$1.17 billion CASA project to help South Asia overcome power shortages

SLAMABAD: The Central Asia, South Asia (CASA)-1,000 project, with estimated cost of $1.17 billion by utilising major chunk of $801 million on transmission infrastructure over next three year period, will help South Asia, including Pakistan, to overcome its power shortages, says a World Bank report.
All member countries of this energy connectivity regional projects have agreed for placing a security management plan for both the construction and operation phases of the line in their respective areas of ownership.
According to the WB report, the CASA-1,000 project is the first step towards creating the Central Asia-South Asia Regional Electricity Market (CASAREM), leveraging Central Asia's significant energy resources to help alleviate South Asia's energy shortages on a mutually beneficial basis.
CASA-1,000 will put in place the contractual and institutional arrangements, and the transmission infrastructure, to facilitate the export of 1,300MW of already available surplus electricity in the summer months from Kyrgyz Republic and Tajikistan to Afghanistan and Pakistan.
CASA-1,000 will be compatible with, and complement, other ongoing or planned transmission investments in the four countries. “Open access” mechanisms will allow other interested exporters (Turkmenistan, Uzbekistan, Kazakhstan or the Russian Federation) to use any available transmission capacity, for example, in the winter months.
Security, according to World Bank, it is a key issue for the project, both during construction and operation. Security issues relate primarily to landmines, sabotage and theft of equipment.
All country governments have agreed to provide adequate security to contractors’ personnel and goods. Each country has prepared a security management plan for both the construction and operation phases of the line in their respective areas of ownership. Provision has been kept for payment for any work related to landmines or any additional specific security arrangement to be made by contractors. The community support programs being developed for local communities, living near the line for the whole CASA-1,000 Project corridor, will serve as an incentive for communities to preserve its safe operation. In case of any damage to the line, measures are designed to limit outages.
The credit enhancement package, negotiated by the countries envisages government guarantees backed by IFI guarantees. Afghanistan, Pakistan and Tajikistan have issued government guarantees. The Kyrgyz Republic guarantee is due by July 7, 2016, as per the Master Agreement.
The World Bank has received formal requests from the four countries for IFI guarantees to cover $40m risk for two importers and the same for two exporters; this requires additional IDA contributions at 25% of guaranteed coverage required from each country.
The original design of the project envisaged a 500kV AC line from Datka substation to Sangtuda substation (477km) to transfer the surplus power from Kyrgyz Republic to Tajikistan, with the Tajikistan internal network transferring this power to Sangtuda; A 500 kV single circuit AC line (120km) in Tajikistan between Regar and Sangtuda substations; Three converter stations: (i) a 1,300MW AC-DC converter station at Sangtuda (Tajikistan); (ii) a 300MW DC-AC converter station at Kabul (Afghanistan),  and (iii) a 1,300MW DC-AC converter station at Peshawar (Pakistan); and a High Voltage Direct Current (HVDC) line of about 117 km in Tajikistan, 562 km in Afghanistan and 71 km in Pakistan.
At the Almaty meetings of the Joint Working Group (JWG) and Intergovernmental Council(IGC) of the CASA-1,000 Project in April 2016, the results of the evaluation of the bid received for the three converter stations package were carefully reviewed. Since the single bid received was very high and the technical capability of the bidder was also a concern for all member countries, the JWG/IGC considered a modification of the original three-terminal configuration of the project outlined above, and it was agreed to go for a two converter station configuration instead of three and announce a fresh tender for this package within two months.
The revised configuration would feature two converter stations in Tajikistan and Pakistan with a separate HVDC back-to-back connection in Afghanistan on an existing 220kV AC line between Tajikistan and Afghanistan.  The location of the HVDC terminals in Tajikistan will remain in Sangtuda while in Pakistan, it will be moved from Peshawar to Nowshera, a more secure location.  The exact location of the back-to-back station in Afghanistan is being finalized.
The modified design will allow Afghanistan to draw more power from the existing 220kV transmission line, along with other benefits. It will also help move the project forward, avoiding delays associated with the complexity of three terminal designs. All countries and financing institutions have renewed their commitment to the project.
The estimated project cost, including contingencies, taxes and interest during construction, is $1.17 billion.  This includes the cost of the technical assistance to support project implementation and community support programmes along the transmission lines corridor.\
According to the project design, the countries are expected to jointly select a creditworthy trustee bank (account bank) to manage revenues, before the commissioning of the project. The account bank will be located in a country not involved in the project and will be audited annually.  For both exporter countries, a revenue management programme will be agreed with the International Financial Institutions (IFIs) to ensure transparent accounting and use of funds from power exports. The export revenues will be primarily used for the uninterrupted operation of the CASA-1000 project, including timely payments to the power producers, and debt service payments, as well as to help energy efficiency programmes and other measures to deal with the winter energy shortages in Tajikistan and the Kyrgyz Republic.
The project has seven financiers: the World Bank (through the International Development Association, IDA); the European Investment Bank (EIB); the Afghanistan Reconstruction Trust Fund (ARTF); the Islamic Development Bank (IsDB); the United States Government; the UK Department for International Development (DFID); and the European Bank for Reconstruction and Development (EBRD). The United States Government and DFID contributions are channeled through a World Bank-administered Multi-Donor Trust Fund to consolidate funding support from bilateral donors who have expressed interest in supporting the project. Currently, there is a small financing gap for Pakistan and Kyrgyz Republic that may be filled by additional financing from the World Bank once the final costs have been established after receipt of the bid prices.
The sale of electricity would only be from surplus summer generation during the months from May 1 to September 30. This surplus summer hydropower is, otherwise, wasted; its export will not affect winter generation or make shortages worse. The project will help alleviate winter shortages because the revenues from exports are expected to be invested in activities that mitigate the shortages. Because the project will allow open access, Tajikistan and Kyrgyz Republic may also import winter electricity through the line.