Fate of US-backed CASA power project in doldrums.
Pakistan's Planning Commission has strongly opposed Casa-1000 power project, and said that Power Ministry in a bid to import 1000mw of electricity signed expansive energy supply agreement which would cost heavily to Pakistanis in the days ahead.
Raising serious questions over the multi-billion-dollar project - Central Asia-South Asia (Casa-1000), the Planning Commission said that sky-high tariff of US Cents 9.41.kwh of the project and its viability are highly questionable both in terms of profitability and risk profile. Surprisingly, the project being implemented is quite different than the assumptions of the feasibility study by SNC LAVLIN. It is an expansive energy supply agreement. And, Pakistani consumers will pay US$ 1.50 billion over the project life of 30 years.
The commission is of the opinion too that this project is against development of domestic energy resources and the West's handsome parting gift to Afghanistan at Pakistan's expense. It is being pushed forward with greater emphasis to counter the China-Pakistan Economic Corridor (CPEC) and gas import from Iran.
Documents available with this scribe disclosed that 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 proposed project, Pakistan will get 1300MW of power by 2019 to meet the country's electricity deficit in peak summer times when the electrical demand is high.
Under the energy supply agreement and following the approval of tariff by the National Electric Power Regulatory Authority (Nepra), power tariff is set at 9.41cent/unit, which was proposed 4.98cent/unit in the feasibility study. The cost of supply of US 1.5 cents/ kWh from Tajikistan had been assumed in the feasibility study while actual agreement is based on US 5.15 cents/ kWh. Also, the transmission charges of US Cents 2.91 are ten times higher than that of NTDC and three times higher than that in Europe. Energy Wing of the Ministry of Planning, Development and Reforms in its recommendation has suggested that some subsidy, grant must be demanded from the project promoters and the donor agencies so that the cost of supplies to Pakistan becomes more attractive and competitive. Also, energy supply rate from exporter currently agreed at Rs. 5.00 per unit and Afghan Transit charge of Rs.1.5 per unit should be re-negotiated to a more reasonable and acceptable level.
At least, there should be no escalation in energy charge. It should be a fixed price contract in USD. Also, the government should ask promoters of the Casa-1000 project to subsidise 1,200km transmission line and reduce export price of energy and transit fee to Afghanistan, the commission urged.
Expressing serious reservations about the safety and security of Casa-1000 project, the planning commission said that Afghanistan is probably not interested in the project which makes the project very risky and may result in lack of interest in securing the transmission line. The reason of lack of Afghan interest in the project also indicates the bad economics and risk profile of the project. Also, at present the country is being supplied energy at 3.5 cents/kWh from Tajikistan, and from Iran at 4 cents/kWh (including aid of 1 cents/kWh), and from Turkmenistan at 3 cents/kWh, while Pakistan has signed energy supply agreement at two times high rates.
On the other hand, National Transmission and Despatch Company Limited (NTDCL) in its response submitted with NEPRA made it clear that the energy supply (US Cents 5.15/kwh) and transit fee (US Cents 1.25/kwh) was negotiated and finalized by the Governments after number of meetings. "At this stage it cannot be reopened as it is agreed position between the parties. However, transit fee is always a Government to Government affair and respective Government can reconsider it," NTDC said.
About the project's feasibility study, NTDCL said that several assumptions made in the feasibility study have now been changed in the signed documents (the PPAs and Master Agreement) and most of these changes have enhanced the viability of the CASA-1000 project. Also, the energy cost is one per kwh basis and the buyers would be required to pay for only the energy despatched and recorded by the meters (i-e., there are no fixed payments).
The NTDCL in its response further declared that the Afghanistan Transit Charge of US cents 1.25/kwh and Tajikistan Transit Charge of US cents 0.10/kwh have been fixed after several rounds of negotiations and in return to this fee, Afghanistan and will assume security responsibility during construction and operation of CASA project and its assets during their respective jurisdictions.
Regarding project viability and transparency, the NTDCL said that the World Bank and Islamic Development Bank are the lenders of this project. These banks conduct their own due diligence regarding project viability and transparency.
Planning Commission is of the opinion that CASA was conceived to provide alternatives to Pakistan obviating the need of gas import from Iran. With changing political environment and prospects of lifting of restrictions on Iran, the rationale for such projects may lose its appeal. In addition, Chinese; have also offered electricity exports via Khunjerab under CPEC program. Although such an offer is at an initial stage and feasibility study is yet to be carried out, Chinese energy may not suffer from risks and instability issues as compared to CASA1000 due to Afghanistan factor. "No wonder, project of CASA-1000 has been gearedup knowing to Chinese offer," Planning Commission said.
It is worth mentioning that CASA 1000 transmission project has been proposed to transmit 1,300 MW of surplus hydel power generated in the central Asian states i.e., Tajikistan and Kyrgyz Republic through Afghanistan to Pakistan. The total distance covered by these transmission lines is 1200 km. The full CASA-1000 transmission lines will move electricity at high voltages between the Kyrgyz Republic and Tajikistan (the first 477 kilometers) and from Tajikistan to Afghanistan and Pakistan (the next 750 kilometers). Each country will be responsible for construction of transmission line in its jurisdiction. The transmission lines covering a distance of 100 km from Pak-Afghan border to Peshawar are to be constructed along with converter station.
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|Date:||Jun 30, 2016|
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