The Ministry of Interior (MoI) has also stated that insecurity is one of the major barriers that can hinder the progress of the projects. 

"Among other factors, insecurity is arguably a big challenge in obstructing the flow of the projects," MoI Deputy Spokesman Najibullah Danish said. "But the projects will be back on track once the election results and the overall situation in the country are clear." Syed Masoud urged the government to put further emphasis on the development projects. 

"The government cannot cancel the project because the MCC has paid the Afghan government millions of dollars. Canceling the project would mean repaying all money. The MCC has not honored its commitments because of the government's negligence." 

The inefficiency of the development projects in Afghanistan's natural resources raises concerns as deficiency of the government, absence of experts during the contracts, insecurity, and lack of transparency on the contracts have given full control of the country's resources to foreign companies.