ISLAMABAD: The attractive market of Central Asian states has remained untapped for decades because of lack of connectivity with South Asia.
When the current Pakistan government came to power in mid-2013, the idea of linking markets of the two Asian regions was floated to diversify exports and reach out to new destinations.
Pakistan’s exports have gone down $4 billion since the PML-N administration took the reins of power and to make up for the loss, Central Asia offers a huge potential. However, in order to tap the potential, strong links need to be forged between the two regions.
In this regard, Pakistan has started work on road and energy corridors to connect itself with China and Central Asia. The China-Pakistan Economic Corridor (CPEC) is a key project which has also sparked interest among all Central Asian states that are interested in joining the network spread over three continents in a bid to reach the world market.
Separately, work is under way on establishing energy corridors between Pakistan and Central Asia. Among these is the Central Asia-South Asia (Casa) 1,300-megawatt power project that will bring electricity to Afghanistan and Pakistan from Tajikistan and Kyrgyzstan.
Tajikistan is planned to supply 1,000MW whereas Kyrgyzstan will provide 300MW to satiate growing energy appetite of Pakistan and Afghanistan.
The idea of regional energy market, which emerged in early 2006, was transformed into the Central Asia-South Asia Regional Electricity Market focused on creating conditions and promoting energy trade through infrastructure projects with support from investment, institutional and legal arrangements.
The Casa project is a key component of the regional electricity market, which will ensure several economic, social and environmental benefits including the narrowing down of energy deficit, job creation and lower carbon emissions.
A modern and efficient electricity transmission line for the Casa project could transform both regions and will mark a critical step towards realisation of regional electricity trade.
Participating countries of the Casa project have opened technical bids for setting up converter stations in Tajikistan and Pakistan for electricity transmission. Bids have been received from German, French, US and Chinese firms.
Many other countries of Central Asia as well as Russia have offered to export electricity to Pakistan. Casa is a pilot project and third-party access rules have been framed which will allow a third country, which is not part of the original project, to export electricity.
The National Electric Power Regulatory Authority (Nepra) has already approved a tariff of 9.41 cents per unit for power import from Central Asia.
This includes energy charges at 5.15 cents per kilowatt-hour (kWh), transmission charges at 2.91 cents per kWh, transit fee for Afghanistan at 1.25 cents per kWh and wheeling charges for Tajikistan at 0.10 cent per kWh.
Already, Pakistan has been importing 100 megawatts from Iran to meet the requirement of Gwadar at a cost of 6.25 cents per unit, which is higher than the 5.15 cents that will be paid to Tajikistan.
The difference is because of the fuel as Iran consumes oil and gas for power generation while Tajikistan will supply hydroelectric power.
Second transmission line
Pakistan and Tajikistan have also formed a joint working commission which is working on a second power transmission line to the northern areas of Pakistan.
Tajikistan is one of the richest countries when it comes to hydroelectric power resources. It accounts for 4% of the world’s hydroelectric power resources and 53% of resources in Central Asia.
At present, the hydroelectric power potential of Tajikistan stands at 527 billion kWh per annum, of which only 4-5% is being used. To boost power production, it is building the giant Rogun hydroelectric power plant.
After its completion, Rogun will be the world’s tallest dam of 335 metres with power production capacity of 3,600 megawatts.
This dam, on which work is continuing, will be the main electricity supplier to not only Tajikistan, but also to neighbouring Afghanistan and Pakistan. This power project will also provide electricity for Pakistan through the second transmission line.
Work on the road and energy corridors has been going on very fast. However, political turmoil in Pakistan following the Panama Papers case may deal a blow to the planned energy projects.
Reports suggest that China has expressed reservations about the tense political climate in Pakistan, fearing it may lead to delay in several projects under CPEC. This project is of national importance and will eventually connect Central and South Asian regions.
Political leaders may set aside their differences and give a strong backing to such projects in a bid to provide the needed fuel to drive the economy.
Though Pakistan and Afghanistan have been mired in a diplomatic row in recent years, projects like Casa will ease such tensions as its success will hinge on their bilateral ties.
the writer is a staff correspondent
Published in The Express Tribune, December 25th, 2017.