World Bank Invests $526.5 m in Energy Trade between Central Asia and South Asia
he World Bank Group’s Board of Directors approved today US$ 526.5 million in grant and credit financing for the Central Asia South Asia Electricity Transmission and Trade Project (CASA-1000) for four countries: Afghanistan, Kyrgyz Republic, Pakistan, and Tajikistan. This transmission infrastructure project will put in place the commercial and institutional arrangements as well as the infrastructure required for 1,300 megawatts (MW) of sustainable electricity trade. The total project cost is estimated at US$ 1.17 billion and several other development partners will provide financing for CASA-1000, including the Islamic Development Bank and United States Agency for International Development.
CASA-1000 will build more than 1,200 kilometers of electricity transmission lines and associated sub-stations to transmit excess summer hydropower energy from existing power generation stations in Tajikistan and the Kyrgyz Republic to Pakistan and Afghanistan. The project will finance the engineering design, construction, and commissioning of transmission lines and three new converter stations. The power generation stations that provide the energy to be traded over CASA-1000, including Toktogul in Kyrgyz Republic and Nurek in Tajikistan, are already in place – and in Tajikistan currently “spill” or waste the hydropower energy during summer months.
In addition to the infrastructure investments, the World Bank Group will also provide country-specific community support programs through a Multi-Donor Trust Fund and the Afghanistan Reconstruction Trust Fund. These programs will help improve livelihoods in communities living along the project corridor and facilitate revenue-sharing. An Inter-Governmental Council has been established to supervise the design and implementation of these programs.
“These four countries are demonstrating strong regional cooperation by addressing their energy challenges together,” said Ms. Sri Mulyani Indrawati, World Bank Managing Director and Chief Operating Officer. “CASA-1000 is a transformational project that will give a much-needed boost to energy security, improved connectivity and trade across two regions at a critical time.”
Nearly 400 million people in South Asia lack reliable access to electricity. Businesses cite energy shortages as one of the most binding constraints to their operation, expansion, and job creation. Both Afghanistan and Pakistan rely heavily on oil for power generation. Cleaner and affordable electricity imports from Central Asia will enable improved service, reduce shortages over the critical summer period, and lessen the financial pressure of fuel imports.
The Kyrgyz Republic and Tajikistan have abundant hydropower, but power generation capacity exceeds national needs during the summer and is insufficient during the winter. Exporting surplus electricity during the summer will help the two countries generate the revenues they need for priority energy sector investments, particularly to cover energy shortages during the winter. The sale of Tajik electricity through CASA-1000 will come exclusively from existing surplus generation from May to September in order to maintain the seasonal pattern of water flows and winter power generation.
The commercial and operating framework for CASA-1000 is specifically based on “open access” principles which will allow additional energy supplying countries to connect with wider regional transmission networks. CASA-1000 will enable the development of the Central Asia South Asia Regional Electricity Market (CASAREM) – a long-term plan for regional energy trade.
“There is too little trade among these regions today and opportunities are being missed. CASA-1000 is just one of several important regional energy initiatives that can help strengthen economic ties while improving the energy situation,” said Philippe Le Houérou, Vice President for South Asia.
Of the total project financing, Afghanistan will receive US$ 316.5 million in the form of an IDA grant. The grant will support construction of about 560 km of overhead transmission line to connect the electricity network via the northern and eastern provinces of Afghanistan. It will also finance the engineering design, construction, and commissioning of a 300 MW converter station in Kabul. Afghanistan is expected to connect more households and businesses to the power grid by importing 300MW of electricity through CASA-1000. Da Afghanistan Breshna Sherkat (DABS), Afghanistan’s electricity company, and the Ministry of Energy and Water will implement Afghanistan’s portion of this project, including a Security Management Plan for both the construction and operation phase.