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Regional power grid tariff

November 09, 2015

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THE National Electric Power Regulatory Authority will be finally taking up for approval next week the power acquisition contract and tariff for the import of 1,000-1,300MW electricity from two Central Asian Republics to enable the authorities to minimise peak summer shortfall.

Codenamed CASA-1000 for the Central Asia South Asia Electricity Import, the transmission project envisages the transportation of surplus electric power available from May 1 to September 30 in Kyrgyz Republic and Tajikistan to Afghanistan and Pakistan.

It will involve the development, financing, construction and operations of transmission lines of 1,227km (two parallel lines of 750km and 477km), according to regulatory filings by the state-run National Transmission and Dispatch Company (NTDC).

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The tariff payable by Pakistan has four components and is based on ‘take and pay’ for the energy delivered and measured at Sangtuda, Tajikistan. These include an energy charge per unit (Kwh) of 5.15 cents, transmission charge of 2.91 cents, Afghan transit fee of 1.25 cents and Tajikistan wheeling charges of 0.10 cents. The total tariff has been negotiated at 9.41 cents per unit.

The project has three major components and involved an estimated cost of $953m, although the final cost will be determined through competitive bidding. It includes a 750km high voltage direct current transmission system between Tajikistan and Pakistan via Afghanistan, together with associated converter stations at Sangtuda (1,300MW), Kabul (300MW) and Peshawar (1,300MW) as DC facilities.

Another component is a 477km 500kV alternating current link between the Kyrgyz Republic (Dakta) and Tajikistan (Khoujand) as AC facilities. The third component will involve upgrades in AC system to safely and reliably accommodate the AC and DC facilities and the associated power flows.

According to regulatory filings, the exporting countries — Kyrgyz Republic and Tajikistan — have close to 6,000GWh of surplus power in the summer months (around 2,150GWh in the Kyrgyz Republic and 3,750 GWh in Tajikistan).

Nepra now has to decide if the proposed rates for power purchases and transmission line expenses are reasonable and if the provisions of the NTDC’s grid code have been incorporated in the technical grid of the project. The regulator also has to determine if modifications in the grid code are required in the absence of voltage profiles.

More importantly, the NTDC has to establish before the regulator that enough arrangements are in place for the dispersal of imported power from Peshawar to other load centres, along with contingency criteria. This is important because the absence of a 125km transmission line in Balochistan had resulted in the non-utilisation of the full capacity of around 900MW of two Uch power projects and led to repeated countrywide breakdowns last year.

On top of that, the power sector authorities also have to justify that the intended timeline for the completion of the transmission line is workable given the fact that some facilities at the source countries have yet to be developed and also in view of the security situation in Afghanistan.

Last month, power minister Khwaja Asif had told the parliament that supply from the CASA-1000 project will start during the summer of 2018. The inter-governmental council of the four nations had also signed the master agreement and the power purchase agreement in April.

The agreements were signed after a study sponsored by the World Bank concluded that 1,300MW of electricity from the Central Asian countries will be viable and beneficial, despite the security risks associated with Afghanistan.

Pakistan’s share under the project is 1,000MW, but Afghanistan’s 300MW will also be available to Islamabad because of Kabul’s limited demand forecasts.

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 Casa-1000 will be implemented as a contractual joint venture in which all four participating countries will own the parts of the project that are located in their respective countries.

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. For Pakistan side of the project $17m has been promised by some other donors, leaving the required gap at $95m.

The World Bank has assured the country that this gap will be filled, but Islamabad has not yet received any firm commitment.

Pakistan, Afghanistan, the Kyrgyz Republic and Tajikistan have been pursuing electricity trading arrangements and the establishment of the Casa Regional Energy Market (CASAREM) since 2005. It will start with the supply of 1,300MW to Pakistan in a few years and subsequently go up to 2,800MW in subsequent years.

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 China-Pakistan Economic Corridor.

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 will pass through Tajikistan, 75pc through Afghanistan and 9pc through Pakistan.

Published in Dawn, Business & Finance weekly, November 9th, 2015

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