Project financing: ADB to pull out of CASA-1,000MW import project

Published: June 6, 2013
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CASA-1,000 is designed to transmit 1,300MW of surplus electricity from Tajikistan and Kyrgyz Republic through Afghanistan, which is going to consume 300MW, to Pakistan. DESIGN: SAMRA AAMIR

CASA-1,000 is designed to transmit 1,300MW of surplus electricity from Tajikistan and Kyrgyz Republic through Afghanistan, which is going to consume 300MW, to Pakistan. DESIGN: SAMRA AAMIR

ISLAMABAD: 

The Asian Development Bank (ADB) has decided to part ways with the 1,000 megawatt (MW) Central Asia South Asia (CASA) power import project due to security risks in Afghanistan in a big blow to the United States (US) which has been vigorously advocating for the project. 

The CASA-1,000MW project is a strategic project for the US like the Turkemistan-Afghanistan-Pakistan-India (Tapi) gas pipeline project. The US had been trying to promote the CASA and Tapi projects which experts term unfeasible due to security concerns in Afghanistan.

A senior official of the Ministry of Water and Power said that the estimated total cost of the project was $966 million, of which ADB was to sponsor 40%.

“The project was to be funded by the World Bank, ADB and Inter-American Development Bank. Now, ADB has decided to pull out of the project due to security risks in Afghanistan,” the official said.

CASA-1,000 is designed to transmit 1,300MW of surplus electricity from Tajikistan and Kyrgyz Republic through Afghanistan, which is going to consume 300MW, to Pakistan. The memorandum of understanding among the four governments was signed on November 16, 2007 in Kabul.

In the final feasibility study of CASA-1,000 project conducted in February, 2011, the surplus power capacity to export by Tajikistan and Kyrgyz Republic has been reassessed. About 3,700 gigawatt hours (GWh) is expected to flow by 2016.

However, the catch is that under “No Generation Expansion Scenario”, the amount of exported power will be decreasing each year in view with the rise in local demand in Tajikistan and Kyrgyz Republic. Moreover, the energy flow will not be available throughout the year and will be recurring during the April to September period of every year only.

Cost of transmission had been projected at 3.37 cents per unit which will go up to 7.26 cents by 2030. Whereas, levelised cost of energy – the price at which electricity must be generated from a specific source to break even over the lifetime of the project – will be 5.38 cents per unit for 15 years and 4.94 cents for the 30-year period.

Projected sale price of energy by Tajikistan is 1.5 cents per unit and 2.5 cents per unit by Kyrgyz Republic.

An inter-governmental agreement (IGA) was signed in August, 2008 to govern and resolve issues critical to the implementation of the project. Each country had constituted a working group for deliberation on various issues with other working groups and make recommendations as a joint working group (JWG) for approval.

All parties were required to hire legal and commercial advisers to assist the countries in negotiations on bilateral and multilateral agreements.

The JWG has agreed for preparations on basis of a contractual joint venture and start negotiations on the standard terms and conditions of the proposed agreements in accordance with agreed commercial principles.

Published in The Express Tribune, June 6th, 2013.

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Correction: An earlier version of the article incorrectly stated that the energy flow ‘will be available throughout the year’ in the seventh paragraph. The error has been rectified.

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Reader Comments (5)

  • Betel-Q8
    Jun 6, 2013 - 1:53PM

    It was just non-sense to beleive in the viability of this project from the very begining, simply due to the fact that major part of transmission line had to pass through war torn Afghanistan.

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  • Umer Faheem
    Jun 6, 2013 - 3:40PM

    I think it should be written as “the energy flow will NOT be available throughout the year and will be recurring during the April to September period of every year only”. Please check as there is a difference between will and will NOT.

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  • Umer Faheem
    Jun 6, 2013 - 3:44PM

    Please check if it should be written as “the energy flow will NOT be available throughout the year and will be recurring during the April to September period of every year only”. Thank You.

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  • Jun 6, 2013 - 3:48PM

    According to estimates, we necessarily need around 10 billion dollars to tackle loadshedding and double this amount to make larger dams.

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  • abdussamad
    Jun 7, 2013 - 12:09AM

    @Babar Bhayo:
    No we need much more money than that. A single dam can cost tens of billions of dollars and take up to a decade to build. Dams are not short term solutions. Of course once the dam is built the electricity is very cheap so over the long term it is quite a good investment.

    The only answer in the short term is to raise electricity prices to clear the circular debt and free up cash for investment. To just clear the circular debt you need a rise of 40-50%.

    Then we have to satisfy all the IMF preconditions and enter into a new program with them. Once we do that it will unlock foreign aid from other parties and we may be able to finance our dams.

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