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Planning Commission opposes Casa power project

Planning Commission opposes Casa power project

ISLAMABAD: As US-backed projects for transnational energy imports from Central Asia gain momentum, the Planning Commission has opposed the Casa-1000 project and described it as expensive, against development of domestic energy resources and the West’s “handsome parting gift to Afghanistan at Pakistan’s expense”.

The commission warned that the proposed project was being pushed forward with greater emphasis to counter the China-Pakistan Economic Corridor (CPEC) and gas import from Iran.

Pakistan, Afghanistan, Tajikistan and Kyrgyzstan had on May 12 signed a quadrilateral agreement for generation of electricity through hydropower projects in Tajik and Kyrgyz republics. Under the project, Pakistan will get 1300MW of power by 2019 to meet its peak summer shortfalls as Kabul declined to consume its 300MW share.

The Planning Commission’s strong opposition to the multi-billion-dollar project – Central Asia-South Asia (Casa-1000) – was made public on Wednesday by the National Electric Power Regulatory Authority (Nepra) while approving 9.41 cents (about Rs10) per unit (kWh) 15-year tariff for the project. This includes 5.15 cents as energy charges to power producing countries, 2.91 cents as transmission charges, 1.25 cents as transit fee to Afghanistan and 0.10 cents as wheeling charges to Tajikistan for 4,317 gigawatt hours (Gwh) per year.

The Planning Commission said that at present Afghanistan was being supplied energy from three different countries in the region. It was importing 500 Gwh at 3.5 cents/kWh from Tajikistan, 200 Gwh at four cents/kWh from Iran (including aid of one cent/kWh) and from Turkmenistan at three cents/kWh.

“No wonder, Afghanistan is not very much interested in the Casa-1000 project,” it added.

The commission argued that the project’s viability was highly questionable both in terms of profitability and risk profile. In order to improve its viability, its capacity and scope may be expanded by increasing the transmission capacity to 3300MW and adding thermal sources such as gas-fired combined cycle power stations in Turkmenistan (possibly replacing TAPI ) as well as a thermal power plant (coal-fired) in Afghanistan. It may also be made multiple way network and open access character to it. A new feasibility study needs to be undertaken if one is interested in promoting cooperation among Central and South Asian countries.

The commission said the energy cost was taken at 1.5 cents per unit by the feasibility study consultant in 2011 which had been increased more than four times to 5.15 cents while transmission charge of 2.91 cents per unit was 10 times higher than Pakistan’s existing rate and three times higher than that in Europe.

The commission was of the opinion that Casa-1000 was conceived as an alternative to gas import from Iran, but with changing political environment and lifting of restrictions on Iran, the rationale for such projects was losing appeal. In addition, Chinese have also offered electricity exports via Khunjerab under the CPEC. Chinese energy may not suffer from risk and instability issues as compared to Casa-1000 due to Afghanistan factor. “No wonder, project of Casa-1000 has been geared up knowing to Chinese offer,” the commission said.

It said there was no collateral from the agencies which wanted to promote regional cooperation under Casa-1000. It appears that all costs have been loaded onto Pakistani consumers through a very liberal transit charge of 1.25 cents per kWh; Afghanistan is expected to earn $50 million revenue per year.

Over the project life of 30 years, Pakistani consumers will pay $1.50 billion. “A fair transit fee will only be a small fraction of what has been agreed to; a handsome parting gift to Afghanistan from the advanced countries on Pakistan’s expense.”

The commission said the fact that Afghanistan was not interested in the project was making the project “very risky” and may result in lack of interest in securing the transmission line. The lack of Afghan interest also indicates the bad economics and risk profile of the project.

That in the absence of a strategic plan of developing a power network involving many sources and sinks and two directional flows, the proposed project may be destined to remain a solo underutilised investment with decreasing seasonal and insecure supplies that may face interruptions due to the uncertain law and order situation in Afghanistan.

The Planning Commission warned that a trend might set in among international donor agencies to finance hydropower projects in Central Asia and discourage hydropower development in Pakistan. “It happens to be evident from the lacklustre support to Pakistan’s hydropower projects such as Diamer-Bhasha dam and Bunji hydropower project,” it said.

The commission urged the government to ask promoters of the Casa-1000 project to subsidise 1,200km transmission line and reduce export price of energy and transit fee to Afghanistan.

Published in Dawn, June 23rd, 2016

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