World Bank study says Pakistan and Afghanistan best transit states for access to Central Asia's energy

A World Bank study disclosed that Pakistan and Afghanistan are geographically well placed to play an important role as transit states for the rest of South Asia, as they provide the best route for access to Central Asia's energy.
According to study, the World Bank is uniquely placed to play the part of honest broker and facilitate the parties to reach the initial Inter-Country Agreements articulating the specific interest of the parties, constituting high level decision making bodies and working groups to carry out and review further detailed analytical and technical work to arrive at key decisions
World Bank report mentioned that Bhutan's unexploited hydropower potential exceeds 23,000 MW and Nepal's exceeds 43,000 MW. Bhutan's electricity export in 2007 is expected to be 25 percent of its GDP and 60 percent of its state revenues. Bangladesh has substantial natural gas reserves; a reserves-to-production ratio of over 104 years.
Iran-Pakistan-India Natural Gas Pipeline (IPI) could supply 150 million cubic meters/day of gas to India and 60 million of gas to Pakistan. WB report stated that the regional co-operation can play an important role in addressing the problem of energy. South Asia lags most other regions in terms of trade of electricity and gas.
World Bank report titled, Potential and Prospects for Regional Energy Trade in the South Asia Region, pointed out that the nascent bilateral energy trade is expected to increase among the countries in the region and its neighbours. India, Pakistan and possibly Bangladesh would emerge as major importers while Central Asia, Iran, Nepal, Bhutan and Myanmar could emerge as significant exporters. Afghanistan would be both an importer and the important transit country. Experience and confidence gained through bilateral trade are expected to help the evolution of regional energy markets with multiple sellers and multiple buyers.
It is envisaged that initially trade would be clustered around two energy markets - a Western Energy Market (in which Central Asia and Iran would sell electricity and gas to Afghanistan and Pakistan and possibly to India). An Eastern Energy Market (in which Nepal, Bhutan would export hydropower to India, and Myanmar would export both natural gas and hydropower to India. Bangladesh could also export gas or gas based power and could import some hydropower from Nepal, Bhutan and Myanmar. Eventually interconnection of the grids of India and Pakistan would create the full regional electricity and gas market serving a population of 1.5 billion people. This market would be one of the largest in the world, whose sheer size would make it easier to mitigate the various risks, reduce cost, create additional and more profitable trading opportunities, and attract investments. Commenting over the "Opportunities in the Western Energy Market," WB report said that Afghanistan's power demand is expected to grow to the level of 905 MW by 2020 and agreements in principle have been reached to import 300 MW each from Tajikistan, Uzbekistan and Turkmenistan. Arrangements for the reinforcement of transmission links with Tajikistan and Turkmenistan are in place and that for the link to Uzbekistan is being reviewed and is likely to be pursued in the context of projects to decongest the Uzbek grid.
Imports from Iran of 60MW to 100 MW to serve the Herat and Nimroz provinces would continue and adequate transmission links for this have already been constructed. Funding is in place and construction is in progress for the North East Power System in Afghanistan to transmit the imported power to various load centres.
Power import from Iran to the Gwadar port area in Pakistan will increase from about 25 MW now to about 100 MW when the proposed 220 kV link is completed. WB report said that "Hydropower import from Central Asia to Afghanistan and Pakistan" is being currently discussed and formulated with the help of multilateral and bilateral development partners led by the WB.
It relates to the export of 1000 MW of power from Tajikistan and Kyrgyz Republic to Pakistan and Afghanistan. A WB study (2004) showed that the completion of the partially constructed Central Asian hydropower projects (including new transmission links) would enable Tajikistan and Kyrgyzstan to supply power to Afghanistan and Pakistan at a delivered cost lower than the marginal cost of generation in Pakistan.
Pakistan's present power demand at the generation level of about 14,000 MW is expected to reach 20,000 MW by FY2010 and 44,700 MW by FY2020. Among the several options to meet such growing demand import of power from Central Asia has a prominent place. About 670 MW would come from Sangtuda-I hydropower project under construction by a joint venture between RAO UES of Russia and the Tajik government.
Surplus power from the existing generating stations of Tajikistan and Kyrgyz republic would supply the remaining 330 MW. An MoU among the four governments had been signed and a Council of Ministers and a multi-country working group have been set up to co-ordinate further efforts. Studies for the dedicated transmission line and other technical, legal commercial and risk mitigation related studies are ongoing under the technical assistance provided by the World Bank and the Asian Development Bank.
Private participation in the transmission component is also envisaged. Should this initial project prove cost effective and reliable, Pakistan is expected to increase its import from Central Asia to about 4000 MW in the second stage.