WASHINGTON: Pakistan and Afghanistan signed an agreement on Saturday to set electricity transit fees from Central Asia to South Asia.

The two sides agreed to a price of 1.25 cents per kilowatt, although the initial asking price mooted by the Afghan side was 2.5 cents per KW.

It also establishes commercial arrangements for 1,300 megawatts of sustainable regional electricity trade between Kyrgyzstan, Tajikistan, Afghanistan and Pakistan as part of the Central Asia South Asia Electricity Transmission and Trade Project.

“Now that we have agreed on a transit fee for the electricity, I hope we can move forward quickly on this transformational project,” said Finance Minister Ishaq Dar, while signing the agreement.

“We are ready to realize the CASA–1000 vision and improve energy security and trade for our countries and region,” said Afghanistan’s Finance Minister Omar Zakhilwal.

The two finance ministers signed the agreement during the annual meetings of the World Bank and IMF in Washington.

The CASA (Central Asia-South Asia) 1,000 project aims to build more than 1,200 kilometres of electricity transmission lines to bring excess summer hydropower energy from Tajikistan and the Kyrgyz Republic to Pakistan and Afghanistan.

In June, Pakistan and Tajikistan cleared a key hurdle when they agreed to set the basic price of five percent per unit for the electricity purchased under the CASA-1000 project.

A statement issued in Washington on Saturday said the parties also had set an inter-governmental council to oversee the complex, four-country process. The council will supervise the design and implementation of the project.

In March 2014, the World Bank Group approved financing for the engineering design, construction and commissioning of transmission lines and three new converter stations. The project would build upon existing power generation stations that will provide the energy to be traded over CASA-1000.

The World Bank is providing $120 million, out of a total loan of $552 million, for laying transmission lines in Pakistan.

Commercial and operating framework for CASA-1000 is based on “open access” principles that will allow additional energy supplying countries to connect with wider regional transmission networks.

Under the plan, the Kyrgyz Republic and Tajikistan will export 1,300 megawatts of electricity to Pakistan and Afghanistan. A major chunk of supplies will come to Pakistan and about 300MW will go to Afghanistan.

CASA-1000 will enable the development of the Central Asia South Asia Regional Electricity Market, a long-term plan for regional energy trade.

The United States is playing a key role in promoting trade between energy-rich Central Asia and energy-starved South Asia.

Washington also has been persuading Pakistan to go ahead with the Turkmenistan-Afghanistan-Pakistan-India gas pipeline project but it opposes a similar pipeline between Pakistan and Iran.

The success of the Central and South Asia energy trade, however, depends on peace and stability in the war-torn Afghanistan as both transmission lines will go through that country.

Published in Dawn, October 12th, 2014