CASA-1000 transit agreement

The signing of the transit agreement for Central Asia South Asia Regional Electricity Market (CASAREM) 1000 project between the government of Pakistan and Afghanistan was hailed by Federal Finance Minister Ishaq Dar as a major step towards close partnership between the two countries. More tellingly the signing ceremony was attended by World Bank President Jim Yong Kim and US Special Representative for Afghanistan and Pakistan Dan Feldman - a reflection of the driving force behind the project.
The government of Pakistan and Afghanistan agreed to a 1.25 cent per kilowatt hour transit fee for supply of electricity to Pakistan through the Afghan territory. It may be recalled that like other delayed projects, routine in Pakistan, the cost to Pakistan has risen dramatically and in this context, it is relevant to note that a decade ago a rate of 0.2 cents per kilowatt hour was under consideration. In addition, India under Narendra Modi is unlikely to accept power supply routed through Pakistan and there is therefore little likelihood of Pakistan also receiving some transit fees in the near future.
At present, the routing of the proposed CASA-1000 transmission line is: (a) transmission within Tajikistan and Kyrgyz Republic to a central node within Tajikistan; and (b) transmission from that central node through Afghanistan to a terminating node in Pakistan. The project is defined as a regional instead of a bilateral project and aims to develop electricity trade between four countries through a set of projects and concomitant investments, underpinned by the relevant institutional arrangements and legal agreements. The initial four countries involved are Tajikistan and Kyrgyz Republic (potential exporters) and Afghanistan and Pakistan (potential importers). In this context, the bilateral transit agreement maybe viewed as a legal arrangement that may advance the implementation of the project that has remained stalled for over a decade. This has been in spite of an overwhelming US support for the project for geopolitical reasons which are not only to reduce Russian influence in its backyard by harnessing Tajik and Kyrgyz surplus electricity for an energy-starved South Asian region but also reduce the possibility of implementation of the proposed Iran-Pakistan gas pipeline project that the US has been opposed to.
Be that as it may, there is no question about the fact that CASA-1000 is a win-win project for all the four participating countries; however, geopolitical considerations of regional powers, particularly Russia, and the sole superpower, the US, as well as the inability of US-led Nato powers to subdue the Afghan Taliban remain the main stumbling blocks to the project's implementation.
The other major impediment to the project has been its financing. Both Afghanistan and Pakistan do not have the resources to fund the 7.5 billion dollar project and interest by several international companies has waned in recent years. A French firm, Total, was reportedly interested in taking the lead in the project but has since withdrawn. A similar picture emerged with respect to interest by other firms, including US Exxon Mobil and Chevron.
The World Bank remains one of the major supporters of the project; however its website indicates four related projects - two for Afghanistan titled CASA-1000 community support programme (40 million dollars) and Afghanistan power system development project (35 million dollars) and one regional project approved in March 2014 with the IBRD/IDA assistance of 526.5 million dollars; the project's status has been shown as implementation; however, the status is archived. Given that a similar project was dropped previously and risks are stipulated as high on the World Bank website its likely implementation in the near future remains suspect. To further complicate matters Tajik and Kyrgyz stakeholders registered concerns on 15th July 2014 by invoking the Inspection Function of the World Bank, arguing that the project would have environmental impacts. To conclude, one would be well advised to temper optimism about CASA-1000 implementation.