DUSHANBE, June 7, 2013, Asia-Plus  -- An article by Zafar Bhutta entitled “Project Financing: ADB to Pull Out of CASA 1,000 MW Import Project” that was published in The Express Tribune (Pakistan) notes that the Asian Development Bank (ADB) has decided to part ways with the Central Asia South Asia Electricity Transmission and Trade Project (CASA 1000) due to security risks in Afghanistan.

According to the article, the CASA 1000 Project -1,000MW project is a strategic project for the US like the Turkmenistan-Afghanistan-Pakistan-India (Tapi) gas pipeline project.  The US had reportedly been trying to promote the CASA and Tapi projects which experts term unfeasible due to security concerns in Afghanistan.

“A senior official of the Ministry of Water and Power [of Pakistan] said that the estimated total cost of the project was $966 million, of which ADB was to sponsor 40%,” the article says.

“The project was to be funded by the World Bank, ADB and Inter-American Development Bank.  Now, ADB has decided to pull out of the project due to security risks in Afghanistan,” the official said.

“CASA 1000 is designed to transmit 1,300MW of surplus electricity from Tajikistan and Kyrgyzstan through Afghanistan, which is going to consume 300MW, to Pakistan.

“In the final feasibility study of the CASA 1000 Project conducted in February, 2011, the surplus power capacity to export by Tajikistan and Kyrgyzstan has been reassessed.  About 3,700 gigawatt hours (GWh) is expected to flow by 2016.

“However, the catch is that under “No Generation Expansion Scenario”, the amount of exported power will be decreasing each year in view with the rise in local demand in Tajikistan and Kyrgyzstan.  Moreover, the energy flow will not be available throughout the year and will be recurring during the April to September period of every year only.

“Cost of transmission had been projected at 3.37 cents per unit which will go up to 7.26 cents by 2030.  Whereas, levelised cost of energy – the price at which electricity must be generated from a specific source to break even over the lifetime of the project – will be 5.38 cents per unit for 15 years and 4.94 cents for the 30-year period.

“Projected sale price of energy by Tajikistan is 1.5 cents per unit and 2.5 cents per unit by Kyrgyzstan.

“An inter-governmental agreement (IGA) was signed in August, 2008 to govern and resolve issues critical to the implementation of the project. Each country had constituted a working group for deliberation on various issues with other working groups and make recommendations as a joint working group (JWG) for approval.

“All parties were required to hire legal and commercial advisers to assist the countries in negotiations on bilateral and multilateral agreements.

“The JWG has agreed for preparations on basis of a contractual joint venture and start negotiations on the standard terms and conditions of the proposed agreements in accordance with agreed commercial principles.”