Investors running from Afghanistan due to changes in investment rules, security situation and corruption
New Delhi, India: Investors are running from Afghanistan due to constant changes in investment rules, law and order situation and alleged corruption in administrative system.
Mining was lucrative sector for foreign investment in Afghanistan and major leaders in regime like China and India got interested in mining sector and got big projects. However there are constant changes going on rules and laws regarding mining sector of Afghanistan that is creating fears among investors because they do not know what and when new laws will be passed and new laws can also be adverse for already initiated projects.
Recent example is of an Indian consortium led by the Steel Authority of India (SAIL) which was awarded the extraction of iron ore in Afghanistan in Hajigak iron ore. An investment of $10.8 billion was originally forecasted for Hajigak iron ore. However, SAIL said in December that the group had proposed new terms and planned to investment only $2 billion in three iron ore mines and a steel plant. Now SAIL is indicating to halt its projects and the Chairman of SAIL, C.S. Verma said Monday that the final figure regarding the investment will be decided once the final deal has been signed. Verma also indicated that they are keeping all options open (including total withdrawal from project) considering the security problems and lack of infrastructure in the area.
The remarks by SAIL chairman comes as the Afghan officials recently said the approval of the new Afghan mining law has paved the way for the resumption of negotiations by the Steel Authority of India Ltd-led Afghan Iron and Steel Consortium (AIFSCO) for the set up of $1.14 billion steel plant in Afghanistan. The officials further added that final agreement will take place once the law is passed by the Afghan president, as per the constitution of Afghanistan. AIFSCO awarded three iron ore mines at Hajigak by the government of Afghanistan in November 2011
