Wednesday, 04 March 2015

CASA 1000 – High Voltage in Central Asia

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By  Franz J. Marty (03/04/2015 issue of the CACI Analyst)

CASA-1,000 envisages hydro-electricity exports from Kyrgyzstan and Tajikistan to Afghanistan and Pakistan. Due to the security situation in Afghanistan and Pakistan, a study designated CASA-1,000 a high risk project. Recently concluded agreements between the participating countries, the currently ongoing procurement and the completed construction of another transmission line nonetheless promise a realization.

BACKGROUND: CASA stands for Central Asia South Asia and for the connection of Central Asia with Pakistan through electricity exports via Afghanistan. The economic benefits are evident: in Kyrgyzstan and Tajikistan cheaply generated and, during the summer months, surplus hydropower will be transferred through Afghanistan to the energy-hungry Pakistan and enable a regional electricity market (Central Asia – South Asia Regional Electricity Market CASAREM).

CASA-1,000 envisages the following: a transmission line will connect Datka in western Kyrgyzstan with Khujand in northern Tajikistan. From there, the electricity will be transferred through the Tajik grid to Sangtuda, south of the Tajik capital Dushanbe. Finally, another power line will connect Sangtuda via Kabul and Jalalabad in Afghanistan with Peshawar in Pakistan.

Studies concluded that CASA-1,000 is technically feasible and economically worthwhile. Even in dry years a sufficient surplus of Kyrgyz and Tajik electricity is almost certainly guaranteed during summer. And the comparatively low production costs of electricity in Kyrgyzstan and Tajikistan coupled with the already high and increasing Pakistani demand are a powerful economic incentive.

The estimated costs of CASA-1,000 amounts to US$ 1.17 billion. In the beginning, the Asian Development Bank was heavily involved, but withdrew in 2009 citing the challenging security situation in Afghanistan as a reason. However, with the help of the World Bank, the project was pursued further; US$ 997 million are financed and efforts are underway to close the remaining financing gap.

IMPLICATIONS: Due to the difficult terrain and the security situation, the planned transmission line in Afghanistan and Pakistan is the most problematic part of CASA-1,000. The arguably most delicate point is crossing the Hindu Kush. The simplest way would be the Salang pass. However, as there is already a power line running over the Salang pass and a second one is planned, there is simply no space left, according to Ghulam Faruq Qazizada, Afghanistan's Deputy Minister of Energy. Therefore, alternative routes are being considered.

The option of a western detour over the Shibar pass that would prolong the line about 150 to 200 km and cause additional costs of US$ 50 to 65 million is according to Qazizada not up for discussion anymore, due to security concerns. However, the option of a western circumvention nonetheless recently resurfaced in Afghan media. Instead of a western detour, two other options going via Andarab in the east to the Panjshir valley, are being considered: a longer one over the Khawak pass; and a shorter one over the Parandih pass. Laying the line underground over the Salang pass has also been contemplated, although this option would be more costly compared to a detour. The final decision regarding the circumvention of the Salang pass is, according to Thomas Breuer, Executive Director of the Inter-Governmental Council (IGC), a council established by the participating countries to implement CASA-1,000, scheduled for summer 2015.

There are also certain security concerns regarding the transmission line between Jalalabad and Peshawar. A regional environmental assessment stated, referring to Pakistan, that security may be an issue as some factions could attempt to use the power infrastructure running through their area as a valuable asset in negotiations with central authorities. Yet according to Qazizada and Breuer, experience with other power lines in Afghanistan has shown that such infrastructure rarely is the target of attacks, as it is considered a kind of collective asset. Furthermore, a program is planned to ensure that local communities along the route of the transmission line will profit from it, be it in the form of access to the power grid or the construction of schools or roads. Accordingly, it is expected that the program and the good road access on this part of the route will improve the security situation.

Qazizada and Breuer both emphasize that an existing transmission line takes mostly the same route as the planned CASA-1,000 power line, and was constructed between 2005 and 2011 without substantial problems. This would show that the implementation of a project like CASA-1,000 is, despite the security situation in Afghanistan, indeed feasible.

Yet it should be recalled that various reports on the project state that field investigations have not been possible due to security concerns and that the situation in Afghanistan has hardly improved since 2011. For example, Taliban recently killed six employees of a private road construction company, wounded one and abducted two others in the province of Baghlan, which the planned transmission line will cross. Furthermore, due to the circumvention of the Salang pass, the route of CASA-1,000 will differ from the previously existing power line in a very delicate section.

In any case, the fact that KEC International Limited, the Indian company responsible for the already completed transmission line, is interested in CASA-1,000 suggests that this company believes in the successful implementation of the project despite, or perhaps because of, its prior experience in building a power line in the same areas of Afghanistan. Afghanistan has also completed a country-specific security plan that envisages the protection of the work sites during the construction by security forces.

In the last few months, huge progress has been achieved. On October 11, 2014, Afghanistan and Pakistan agreed on a transit fee, and at IGC meetings in November/December 2014 and February 2015 a master agreement as well as a power purchase agreement were prepared. Those agreements are currently being finalized and Qazizada expects that their ratification will take place in spring 2015.

It has been agreed that Pakistan will obtain electricity at US¢ 9.35 per kilowatt through CASA-1,000 during the initial 15 years, whereas this price includes a transit fee of US¢ 1.25 per kilowatt owed by Pakistan to Afghanistan. Afghanistan first demanded a transit fee of US¢ 2.5 per kilowatt but made concessions as it does not view CASA-1,000 from a purely economic angle, but also as an opportunity to improve regional relations and to build confidence among the participating countries and private corporations, hoping that this will have a positive impact on other projects.

At the moment, the procurement for a considerable part of the project is underway. Although the list of participating firms is not public, notable companies like KEC International Limited, Alstom, ABB, Siemens and the State Grid Company of China have earlier shown interest. The deadlines for submitting bids for the Afghan transmission line and converter stations along the way have been set for March 2 and April 19, respectively. However, it is not yet certain when exactly the actual construction will begin on the ground. According to studies, the effective construction will take at least 40 months. This means that CASA-1,000 will in any event not be completed before 2018.

CONCLUSION: If CASA-1,000 will be implemented, it will be a milestone in the region's energy sector and build a bridge between Central and South Asia, whereas Afghanistan could establish itself as a transit country. Through the import of cheap electricity and the security of supply on the side of the importing countries and the revenues from the sale of electricity to new buyers and transit fees on the side of the exporting and transit countries, the project could boost the economies of all participating states.

However, although a previous line has been built and power lines have seldom been targeted, the security situation in Afghanistan and Pakistan still poses significant difficulties. Yet Breuer asserts that CASA-1,000 will definitively be implemented and not remain an idea.

 

AUTHOR'S BIO: Franz J. Marty is a Swiss freelance journalist currently based in Kabul, Afghanistan.

Image Attribution: Wikimedia Commons

Read 9489 times Last modified on Tuesday, 10 March 2015

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