At the time of the inception of CASA-1000, the main reasons Pakistan had an interest in the project were to diversify its energy supply options eliminating the need to import gas from Iran and meeting peaked demand in summer months. However, with the changing political landscape amidst removal of sanctions on Iran coupled with the massive energy projects scheduled under CPEC, the rationale for the project is up for debate. There could have been more efficient and effective alternatives such as China State Grid's offer of grid exports from China.
In addition, the project that has been approved and going ahead is different than the assumptions of the original feasibility by SNC-Lavlin which justified the project in the first place. The cost of supply of 1.5 cents from Tajikistan had been assumed in the feasibility study while actual agreement is based on 5 cents.
The Pakistani consumer has been put at a disadvantage with the proposed costing structure. Through a very generous proposed transit charge of 1.25 cents per kWh, Afghanistan is expected to earn revenue of approximately $50 million per year. However, over the project life of 30 years, Pakistani consumers will pay $1.5 billion.
According to project specifications, the Nurek HPP in Tajikistan will be providing the electricity for the export arrangement.
The dam was commissioned in 1972 and is in a debilitated condition with much needed repair and maintenance required. Considering the austere fiscal condition of the Tajik government, it is highly improbable that the required maintenance would be completed in a timely manner.
At the start of this year, the Taliban sabotaged an electricity transmission line passing through the Baglan province which will also be the route for the CASA project. Political and law and order situation is still volatile in Afghanistan and it has only committed to purchase of 300 MW. Without significant Afghan stakes, the project's risks have increased significantly. Till date it is not clear what risk sharing and mitigation mechanisms have been put in place to safeguard the substantial amount of equity being injected into the project by the Government.
In the absence of an organized plan of developing the power network the project will end up as an inefficient investment with potentially seasonal and most certainly insecure supplies.
It is a mystery why the World Bank would pursue a high risk venture without taking into account the changed circumstances of the project as well as the countries associated with the project.
And this too comes at the expense of refusal of financing the crucial hydel power projects such as Neelum Jhelum, Bhasha and Dassu by the multi-lateral donor aid agencies, citing environmental and territorial issues as excuses.
And mind you, informed sources quote that even the Planning Commission was not sold on the idea. But the project goes on.
Comments
Comments are closed.