Energy corridor

November 29, 2015


The writer is a business strategist and entrepreneur.
The writer is a business strategist and entrepreneur.

CLIMATE and topography bequeath Central Asia with rich hydropower potential. After heavy winter snowfall come the strong sun and warm summers. This brings melting water, 40 cubic kilometres each year, down from glaciers in the Tian Shan Mountains and snowfields in the highlands and steppe land.

As it comes down Kyrgyzstan’s 40,000 rivers and streams, the water drops thousands of metres in altitude. Further south, Tajikistan’s mountains and rivers provide it an estimated 4pc of the world’s hydropower resources. There is surplus electricity in the summer months and now a plan — known as CASA 1000 — is to export 1300MW to Pakistan and Afghanistan

Both countries have reached an agreement under which Afghanistan will receive a fee of 1.25 cents per kWh from Pakistan in exchange for letting 1000MW transit through its territory. The power purchase price is reported to be five cents. This does not appear to be a bad deal for Pakistan.

The shortage of electricity in this country is an impediment to greater industrialisation. A plan to establish a series of industrial estates along the path of the China-Pakistan Economic Corridor had to be shelved this year for want of electricity. Power generation is not the only constraint. A ramshackle transmission and distribution system is equally to blame. Consider for example Sindh’s wind corridor where against 4000MW of immediate wind power potential the grid is unable to evacuate anything close to that from Jhimpir where the wind estates are located. Most of the potential is being squandered.

Much of our energy potential is being squandered.

After reaching Kabul from Tajikistan, the planned CASA 1000 transmission line will enter Pakistan at Torkham before reaching Peshawar. What arrangements are being planned to then transmit this 1000MW to other parts of the country? How can we be sure that we will then not encounter another Sindh wind corridor type situation?

At the same time, I ought to point out a couple of potential risks. Kyrgyzstan and Tajikistan also have decrepit, Soviet-era grids that struggle to keep the lights on. If, like us they also plan to upgrade their grid in the coming years and there is a surge in domestic demand, could we expect a curtailment in electricity available for export? Second, many of the Soviet-era dams are in need of rehabilitation, while new ones are also planned. To what extent is the project predicated on the investments that are going to be made here and what are the risks if these do not materialise? Lastly, there is the risk is of escalating insurgency in Afghanistan.

Nonetheless, energy arbitrage is only one aspect of this project. Its bigger component is improving regional connectivity and economic integration between Kyrgyzstan, Tajikistan, Afghanistan and Pakistan. Such projects create interdependencies and give the countries a stake in each other’s stability and security.

The planned Tapi gas pipeline is another such project. That takes a different route as it enters Afghanistan from Turkmenistan, north of Herat and then takes a circuitous course along the Afghanistan ring road to arrive at Kandahar before crossing over to Quetta.

The Iran Pakistan gas pipeline is yet another. The same region is traversed by a North-South highway that links the Iranian port of Chabahar with the Afghanistan ring road. This too is an access to Central Asia. The Afghanistan segment of this road is Indian-built and a cause of much (and needless) chagrin in Pakistani defence quarters.

To be clear, it was Pakistan’s intransigence — and not too bright a move on the chessboard — of not allowing India overland transit to Iran and Afghanistan, which led to Chabahar’s development. Were it not for that there would today be a strong commercial lobby in India pressing for harmonious relations with Pakistan.

Beyond energy re­­so­­u­r­­ces Afghanistan holds substantial de­­posits of high quality iron ore and coking coal in its Bamiyan province and in which, a few years ago, a consortium of Indian companies had obtained over $10 billion in mining concessions.

Through these columns, let me float the idea for this ore and coal to be brought by means of a straight 600km rail line that can be laid from Bamiyan running through Miramshah in North Waziristan and down to Kalabagh. A giant steel mill could be established here, possibly with Russian assistance that would supply steel products to industries in northern Pakistan and the states of western India.

Crowning all these initiatives, of what could become a mesh of electricity transmission lines, gas pipelines, mines, roads, railways and ports, is the China Pakistan Economic Corridor.

Energy, steel, ports, transit corridors and human capital are the primary resources on which nations are built. We have all the building blocks in sight. The only thing needed is a vision that transcends zero-sum thinking.

The writer is a business strategist and entrepreneur.

Published in Dawn, November 29th, 2015