oversight

SIGAR 21-30-IP

Published by the Office of the Special Inspector General for Afghanistan Reconstruction on 2021-04-05.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

SIGAR                                       Special Inspector General for
                                             Afghanistan Reconstruction




                                                     SIGAR 21-30 Inspection Report




       Kandahar Solar Power Plant: Project Was Generally
       Completed According to Contract Requirements




                                                                  APRIL
                                                                2021
SIGAR 21-30-IP/Kandahar Solar Power Plant
®               SIGAR J
                                   Office of the Special Inspector General
                                   for Afghanistan Recoristructlon




April 5, 2021


Ms. Gloria D. Steele
Acting Deputy Administrator, U.S. Agency for International Development

Dr. Tina Dooley-Jones
USAID Mission Director for Afghanistan



This report discusses the results of SIGAR’s inspection of the Kandahar solar power plant in Kandahar
Province, Afghanistan. In February 2017, the U.S. Agency for International Development (USAID) awarded
Dynasty Oil & Gas Private Limited (Dynasty), an Indian firm, a $10 million firm-fixed-price contract to design,
construct, operate, and maintain a 10-megawatt solar power plant. In February 2017, Dynasty also signed a
15-year power purchase agreement with Da Afghanistan Breshna Sherkat (DABS), Afghanistan’s power utility.
This agreement requires Dynasty to sell, and DABS to purchase, all of the plant’s generated electricity. On
September 28, 2019, the solar power plant became commercially operational.
During our August 31–September 3, 2020, site visits to the Kandahar solar power plant, we found that
Dynasty’s plant construction generally met contract requirements. However, we found that Dynasty appears to
have installed prohibited piping material from Iran. We also found that some of Dynasty’s electrical
workmanship was substandard, which created a safety and fire hazard. Lastly, we found that some
maintenance issues—nonfunctional security cameras, cracks in the boundary wall and the control building’s
roof, and mortar missing in the boundary wall’s foundation—are starting to surface.
The Kandahar solar power plant is generating electricity, but DABS is not using all of the electricity produced at
the plant due to technical issues with DABS’s electrical grid. In addition, DABS has not paid Dynasty for all the
generated electricity, despite DABS’s contractual obligation to do so. Dynasty’s ability to continue operations is
threatened due, in part, to DABS’s unpaid invoices; and if the project fails, it could affect future private
investment in Afghanistan. We are not making any recommendations pertaining to the DABS electrical grid
being unable to accept all of the energy produced by Dynasty, as well as the outstanding invoices, because
these issues are between DABS and Dynasty.
We are making two recommendations in this report. We recommend that the USAID Mission Director for
Afghanistan (1) determine whether Dynasty violated contract terms citing the Federal Acquisition Regulation in
the installation of Iranian-manufactured piping and take appropriate action to hold the contractor accountable,
and (2) advise Dynasty about the faulty wiring connections and unsecured exposed wiring that are creating a
safety and fire hazard, as well as the maintenance issues involving the cracked concrete and missing mortar,
so that Dynasty can take whatever action it deems appropriate.
We provided a draft of this report to USAID for review and comment. USAID provided written comments,
reproduced in appendix III, in which it concurred with both recommendations. For the first recommendation,
USAID said it determined that Dynasty did not violate contract terms under the Federal Acquisition Regulation.
Because Dynasty owns and operates the plant and there is no construction warranty, and because USAID
determined that Dynasty did not violate the contract terms, we will close the recommendation as implemented
upon issuance of this report. For the second recommendation, USAID said that it would share the findings
about faulty wiring connections, unsecured exposed wiring, and maintenance issues involving the cracked
concrete and missing mortar with DABS and Dynasty. Our second recommendation will remain open until
USAID provides documentation showing that it notified DABS and Dynasty of these issues. We are requesting


          1550 Crystal Drive, 9th Floor      Mailing 2530 Crystal Drive
          Arlingt,on, Virginia 22202         Arlington, Virginia 22202-3940   Tel 703 545 6000   www.slgar.mil
®           SIGAR J
                                  Office of the Special Inspector General
                                  for Afghanistan Recoristructlon


documentation of the corrective actions taken and/or target dates for completion of the recommendations to
sigar.pentagon.audits.mbx.recommendation-follow-up@mail.mil, within 60 days from the issue date of this
report.
We conducted this inspection under the authority of Public Law No. 110-181, as amended, and the Inspector
General Act of 1978, as amended; and in accordance with the Quality Standards for Inspection and
Evaluation, published by the Council of the Inspectors General on Integrity and Efficiency.




John F. Sopko
Special Inspector General
   for Afghanistan Reconstruction




         1550 Crystal Drive, 9th Floor      Mailing 2530 Crystal Drive
         Arlingt,on, Virginia 22202         Arlington, Virginia 22202-3940   Tel 703 545 6000   www.slgar.mil
                                            TABLE OF CONTENTS



Construction of the Kandahar Solar Power Plant Generally Met Contract Requirements, But Prohibited
Materials Were Used and Substandard Electrical Workmanship Exists .................................................................. 2 
The Kandahar Solar Power Plant Is Generating Electricity, But DABS Is Not Using Or Paying for All of the
Electricity Generated, and Maintenance Issues Exist ............................................................................................... 4 
Conclusion.................................................................................................................................................................... 6 
Recommendations ...................................................................................................................................................... 6 
Agency Comments ....................................................................................................................................................... 7 

Appendix I - Scope and Methodology ......................................................................................................................... 8 
Appendix II - Monthly Energy Delivered and Not Delivered Onto the DABS Electrical Grid ..................................... 9 
Appendix III - Comments from the U.S. Agency for International Development ..................................................... 10 
Appendix IV - Acknowledgments ............................................................................................................................... 19 


PHOTOS

Photo 1 - Kandahar Solar Power Plant ....................................................................................................................... 1 
Photo 2 - Prohibited Piping from YAZD Pipe ............................................................................................................... 2 
Photo 3 - Site Visit Photo With Prohibited Piping ....................................................................................................... 2 

Photo 4 - Unsealed Opening in Pole ........................................................................................................................... 3 
Photo 5 - Exposed Wiring Surrounding Pole Bases ................................................................................................... 3 
Photo 6 - Interior Exposed Spliced Wiring in Guard Tower ....................................................................................... 3 

Photo 7 - Exterior Exposed Spliced Wiring from the Solar Panel Providing Power to the Guard Tower.................. 3 
Photo 8 - Cracks in Boundary Wall ............................................................................................................................. 5 
Photo 9 - Cracks in the Control Building’s Roof ......................................................................................................... 5 
Photo 10 - Boundary Wall and Foundation ................................................................................................................ 6 
Photo 11 - Boundary Wall Foundation Lacking Mortar ............................................................................................. 6 


TABLES

Table 1 - Energy in Kilowatt-Hours that the Kandahar Solar Power Plant Produced and Delivered to the
DABS’s Electrical Grid.................................................................................................................................................. 9 




SIGAR 21-30-IP/Kandahar Solar Power Plant                                                                                                                             Page v
ABBREVIATIONS

              DABS                     Da Afghanistan Breshna Sherkat

              USAID                    U.S. Agency for International Development




SIGAR 21-30-IP/Kandahar Solar Power Plant                                          Page vi
On February 23, 2017, the U.S. Agency for International Development (USAID) awarded Dynasty Oil & Gas
Private Limited (Dynasty), an Indian firm, a $10 million firm-fixed-price contract to design, construct, operate,
and maintain a 10-megawatt solar power plant in Kandahar Province, Afghanistan (see photo 1).1 Dynasty was
responsible for designing and constructing the power plant as well as the perimeter boundary wall, access
roads, and various other facilities, such as a security room, guard towers, and control building. The Kandahar
solar power plant connects to Afghanistan’s electrical grid through Shorandam Industrial Park and the Breshna
Kot Substation, providing energy to industrial and residential customers in Kandahar. In February 2017,
Dynasty also signed a 15-year power purchase agreement with Da Afghanistan Breshna Sherkat (DABS),
Afghanistan’s power utility, in order to encourage private investment in the Afghan energy sector.2 The
agreement required Dynasty to sell, and DABS to purchase, all of the plant’s generated energy.

On August 26, 2017, USAID issued
Dynasty a notice to proceed with a        Photo 1 - Kandahar Solar Power Plant
required completion date of August 26,
2018. USAID and Dynasty modified the
contract six times, which changed the
construction completion date to December
29, 2019. Dynasty completed facility
testing and on September 28, 2019, the
solar power plant became commercially
operational.3 Dynasty was responsible for
the design and construction, and it
accepted ownership and responsibility for
operating and maintaining the plant
following construction. Therefore, the
contract did not include a warranty on
completed construction work, an item      Source: SIGAR, September 3, 2020
typically included in USAID-funded
construction contracts in Afghanistan.4
The objectives of this inspection were to determine whether (1) the design and construction were completed in
accordance with contract requirements and applicable construction standards, and (2) the solar power plant is
being used and maintained.
We conducted our field work in Kabul and Kandahar Province, Afghanistan, and Arlington, Virginia, from July
2019 through February 2021, in accordance with the Quality Standards for Inspection and Evaluation,
published by the Council of the Inspectors General on Integrity and Efficiency. Our professional engineers
conducted the engineering assessment in accordance with the National Society of Professional Engineers’
Code of Ethics for Engineers. Appendix I has a detailed discussion of our scope and methodology.



1 The solar power plant is located in the Mohammad Afzal Khan Village, Daman District, Kandahar Province, Afghanistan.
2 DABS is Afghanistan’s national utility company that manages power generation, transmission, and distribution throughout
the country.
3 Other entities also contributed to the project’s completion and testing processes. For example, Tetra Tech, under USAID’s

Engineering Support Program, provided construction managers as owner’s advisor services.
4 Our previous inspections show that USAID’s construction contractors may be subject to a contractually stipulated

warranty period during which the contractor is responsible for correcting issues arising from deficient work. See SIGAR,
USAID’s Power Transmission Expansion and Connectivity Project in Afghanistan: The Ghazni and Sayedabad Substations
are Complete, But Construction Deficiencies Create Safety Hazards and Could Disrupt Electrical Power, SIGAR-20-27-IP,
February 13, 2020; SIGAR, USAID’s Power Transmission Expansion and Connectivity Project: Arghandi-Ghazni
Transmission Line Was Generally Built to Contract Requirements, But Four Deficiencies Create Safety Hazards and Could
Disrupt Electrical Power, SIGAR 19-35-IP, April 29, 2019.


SIGAR 21-30-IP/Kandahar Solar Power Plant                                                                           Page 1
CONSTRUCTION OF THE KANDAHAR SOLAR POWER PLANT GENERALLY MET
CONTRACT REQUIREMENTS, BUT PROHIBITED MATERIALS WERE USED AND
SUBSTANDARD ELECTRICAL WORKMANSHIP EXISTS

During our August 31–September 3, 2020, site visit to the Kandahar solar power plant, we found that
Dynasty’s plant construction generally met contract requirements. However, we also found that Dynasty
installed prohibited piping material from Iran and some of Dynasty’s electrical workmanship was substandard.


Dynasty Installed Prohibited Piping Material from Iran
To facilitate solar panel cleanings, Dynasty constructed a new cleaning system, including a water well with
associated piping, pumps, and water storage tanks. The cleaning system is mostly underground and distributes
water around the grounds to spray hoses near solar panels. The construction contract and U.S. federal law
prohibited the use of Iranian-made materials in the facility. However, during our inspection, we found that a
section of the cleaning system’s above ground piping was manufactured in Iran (see photos 2 and 3).

YAZD Pipe, an Iranian firm, manufactured the green piping in these photos. Our visual inspection confirmed
approximately 66 feet of above ground piping was Iranian.5 Because Iran is subject to U.S. economic
sanctions, the purchase and installation of the YAZD piping appears to have violated contract requirements
and the Federal Acquisition Regulation.6 During a December 2020 meeting, we brought this issue to USAID’s
attention so the agency could determine appropriate corrective actions.7


     Photo 2 - Prohibited Piping from YAZD Pipe              Photo 3 - Site Visit Photo With Prohibited Piping




     Source: SIGAR, September 3, 2020                        Source: SIGAR, September 3, 2020




5 Dynasty’s invoices showed that all the below ground piping came from India.
6 The Federal Acquisition Regulation prohibits U.S. government contractors from obtaining Iranian goods and services
without authorization from the U.S. Department of the Treasury’s Office of Foreign Assets Control. See Federal Acquisition
Regulation 52.225-13, Restrictions on Certain Foreign Purchases, June 2008.
7 We reviewed April 2019 notes from Tetra Tech, the construction oversight company, which found that Dynasty used Iranian

tiles for the guard shack flooring but removed them after Tetra Tech raised the issue (See Tetra Tech Engineering Support
Program; Meeting Minutes, Technical Meeting No. 45, April 2, 2019. Tetra Tech). When we brought the issue of the Iranian
piping to USAID’s attention, USAID told us that they believed Dynasty installed the Iranian piping after the facility was
constructed and Dynasty’s contractual obligations with USAID ended. However, the cleaning system was installed before the
plant became operational, and we located photos from an October 2019 Tetra Tech site visit that showed the Iranian piping.


SIGAR 21-30-IP/Kandahar Solar Power Plant                                                                         Page 2
Some of Dynasty’s Electrical Workmanship Was Substandard
The power purchase agreement requires that Dynasty’s construction and equipment installation meet
applicable International Electrotechnical Commission standards.8 These standards call for all electrical
connections to be sealed so that wiring is not exposed to various weather conditions. During our site visit, we
found multiple instances where Dynasty’s electrical workmanship was substandard. Specifically, Dynasty did
not seal openings where wire entered poles. We also found exposed wiring or splices at the exterior of some
lighting and security camera poles, and in and around some guard towers (see photos 4 through 7). Although
these issues do not affect the plant’s ability to produce electricity, the deficiencies leave exposed wires
susceptible to environmental deterioration or damage. In the guard towers the exposed wiring and connections
present a safety and fire hazard to personnel working there.


     Photo 4 - Unsealed Opening in Pole                    Photo 5 - Exposed Wiring Surrounding Pole Bases




     Source: SIGAR, September 1, 2020                      Source: SIGAR, September 1, 2020




      Photo 6 - Interior Exposed Spliced Wiring           Photo 7 - Exterior Exposed Spliced Wiring from the
      in Guard Tower                                      Solar Panel Providing Power to the Guard Tower




      Source: SIGAR, September 1, 2020                    Source: SIGAR, September 1, 2020




8 The International Electrotechnical Commission is a non-profit, non-governmental international standards organization
headquartered in Geneva, Switzerland. The Commission prepares and publishes international standards for all electrical,
electronic, and related technologies, collectively known as electrotechnology.


SIGAR 21-30-IP/Kandahar Solar Power Plant                                                                         Page 3
THE KANDAHAR SOLAR POWER PLANT IS GENERATING ELECTRICITY, BUT DABS
IS NOT USING OR PAYING FOR ALL OF THE ELECTRICITY GENERATED, AND
MAINTENANCE ISSUES EXIST

During our site visit, we found that the Kandahar solar power plant was being used to generate electricity, but
that DABS was not using all of the electricity generated. We also found that DABS has not paid Dynasty for
approximately $1.1 million in generated electricity. Further, we found three maintenance issues involving
nonfunctional security cameras, cracks in the power plant’s boundary wall and the control building’s roof, and
missing mortar in the boundary wall’s foundation.


DABS Is Not Using All of the Plant’s Generated Electricity
Although Dynasty’s solar power plant is generating electricity, DABS’s electrical grid is unable to transmit and
distribute all of the energy produced because of the grid’s instability. DABS’s Kandahar electrical grid receives
power from several sources, one being Dynasty’s solar power plant. During our 4-day site visit, the Kandahar
solar power plant had to shut down three times due to disruptions in the electrical grid. In addition, Dynasty
officials told us that technical issues between the plant and the electrical grid prevent DABS from accepting
and using all of the solar energy that the Dynasty plant produces.9
Dynasty provided us with information comparing the amount of electricity delivered to the DABS electrical grid
and the amount of electricity unable to be delivered onto the grid during the 12-month period from October
2019 through September 2020. We found that the grid was unable to receive about 11.2 million kilowatt-
hours out of the 24.1 million kilowatt-hours, about 46 percent, of the electricity generated at the Kandahar
solar power plant during this 12-month period.10 Our analysis also shows that for 5 of the 12 months, the
amount of electricity that Dynasty was unable to deliver onto the DABS electrical grid exceeded 50 percent of
the electricity generated for those months, reaching as high as 93.7 percent in December 2019.11 Appendix II
provides a monthly breakdown for the amount of energy delivered to the DABS electrical grid and amount of
energy unable to be delivered onto the DABS electrical grid from October 2019 through September 2020.
To mitigate the energy delivery problem, the Breshna Kot Substation requires additional capacitor banks.12 The
substation currently has a total of 5.2 mega volt-ampere reactive capacitor banks. However, engineering
studies conducted by DABS and USAID concluded that 20 mega volt-ampere reactive capacitor banks were
needed to mitigate voltage problems on the Kandahar grid.13 The larger capacitor banks could better stabilize
the voltage for the Kandahar solar power plant, as well as two other solar power plants and the Kajaki
hydroelectric power plant, which are also connected to the Kandahar electrical grid.14
DABS officials told us that they are aware of the grid issue and have finalized the procurement of new
capacitor banks costing approximately $325,000. The officials believe that the new capacitor banks will allow
the electrical grid to receive all of the energy generated by the power plants.




9 The connection issues exist because DABS has not installed sufficient electrical equipment at the Breshna Kot Substation,
specifically capacitor banks, resulting in uncontrolled voltage and frequency fluctuations in the Kandahar electrical grid.
10 Kilowatt is a unit of power equal to 1,000 watts.

11 The 5 months are November and December 2019, and January, June, and July 2020.

12 A capacitor bank stores electrical energy and conditions the flow of that energy.

13 Mega volt-ampere reactive is a unit of measure for energy as it relates to capacitor banks.

14 The two other solar power plants are the 77 Construction Company’s 15-megawatt solar power plant and Zularistan’s

15-megawatt solar power plant, both located in the Kandahar area.


SIGAR 21-30-IP/Kandahar Solar Power Plant                                                                          Page 4
DABS Has Not Fully Paid Dynasty for Energy Generated, Which Could Affect the
Solar Power Plant’s Future Operations
DABS has not paid for all the electricity generated at the Kandahar solar power plant. The power purchase
agreement states that DABS will purchase all energy generated and delivered onto the electrical grid from the
Kandahar solar power plant, including generated electricity that was delivered to but not distributed by the
grid. In addition, the agreement requires DABS to pay Dynasty within 30 days of receiving an invoice. However,
we found that DABS had not paid Dynasty for all the energy delivered onto the grid, and had never paid
Dynasty for any electricity that was generated but not distributed.
In November 2020, Dynasty officials told us that the outstanding, unpaid electricity delivered onto the grid and
billed to DABS from July through September 2020 totaled $298,707. Additionally, the total billed amount for
the outstanding, unpaid electricity that could not be delivered onto the electrical grid due to voltage instability
issues at the Breshna Kot Substation for September 2019 through September 2020 totaled $825,011.
Together, the outstanding invoices through September 2020 totaled about $1.1 million. Dynasty officials said
that the unpaid invoices contribute to cash flow issues that place the viability of the power plant at risk.15


Three Maintenance Issues Exist at the Kandahar Solar Power Plant
During our site visit, we found three maintenance issues at the solar power plant. Specifically, we found that
17 of the 36 security cameras (47 percent) were nonfunctional. We also found cracks in facility’s boundary
wall and on the roof of the control building (see photos 8 and 9). Further, we found mortar missing from stones
that form the boundary wall’s foundation (see photos 10 and 11). These were not identified during the
project’s final inspection in December 2019. While they do not affect the solar power plant’s ability to operate
as intended and produce electricity, the issues indicate Dynasty’s difficulty in properly maintaining the plant.


         Photo 8 - Cracks in Boundary Wall               Photo 9 - Cracks in the Control Building’s Roof




                                                                                               01 .09 .20l?D 10 :44


         Source: SIGAR, August 31, 2020                  Source: SIGAR, September 1, 2020




15 Dynasty officials also said the company incurred $1.5 million in additional expenses due to delays caused by the

custom’s process, and that these additional expenses also place the viability of the power plant at risk.


SIGAR 21-30-IP/Kandahar Solar Power Plant                                                                             Page 5
  Photo 10 - Boundary Wall and Foundation             Photo 11 - Boundary Wall Foundation Lacking Mortar




  Source: SIGAR, August 31, 2020                      Source: SIGAR, August 31, 2020


CONCLUSION

Dynasty successfully built the Kandahar solar power plant, which is generating electricity. Dynasty’s
construction mostly met contract requirements, except for its installation of what appeared to be prohibited
Iranian piping material, and some substandard electrical workmanship involving wiring around the lighting and
poles and guard towers. The faulty and unsecured wiring create a safety and fire hazard. In addition, although
the power plant has only been operating for about 16 months, some maintenance issues—nonfunctional
security cameras, cracks in the boundary wall and the control building’s roof, and mortar missing in the
boundary wall’s foundation—are evident. These issues do not affect the solar power plant’s ability to generate
electricity, but they need the attention of Dynasty, the plant’s owner and operator.
However, Dynasty’s ability to continue operations is threatened, in part due to DABS’s unpaid invoices. Further,
almost half of the electricity generated by the solar power plant is being wasted due to technical problems with
the Kandahar electrical grid, although DABS is reportedly working to resolve this matter. Because the electrical
grid problems and unpaid invoices are issues between Dynasty and DABS, we are not making any
recommendations to address them. However, it is worth noting that DABS has had issues for years with billing
and collecting payments from its customers, which would then affect its cash flow and ability to pay its bills. We
recognize the importance of successfully resolving these problems and hope all stakeholders are able to work
together to find a suitable solution that will help ensure the Kandahar solar power plant’s future.


RECOMMENDATIONS

To protect U.S. taxpayers’ investment in the Kandahar solar power plant, we recommend that the USAID
Mission Director for Afghanistan take the following action and report the results back to SIGAR within 60 days:
    1. Determine whether Dynasty violated contract terms citing the Federal Acquisition Regulation in the
       installation of Iranian-manufactured piping, and take appropriate action to hold the contractor
       accountable.
    2. Advise Dynasty about the faulty wiring connections and unsecured exposed wiring that are creating a
       safety and fire hazard, as well as the maintenance issues involving the cracked concrete and missing
       mortar, so that Dynasty can take whatever action it deems appropriate.




SIGAR 21-30-IP/Kandahar Solar Power Plant                                                                  Page 6
AGENCY COMMENTS

We provided a draft of this report to USAID for review and comment. USAID provided written comments, which
are reproduced in appendix III. USAID also provided technical comments, which we incorporated as
appropriate. USAID concurred with both recommendations. For the first recommendation, USAID said it
determined that Dynasty did not violate contract terms under the Federal Acquisition Regulation with respect
to USAID’s contract. For the second recommendation, USAID said that it has no role in the plant’s operations
and maintenance. However, as we recommended, USAID said that it would share the findings about faulty
wiring connections, unsecured exposed wiring, and maintenance issues involving the cracked concrete and
missing mortar with DABS and Dynasty.
In its comments on our first recommendation, USAID stated that its contract with Dynasty, which prohibits the
purchase of certain materials, cannot be applied to the design-build contract between Dynasty and DABS.
However, USAID’s contract with Dynasty states that “the Contractor (Dynasty) was responsible for the design
and construction of the plant.” Similarly, the power purchase agreement between Dynasty and DABS defines
the construction contract as “the contract between USAID and the Seller (Dynasty) pursuant to which the
facility will be designed, constructed, and commissioned.” Additionally, USAID contracted with Tetra Tech to
oversee the facility’s construction, which included ensuring that prohibited products were not used. Further, in
its technical comments, USAID stated that Dynasty did not use Iranian-made products during plant
construction.
USAID stated that the Iranian-made pipes we found were replacement pipes purchased and installed after the
plant began operations as a result of damage caused by regular use of the original pipes. However, we located
photos from an October 2019 Tetra Tech site visit that appear to show that the Iranian piping was installed
during plant construction, and we found no evidence that the original pipes and joints incurred regular damage
and were replaced after plant commissioning. Therefore, we stand by our analysis that this system falls under
USAID’s $10 million construction contract with Dynasty, that Dynasty installed the Iranian piping during
construction, and that the Tetra Tech oversight team failed to identify the prohibited piping when they
inspected the project’s construction during the contract performance period. 
Nevertheless, because Dynasty owns and operates the plant and there is no construction warranty, and
because USAID determined that Dynasty did not violate the contract terms, we will close the recommendation
as implemented upon issuance of this report.
In its comments on our second recommendation, USAID stated that the faulty wiring connections, unsecured
exposed wiring, and maintenance issues involving the cracked concrete and missing mortar were relevant to
the design-build contract between Dynasty and DABS. Although USAID said it has no role in the plant’s
operation and maintenance, USAID said it will share the findings with Dynasty and DABS. This recommendation
will remain open until USAID provides us with evidence that it has notified Dynasty and DABS of the findings.




SIGAR 21-30-IP/Kandahar Solar Power Plant                                                                 Page 7
APPENDIX I - SCOPE AND METHODOLOGY

This report provides the results of SIGAR’s inspection of the Kandahar solar power plant in Kandahar Province,
Afghanistan. The objectives of this inspection were to determine whether (1) the design and construction was
completed in accordance with contract requirements and applicable construction standards, and (2) the facility
is being used and maintained. Specifically, we
       reviewed contract documents, design submittals, and other relevant project documentation;
       interviewed officials with the Afghan government’s power authority, Da Afghanistan Breshna Sherkat,
        concerning the power purchase agreement and payment to Dynasty for power; and
       conducted a 4-day site visit to the power plant on August 31, and September 1, 2, and 3, 2020.
We did not rely on computer-processed data in conducting this inspection. However, we considered compliance
with laws and indicators of fraud, abuse, and other illegal acts, and their potential impact.
In December 2014, SIGAR entered into a cooperative agreement with Afghan civil society partners. Under this
agreement, our Afghan partners conduct specific inspections, evaluations, and other analyses. In this regard,
Afghan engineers inspected the facility in August and September 2020.
We developed a standardized engineering evaluation checklist covering items required by the contract. The
checklist required our partners to analyze the contract documents, scope of work, technical specifications, and
design drawings. We compared the information our Afghan civil society partners provided to accepted
engineering practices, relevant standards, regulations, laws, and codes for quality and accuracy.
In addition, as part of our monitoring and quality control process, we
       met with our Afghan partner engineers to ensure that the inspection’s planning and approach were
        consistent with the objectives of our inspection and the terms of our cooperative agreement;
       attended periodic meetings with our partners and conducted our normal entrance and exit
        conferences with agency officials;
       discussed significant inspection issues with our partners;
       referred any potential fraud or illegal acts to SIGAR’s Investigations Directorate, as appropriate;
       monitored our partners’ progress in meeting milestones and revised contract delivery dates as
        needed; and
       conducted oversight of our partners in accordance with SIGAR’s policies and procedures to ensure
        that their work resulted in impartial, credible, and reliable information.
We conducted our inspection field work in Kabul and Kandahar Province, Afghanistan, and Arlington, Virginia,
from July 2019 through February 2021, in accordance with the Quality Standards for Inspection and
Evaluation, published by the Council of the Inspectors General on Integrity and Efficiency. Our professional
engineers conducted the engineering assessment in accordance with the National Society of Professional
Engineers’ Code of Ethics for Engineers. We believe that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our inspection objectives. We conducted this inspection under the
authority of Public Law No. 110-181, as amended, and the Inspector General Act of 1978, as amended.




SIGAR 21-30-IP/Kandahar Solar Power Plant                                                                     Page 8
APPENDIX II - MONTHLY ENERGY DELIVERED AND NOT DELIVERED ONTO THE
DABS ELECTRICAL GRID

Table 1 shows the amount of energy that Dynasty’s Kandahar solar power plant delivered to the Da
Afghanistan Breshna Sherkat (DABS) electrical grid and energy that was unable to be delivered onto the DABS
electrical grid for the 12-month period from October 2019 through September 2020.


     Table 1 - Energy in Kilowatt-Hours that the Kandahar Solar Power Plant Produced and Delivered
     to the DABS’s Electrical Grid
                                    Energy Delivered onto     Energy Unable to be       Percentage (%) of
       Month                        DABS’s Electrical Grid   Delivered onto DABS’s      Total Undelivered
                                          (in kWh)           Electrical Grid (in kWh)    (Wasted) Energy

       October 2019                      1,153,370                    799,334                40.9%
       November 2019                        732,378                   919,679                55.7%
       December 2019                        110,789               1,651,574                  93.7%
       January 2020                         265,672               1,109,500                  80.7%
       February 2020                     1,050,010                    920,693                46.7%
       March 2020                        1,433,825                    558,532                28.0%
       April 2020                        1,536,560                    469,897                23.4%
       May 2020                          1,550,352                    886,780                36.4%
       June 2020                         1,016,742                1,382,588                  57.6%
       July 2020                         1,143,330                1,258,241                  52.4%
       August 2020                       1,527,860                    707,003                31.6%
       September 2020                    1,420,678                    537,268                27.4%
       Total                           12,941,567                11,201,089                  46.4%

      Source: SIGAR analysis based on information Dynasty provided.




SIGAR 21-30-IP/Kandahar Solar Power Plant                                                                   Page 9
APPENDIX III - COMMENTS FROM THE U.S. AGENCY FOR INTERNATIONAL
DEVELOPMENT




                (i) ~,~~J~ I AFGHANISTAN
                 MEMORANDUM
                                                                                                       March ll , 2021


                 TO:                          John F_ opko, pecia l Inspector Genera l for
                                              Afghanistan Reconstruction (S IG AR)

                  FROM:                       Tina Dool y-Jone, Mission Director ~                           /

                 S BJ ECT:                    Mi ssi on Respo n e to the Draft SIGAR lnsklrion Report
                                              titled: "K,1-ndahar Solar Power Plant: Project Wa s
                                              Generally Completed According to Conlracl
                                              Requirements" {SIGAR2 1-XX Inspection Report/1-061 ).

                 REF:                          SI GAR Transmiual email dated Febru ary '21, 202 l.

                 USAID thanks SlGAR for the opportunity to comment on the draft report
                 titled, " Kandahar Solar Power Plant: Project Was Ge11eral ly Completed
                 According to Contract Requirements" (SIGAR 21-XX Inspection
                 R port/SIGAR 1-061 ).

                  USA JD concurs wilh Recommendation I and Reco111111en<la1io1i 2 and
                  appreciates the opportuuity to provide our feedback .

                  USAID' comments are divided in 1wo sections: the fir. t section responds to
                  the two recommendation in the subj ect draft repo rt while the second
                  identifies specifo: portions of the draft repo1t that contain inaccurate or
                  incomplete facts or conclusions.

                   'I       R Recommendation 1:
                  Del •1mi11e whether Dynas()' violated cn11tract terms citing the Federal
                  Acq11isi1ioll Reg11/alio11 in !he i11s1u/la1/011 oj' lrt111/a11-11iam1fact11red piµing, and
                  lake appropriate ac1ion to hold !he co111ractor accow1rah/e,

                  USA ID Response: USA ID concw·s with the recommendation.


                  U.S. Ag ency for lnternahonal Development   Toi: 202.-2 16-Gi 68 10700· 106·001
                  Great Massouc1 Roacl                        Email: kabulusaldlnfonnaUo•@usafQ 90'1
                  Kabul. Af9han1,1• 11                        htlp://afgl,anistan usald.gov




SIGAR 21-30-IP/Kandahar Solar Power Plant                                                                                Page 10
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                   USAID has determined that Dynasty did not violate contract terms under the
                   FAR with respect to USAID's contract.

                   The scope of the contract with Dynasty Oil and Gas Private Limited (Dynasty)
                   was to attract Independent Power Producers (IPPs) through a reverse auction
                   to work with DABS to design and build the Kandahar solar power plant. The
                   design-build contract was signed between Dynasty and DABS. USAID's
                   contract with Dynasty was milestone based, incentivizing Dynasty to produce
                   2 megawatts (MWs) of power for each of the five milestones. USAID's
                   contract with Dynasty - which prohibits the purchase of certain materials
                   under that contract - cannot be applied to the design-build contract between
                   Dynasty and DABS. The piping system constructed for cleaning of the solar
                   panels did not fall under the scope of the $10 million funded by US AID and
                   was therefore not part of the verification process for each of the five
                   milestones.

                   Therefore, Dynasty did not violate any contract or clause requirement with
                   USAID related to the scope of the contract. USAID will share the findings of
                   the inspection with DABS for their awareness, follow up and continued
                   engagement with Dynasty under the DABS-Dynasty Power Purchase
                   Agreement.

                   Based on the above, USAID requests SIGAR to close Recommendation I
                   upon issuance of the final report.

                   SIGAR Recommendation 2:
                   Advise Dynasty about the faulty wiring connections and unsecured exposed
                   wiring that are creating a safety and fire hazard, as well as the maintenance
                   issues involving the cracked concrete and missing mortar; so that Dynasty can
                   take whatever action it deems appropriate.

                   USAID Response:

                   USAID concurs with the recommendation.

                   As noted in the response to Recommendation I above, the USAID reiterates
                   that the contract between USAID and Dynasty was milestone based,
                   incentivizing Dynasty to produce two megawatts of power for each of the five
                   milestones for the 10 MW solar power plant. The deficiencies identified by




SIGAR 21-30-IP/Kandahar Solar Power Plant                                                          Page 11
                                                      3
                 SIGAR are relevant to the design-build contract between Dynasty and DABS.
                 Therefore, USAID has no role in the operations and maintenance of the plant.


                 Actions Planned:
                 USAID will share the findings with DABS and Dynasty for their appropriate
                 action.

                 Based on the above, USAID requests SIGAR to close Recommendation 2
                 upon issuance of the final report.




SIGAR 21-30-IP/Kandahar Solar Power Plant                                                       Page 12
                                                       4

                   Comments on the Draft SIGAR Inspection Report Titled: "Kandahar
                    Solar Power Plant: Project Was Generally Completed According to
                    Contract Requirements" (SIGAR 21-XX Inspection Report/1-061).

              1. Page ii SIGAR statement: "In February 2017, the U.S. Agency for
                 International Development (USAID) awarded Dynasty Oil & Gas Private
                 Limited (Dynasty), an Indian firm, a $10 million firm-fixed-price contract to
                 design, construct, operate, and maintain a IO-megawatt solar power plant."

                 "However, we found that Dynasty appears to have installed prohibited piping
                 material from lran."

      SIGAR      USAID Comment 1:
    Comment 1
                 USAID would like to clarify that this statement conflates Lwo separate
                 contracts. The contract between USAID and Dynasty was a milestone-based
                 contract to incentivize Dynasty to produce 10 MW of solar power in Kandahar
                 province. The design-build (construction) contract to design, construct,
                 operate, and maintain the power plant was a separate contract signed between
                 Dynasty and DABS. The terms included in the USAID-Dynasty milestone
                 contract do not apply to the Dynasty-DABS design-build contract and the
                 piping system did not fall under the scope of the $10 million contract funded
                 byUSAID.

                 USAID requests that SIG AR clarify the nature of the two contracts in this
                 statement as well as in similar statements that appear throughout the document
                 (e.g., Page 1, lines 1-2: "On February 23, 2017, the U.S. Agency for
                 International Development (USAID) awarded Dynasty Oil & Gas
                 Private Limited (Dynasty), an Indian firm, a $10 million firm-fixed-price
                 contract to design, construct, operate, and maintain a I 0-megawatt solar
                 power plant"; Page 2, lines 10-11: "The construction contract and U.S. federal
                 law prohibited the use oflranian-made materials in the facility.").

              2. Page 2: SIGAR statement: "we found that a section of the cleaning system's
                 above ground piping was manufactured in Iran . . ."

     SIGAR        USAID Comment 2:
    Comment 2
                 The co.ntract between lJSAID and Dynasty was milestone based, incentivizing
                 Dynasty to produce two MW of power for each of the five milestones for the




SIGAR 21-30-IP/Kandahar Solar Power Plant                                                         Page 13
                                                         5

                 10 MW solar power plant. As stated above, the design-build contract was
                 signed between Dynasty and DABS, therefore the piping system constructed
                 for cleaning of the solar panels did not fall under the scope of the $ 10 million
                 funded by USAID and was not part of the milestone verification by Tetra
                 Tech.

                 This piping system that is required for maintenance was constructed by
                 Dynasty at their own expense and Dynasty confirmed to USAID that no
                 Iranian-made products were used for the project before commissioning and
                 completion of the plant. According to Dynasty, the piping system is heavily
                 used daily for module cleaning and other water requirements of the plant. The
                 pipes and joints regularly get damaged while operating under high water
                 pressure and require routine replacement. The original pipes used in the
                 system were from India. It was only after the plant had been commissioned
                 and completed (marking the end of the USAID award) and was operating that
                 the pipes became damaged and Dynasty bought pipes available on the local
                 market - the Iranian-made pipes - to replace them.

                 USAID requests that SIGAR delete the reference to the Iranian-made pipes or
                 incorporate the above facts .

              3. Page 2 footnote #7: " ... We reviewed April 2019 notes from Tetra Tech, the
                 construction oversight company... However, the cleaning system was
                 installed before the plant became operational, and we located photos from an
                 October 20 J9 Tetra Tech site visit that showed the Iranian piping."

      SIGAR   USAID Comment 3:
    Comment 3 Tetra Tech did not fully inspect the cleaning system as it was not part of the
              contractual requirement under the five milestones. Tetra Tech informed
              USAID that -they did not observe any Iranian-made piping in the system
              during their October 2019 site visit.

                 Dynasty has confirmed to USAID that the pipes originally used in the solar
                 panel cleaning system were from India, and that they used Iranian-made pipes
                 for the solar panel cleaning system only after the USAID project period had
                 ended. They used these pipes during the operations and maintenance period at
                 their own expense.

                 While the Tetra Tech photo taken during the October 2019 site visit and
                 referenced in footnote #7 shows green pipes, the photo does not provide detail




SIGAR 21-30-IP/Kandahar Solar Power Plant                                                            Page 14
                                                         6

                 sufficient to read the markings on the pipes. USAID and Tetra Tech are unable
                 to confirm whether the pipes shown in the photo are the same pipes that were
                 identified during the subsequent SIGAR site visits or whether those pipes had
                 been replaced by the Iranian-made pipes by Dynasty as part of their operations
                 and maintenance. Please note that the October 2019 photo shows green pipes
                 but not the pipe markings that can confirm the country of origin. Therefore, it
                 is not possible to conclude that those green pipes were made in Iran.

                 USAID requests that SIGAR delete the reference to Tetra Tech's October
                 2019 photo or to incorporate the above facts.

              4. Page 3 lines 1-9: SIGAR statement" ... Some of Dynasty's Electrical
                 Workmanship Was Substandard.. . In the guard towers the exposed wiring
                 and connections presents a safety and fire hazard to personnel working there.''

      SIGAR      USAID Comment 4:
    Comment 4
                 As stated under USAID Comment I (above), the deficiencies reported by
                 SIG AR do not fall under the Statement of Work of the USAID contract with
                 Dynasty nor the quality assurance scope ofTt ESP. Under the Power
                 Purchase Agreement (PPA) terms, Dynasty is responsible for operations and
                 maintenance of the facility for 15 years. Although the issues reported by
                 SIGAR do not affect the solar plants' ability to produce energy, Dynasty has
                 expressed their commitment to addressing these problems in their routine
                 maintenance for the safety of their employees.

                 USAID requests that SIGAR incorporate the above clarification in the
                 forthcoming report.

              5. Page 4 line 12 - 15: SIGAR statement "DABS's Kandahar electrical grid
                 receives power from several sources, one being Dynasty's solar power plant.
                 During our 4-day site visit, the Kandahar solar power plant had to shut down
                 three times due to disruptions in the electrical grid. In addition, Dynasty
                 officials told us that technical issues between the plant and the electrical grid
                 prevent DABS from accepting and using all of the solar energy that the
                 Dynasty plant produces."




SIGAR 21-30-IP/Kandahar Solar Power Plant                                                            Page 15
                                                        7

     SIGAR    USAJD Comment 5:
    Comment 5 DABS confirmed to USAID that the grid line is often down due to attacks on
              the line, subsequent repairs, and routine maintenance, which prevents the
              transfer of power from the solar plant to the grid.

                 Another reason grid efficiency is low is because a 20MVA capacitor bank
                 needs to be installed in Breshna Kot Substation. According to DABS, the
                 procurement of the capacitor bank was delayed due to the COVID-19
                 pandemic. USAID has learned that the procurement is in its final stages.
                 DABS is facing similar issues with the 10 MW Zularistan solar plant and the
                 15 MW 77CC solar plants, which are also connected to the same grid. DABS
                 confirmed that they are working hard to address these tangible issues.
                 However, the attacks on the grid line are unpredictable and beyond DABS'
                 control.

                 USAID is funding the I 14-kilometer South East Power System (SEPS)
                 transmission line that will be completed by the end of calendar year 2022.
                 This line is anticipated to significantly improve the conditions in the Kandahar
                 area and provide redundancy to the existing grid.

                 USAID requests that SIGAR incorporate the above in the forthcoming report.

              6. Page 5 lines 9-14: SIGAR Statement "we found that DABS had not paid
                 Dynasty for all the energy delivered onto the grid, and had never paid Dynasty
                 for any electricity that was generated but not distributed."

      SIGAR      USAU> Comment 6:
   Comment6      Dynasty's $825,01 I payment is on-hold pending a final decision by the High
                 Economic Council (HEC). The reason for the delay in payment by DABS is
                 because Dynasty did not commission the power plant on time as per the terms
                 and conditions of the PPA. The delay in commissioning and completion was
                 because Dynasty faced customs delays for equipment at the entry ports.
                 DABS and Dynasty have presented the case to the HEC for resolution.
                 USAID does not have a legal or contractual basis to demand action from
                 DABS since it is not party to the PPA. However, USAID management has
                 requested DABS to improve its relationships with the IPPs, and to address
                 internal capacity issues that are leading to poor management and delayed
                 payments.




SIGAR 21-30-IP/Kandahar Solar Power Plant                                                           Page 16
                                                           8

                7. Page 5 line 15-19: SIGAR statement ".... we found that 17 of the 36 security
                   cameras (47 percent) were nonfunctional.. . These were not identified during
                   the project's final inspection in December 2019."

       SIGAR       USAID Comment 7:
    Comment 7      According to the PPA between DABS and Dynasty, the Government of
                   Afghanistan is responsible for providing protection against insurgent attacks
                   on the plant. Dynasty is responsible for internal security of the plant and its
                   employees. Dynasty has the flexibility to develop security measures and is
                   solely responsible for all security costs.

                   The construction of the boundary wall and control building do not fall under
                   the scope of the US AID contract with Dynasty. The contract to design and
                   build was between Dynasty and DABS. Dynasty is also responsible for the
                   operation and maintenance of the plant per the terms and conditions of the
                   PPA.

                    Dynasty has expressed their commitment to address these issues for the safety
                    of their employees during routine maintenance.

                    USAID requests that SIGAR incorporate the above clarifications in the
                    forthcoming report.

                8. Page 6: Conclusion:

      SIGAR         USAID Comment 8:
    Comme nt 8      USAID requests that SIGAR adjust the conclusion statements to reflect the
                    responses provided by USAID in the above responses to the draft report.



                    cc:   Morgan J. Brady, Controller
                          U.S. Embassy/Kabul
                          Asia Bureau Budget
                          Paul Bruning, Acting Director, Office of Infrastructure




SIGAR 21-30-IP/Kandahar Solar Power Plant                                                            Page 17
     SIGAR’s Response to Comments from the U.S. Agency for International Development

SIGAR Comment 1. Our report accurately defines and presents the difference between the contract USAID
awarded to Dynasty, and the power purchase agreement between Dynasty and DABS. In addition, USAID’s
contract with Dynasty states that its purpose is “to install a 10-megawatt solar photovoltaic system in
Kandahar province” and “the Contractor (Dynasty) was responsible for the design and construction of the
plant.” Additionally, USAID contracted with Tetra Tech to oversee the facility’s construction, which included
ensuring that prohibited products were not used. The contract between Dynasty and DABS, the power
purchase agreement, outlines the terms under which DABS would pay Dynasty for energy generated. This
agreement defines the construction contract as “the contract between USAID and the Seller (Dynasty) pursuant
to which the facility will be designed, constructed, and commissioned.”
SIGAR Comment 2 and 3. See comment 1. In addition, we found no evidence that the pipes and joints incurred
regular damage due to high water pressure, and were replaced after plant commissioning. We stand by our
analysis that this system falls under USAID’s $10 million construction contract with Dynasty, that Dynasty
installed the Iranian piping during construction, and that the Tetra Tech oversight team failed to identify the
prohibited piping when they inspected the project’s construction during the contract performance period.
SIGAR Comment 4. In response to USAID’s comment, we revised the report to state that the substandard
wiring does not affect the plant’s capacity to produce electricity.
SIGAR Comment 5. As stated in our report, we acknowledge USAID’s confirmation of the need for 20 mega volt-
ampere reactive capacitor banks at the Breshna Kot Substation. We also agree with USAID’s comment that it is
funding the 114-kilometer South East Power System transmission line, which is expected to improve conditions
in the Kandahar area and its existing electrical grid, and that the transmission line is scheduled to be
completed by the end of next year.
SIGAR Comment 6. We understand that USAID does not have any “legal or contractual basis” to demand action
from DABS. Our report does not state that USAID has any such legal or contractual recourse, nor do we make
any recommendations to address payment issue. We appreciate that USAID management has requested DABS
to improve its relationship with independent power producers and address the internal capacity issues that are
leading to delayed payments.
SIGAR Comment 7. According to the contract between USAID and Dynasty, “The contractor is responsible for
the design, construction of the plant (including perimeter boundary wall, access roads and pathways, and
necessary buildings), and maintenance and operation of the project at its own expense.” We agree that
Dynasty is responsible for the operation and maintenance of the plant, as stated in the contract’s purpose. As
such, our report brought this operation and maintenance issue to the attention of USAID and Dynasty.
SIGAR Comment 8. USAID’s technical comments do not provide sufficient and appropriate new information
requiring such a change.




 




SIGAR 21-30-IP/Kandahar Solar Power Plant                                                              Page 18
APPENDIX IV - ACKNOWLEDGMENTS

Adam Bonfanti, Senior Inspection Manager
Erika Ersland, Inspector-in-Charge
Wilhelmina Pierce, Professional Engineer
Abdul Rahim Rashidi, Program Analyst
Shahanshah Shirzay, Civil Engineer




SIGAR 21-30-IP/Kandahar Solar Power Plant   Page 19
                                      This inspection was conducted
                                     under project code SIGAR-I-061.




SIGAR 21-30-IP/Kandahar Solar Power Plant                              Page 20
                               The mission of the Special Inspector General for Afghanistan
           SIGAR’s Mission     Reconstruction (SIGAR) is to enhance oversight of programs for the
                               reconstruction of Afghanistan by conducting independent and
                               objective audits, inspections, and investigations on the use of
                               taxpayer dollars and related funds. SIGAR works to provide accurate
                               and balanced information, evaluations, analysis, and
                               recommendations to help the U.S. Congress, U.S. agencies, and
                               other decision-makers to make informed oversight, policy, and
                               funding decisions to:
                                           improve effectiveness of the overall reconstruction
                                            strategy and its component programs;
                                           improve management and accountability over funds
                                            administered by U.S. and Afghan agencies and their
                                            contractors;
                                           improve contracting and contract management
                                            processes;
                                           prevent fraud, waste, and abuse; and
                                           advance U.S. interests in reconstructing Afghanistan.


  Obtaining Copies of SIGAR    To obtain copies of SIGAR documents at no cost, go to SIGAR’s Web
                               site (www.sigar.mil). SIGAR posts all publicly released reports,
   Reports and Testimonies     testimonies, and correspondence on its Web site.




                               To help prevent fraud, waste, and abuse by reporting allegations of
To Report Fraud, Waste, and    fraud, waste, abuse, mismanagement, and reprisal, contact SIGAR’s
      Abuse in Afghanistan     hotline:
   Reconstruction Programs                 Web: www.sigar.mil/fraud
                                           Email: sigar.pentagon.inv.mbx.hotline@mail.mil
                                           Phone Afghanistan: +93 (0) 700-10-7300
                                           Phone DSN Afghanistan: 318-237-3912 ext. 7303
                                           Phone International: +1-866-329-8893
                                           Phone DSN International: 312-664-0378
                                           U.S. fax: +1-703-601-4065



                               Public Affairs Officer
              Public Affairs               Phone: 703-545-5974
                                           Email: sigar.pentagon.ccr.mbx.public-affairs@mail.mil
                                           Mail: SIGAR Public Affairs
                                            2530 Crystal Drive
                                            Arlington, VA 22202