Earlier today, we learned that the U.S. government had raided a citizens victim fund to the tune of $1.5 billion in order to use the money for general expenses. It’s all starting to make sense now. When you’re spending $43 million on gas stations that should cost $500K, it doesn’t take long to run out of money.
Taxpayers lose. Again.
The U.S. Department of Defense spent nearly $43 million on a gas station in northern Afghanistan and has been unable to explain why it cost so much, a U.S. special inspector reported on Monday.
The Pentagon “charged the American taxpayers $43 million for what is likely to be the world’s most expensive gas station,” said John Sopko, head of the Special Inspector General for Afghanistan Reconstruction, a congressionally mandated body. The amount was spent between 2011 and 2014 on construction and initial implementation of the station.
The gas station in Sheberghan, Afghanistan opened in 2012 and was created to show that compressed natural gas could be used in Afghanistan in cars effectively.
Now here are a few choice excerpts from the actual Special Inspector General report, which can and should be read in full here:
According to a TFBSO study, the Task Force spent nearly $43 million to construct a compressed natural gas (CNG) automobile filling station in the city of Sheberghan, Afghanistan. The main purpose of the project was to demonstrate the commercial viability of CNG for automobiles in Afghanistan as part of a broader effort to take advantage of Afghanistan’s domestic natural gas reserves and reduce the country’s reliance on energy imports.
Although TFBSO achieved its immediate objective of building the CNG filling station, it apparently did so at an exorbitant cost to U.S. taxpayers. In comparison, SIGAR found that a CNG station in Pakistan costs no more than $500,000 to construct. Furthermore, there is no indication that TFBSO considered the feasibility of achieving the station’s broader objectives or considered any of the potentially considerable obstacles to the project’s success before beginning construction.
One of the most troubling aspects of this project is that the Department of Defense claims that it is unable to provide an explanation for the high cost of the project or to answer any other questions concerning its planning, implementation, or outcome. In fact, in response to my request for information, the Principal Deputy Under Secretary for Policy stated in June 2015 that the March 2015 closure of TFBSO resulted in the Office of the Secretary “no longer possessing the personnel expertise to address these questions or to assess properly the TFBSO information and documentation retained by WHS in the OSD Executive Archive” (see Appendix I).
Frankly, I find it both shocking and incredible that DOD asserts that it no longer has any knowledge about TFBSO, 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. Nevertheless, I intend to continue our inquiry into TFBSO activities to shed additional light on how this program operated, what it achieved, how this enormous amount of money was spent, and whether any conduct by TFBSO staff or contractors was criminal in nature.
The contract awarded to Central Asian Engineering to construct the station was for just under $3 million. Yet according to an economic impact assessment performed at the request of TFBSO:
The Task Force spent $42,718,739 between 2011 and 2014 to fund the construction and to supervise the initial operation of the CNG station (approximately $12.3 [million] in direct costs and $30.0 [million] in overhead costs).
The $43 million total cost of the TFBSO-funded CNG filling station far exceeds the estimated cost of CNG stations elsewhere. According to a 2010 publication of the International Energy Association, “the range of investment for a public [CNG] station serving an economically feasible amount of vehicles varies from $200,000 to $500,000. Costs in non-OECD [Organization for Economic Co-operation and Development] countries are likely to be in the lower end of this range.” Consistent with that finding, a 2005 CNG station feasibility study conducted by Pakistan’s Small and Medium Enterprise Development Authority concluded that the total cost of building a CNG station in Pakistan would be approximately $306,000 at current exchange rates.10 In short, at $43 million, the TFBSO filling station cost 140 times as much as a CNG station in Pakistan.
To date, DOD has been unable to provide documentation showing why the Sheberghan CNG station cost nearly $43 million. In a May 2015 letter to the Secretary of Defense, SIGAR requested information on the CNG station, including a description of the costs associated with building and operating it (see Appendix III). The Department was unable to provide any of the requested information.
It is not clear why TFBSO believed the CNG filling station project should be undertaken. In the absence of national or even regional natural gas transmission and local distribution infrastructure to support a network of CNG stations, there is no incentive for motorists to convert their vehicles to CNG. In fact, an economic impact assessment performed at the request of TFBSO found that the CNG filling station project produced no discernable macroeconomic gains and a discounted net loss of $31 million.
TFBSO spent nearly $43 million to build a CNG filling station that would have cost no more than $500,000 in neighboring Pakistan. Even considering security costs associated with construction and operation in Afghanistan, this level of expenditure appears gratuitous and extreme. There are several troubling aspects of this project, including overhead costs of $30 million (70 percent of total project expenditures), the apparent lack of a feasibility study prior to project initiation, and the prohibitive costs associated with converting cars to CNG.
Under the circumstances, DOD’s position that it has no knowledge about this $800 million program is startling and unconvincing. It is also a major concern because TFBSO was DOD’s principal vehicle for stimulating private sector investment in Afghanistan to build a stable and growing economy. An understanding of the successes and failures of TFBSO activities will be critical for Congress and the Administration when considering economic development activities during future contingency operations.
So while we don’t know much, we do know that somebody got paid. Most likely an Afghan warlord, a corrupt military contractor, or al-Qaeda. Perhaps all of the above.
Of course, I’ve documented corruption and shadiness in Afghanistan on numerous occasions. Still don’t believe me? Here’s some light reading: