From an elusive dream a few years ago, the Central Asia South Asia electricity import project for supplying surplus central Asian power in the summers to Afghanistan and Pakistan — codenamed Casa-1000 — seems to be nearing reality.
Last Thursday, the Economic Coordination Committee (ECC) of the cabinet approved in principle the signing of the master agreement and the power purchase agreement of the Casa-1000.
The next day, a team led by water and power secretary Mohammad Younas Dagha and comprising National Transmission and Dispatch Company engineers signed the two agreements in Istanbul with their counterparts from the three other participating countries.
Pakistan, Afghanistan, the Kyrgyz Republic and Tajikistan have been pursuing the development of electricity trading arrangements and the establishment of the Casa Regional Energy Market (CASAREM) since 2005, starting with the supply of 1,300MW to Pakistan in a few years and going up to 2,800MW in the subsequent years.
The economic analysis of the project suggests that the levelised delivered price would be about 9.50 US cents per kwh till 2035.
Pakistan is expecting its electricity demand to more than double in 10 years to 45,000MW. However, enough investment is not expected for a timely addition of domestic generation capacity, notwithstanding the huge Chinese push under the Pakistan China Economic Corridor.
Also read: World Bank assures support for development
The parties have now entered into a formal master and power purchase agreement after a study sponsored by the World Bank concluded that 1,300MW of electricity from the Central Asian countries is viable and beneficial, despite the security risks associated with Afghanistan.
“The recommended project configuration provides flexibility without constraining future options and is economically viable under very conservative assumptions. Sensitivity studies show that even under adverse assumptions, the project remains viable,” said a final report of the Montreal-based SNC-Lavalin.
Under the master agreement, a transmission line would originate in the Kyrgyz Republic and Tajikistan and pass through Afghanistan to reach Pakistan. The project will comprise the development, financing, construction, ownership and operation of the AC and DC facilities.
This would include a 750km high voltage direct current (DC) transmission system between Tajikistan and Pakistan via Afghanistan, together with associated converter stations at Sangtuda (1,300MW), Kabul (300MW) and Peshawar (1,300MW).
A 477km 500kV alternating current facility would also run between the Kyrgyz Republic (Datka) and Tajikistan (Khoujand). System upgrades would also be required to safely and reliably accommodate the AC and DC facilities and the associated power flows.
The Casa-1000 transmission line to Peshawar would be capable of delivering 1,300MW — 1,000MW to Pakistan and 300MW to Afghanistan. However, officials suggest that Afghanistan’s share may be available to Pakistan as Kabul may not need the power in the near future.
The exporting countries — Kyrgyz Republic and Tajikistan — have confirmed that they shall be able to deliver about 4000GWh of energy in a normal year and 4,434GWh in a wet year.
The availability of energy is of crucial nature. The imported electricity would be available from May to October when power demand in Pakistan goes up exponentially and domestic hydropower generation goes down.
The estimated cost of the project is $1.17bn, including $208m interest, during construction and taxes, but the final cost will be determined through a competitive bidding process beginning next month. This includes the estimated cost of $232m required for the Pakistan portion of the DC transmission line and convertor station.
The tariff components of the project involve the transmission tariff for paying back the investment, operations and maintenance cost, and two special funds for community support and common funds.
The transmission tariff has been estimated at 2.98 cents per kWh, energy tariff at 5.15 cents per unit and the Afghan transit fee of 1.25 cents per unit. In addition, a transit fee of 0.1 cent per unit will also be paid to Tajikistan for the flow of Kyrgyz energy, while the option for non-member countries to inject energy at 1.5 cents per unit has been kept open.
The Casa-1000 shall be implemented as a contractual joint venture in which all four participating countries shall own the parts of the project located in their respective countries.
Following the master and power purchase agreements, account bank, technical code and coordination agreements, as well as a host government agreement, would be signed by all the parties.
The World Bank board had approved a $120m international development assistance credit for Pakistan in March last year, while the Islamic Development Bank has indicated a $35m financing. As such, the Pakistani side has a potential gap of $112m, of which $17m has been picked up by some donors, leaving the required balance at $95m. The World Bank has assured that this gap will be filled, but the country has not yet received any firm commitment.
Tender documents for engineering, procurement and construction contracts of convertor stations and operation and maintenance are expected to be awarded next month, with construction expected to begin from September 2015.
According to details, the high voltage direct current transmission lines are expected to commence from Sangtuda in Tajikistan and will pass through Kunduz, Pul-i-Khumri, Kabul and Jalalabad in Afghanistan and end up in Peshawar.
The total length of the transmission lines is estimated to be 750km, 16pc of which would pass through Tajikistan, 75pc through Afghanistan and 9pc through Pakistan.
Published in Dawn, Economic & Business, April 27th, 2015