No mention of penalty clause in $1.17 bn CASA-1000 project

Pakistan to get 1,000MW of electricity; project will comprise development, financing, construction, ownership and operation of AC and DC facilities; 750km transmission line is likely to start from Tajikistan, will pass through Afghanistan and end up in Peshawar

ISLAMABAD: Though the construction work on the much hyped CASA-1000 project has kicked off, which will be the first one in connecting the four countries situated in Central and South Asia in terms of supply of electricity, but there is no mention of penalty clause in the agreement between the stakeholders that will safeguard the interests of the major buyer country -- Pakistan.

Under $1.17 billion CASA-1000 project, the laying of high voltage direct current transmission line is likely to start from Sangtuda in Tajikistan and will pass through Kunduz, Pul-i-Khumri, Kabul and Jalalabad in Afghanistan and end up in Peshawar.

The total length of the transmission lines is estimated to be 750km, 16pc of which would pass through Tajikistan, 75pc through Afghanistan and 9pc through Pakistan.

In case the 75 percent transmission line that will pass through the turbulent Afghanistan exposes to any kind of subversive activities by any of warring groups, electricity suppliers — Tajikistan, Kyrgyz Republic, and main buyer of 1000MW of electricity Pakistan -- will face the loss, a senior official at Ministry of Water and Power told The News.

The safeguards to the smooth supply of electricity of 1000MW under the project has not been ensured to Pakistan in the agreement in the shape of penalty clause if the transmission line gets damaged in the territory of the war ravaged neighbouring country.

The Kabul administration although have extended the assurances to all the stakeholders, particularly to Pakistan, for the safety of the transmission line, but there is no mention of any penalty clause in the agreement as the disruption would not only deprive the country from the electricity supply but would also adversely impact the economy in Pakistan which will be vibrant because of the injection of this very 1000MW, the official argued.

The official said that 50 percent of the area, through which the transmission line will pass, is controlled by Taliban or local warlords and the remaining area is under control of Kabul administration or its allied forces.

The spokesman of Ministry of Water and Power admitted the fact that there was no penalty clause involved in the agreement which would give monetary punishment to the country where in the transmission line is damaged and not properly safeguarded.

However, in the same breath, he said that in case the electricity supply was disconnected in the wake of any damage to the transmission line, then Pakistan would not pay transit fee of 2.5 cents per unit to the Afghanistan. Nonetheless, spokesman failed to respond when asked what mechanism in the agreement has been ensured to recover the loss to be incurred on Pakistan’ economy that will thrive on the 1000MW of electricity alone.

When asked as to whether the decision of government of Pakistan to become part of this project is sane or not when it comes to importing the electricity from the upper riparian countries -- Tajikistan, Kyrgyz Republic at the cost of water interests of lower riparian country of Uzbekistan particularly under the scenario when Pakistan is set to move either International Court of Justice (ICJ) or Neutral Expert against India over the faulty design of Kishenganga hydropower power project of 330MW pleading that the said project would inflict the huge loss to water interests of low riparian—Pakistan. And in the international forum, India can utilise the arguments objecting the stance of Pakistan saying if Pakistan can import electricity from upper riparian countries then on what ground it is objecting on its upper riparian country — India for its project of Kishenganga hydropower project being erected on Jhelum River. The spokesman after getting the input from the top mandarins of the ministry said that Pakistan had clearly asked the Tajikistan, Kyrgyz Republic that it would buy the electricity to be generated from the projects that would not harm the interests of low riparian -- Uzbekistan and in this regard World Bank has certified the hydro power projects in both the countries ensuring the said projects would not inflict loss on water rights of Uzbekistan.

Uzbekistan is a country which is very sensitive to CASA-1000 project and has been presenting its case in various world forums against Tajikistan. The Aral sea that ends up in Uzbekistan that at one time used to enhance it agriculture growth has almost dried up because of the water tributaries coming from upper countries have been diverted to store the water reservoirs in upper riparian countries.

However, under the master agreement of CASA-1000, a transmission line would originate in the Kyrgyz Republic and Tajikistan and pass through Afghanistan to reach Pakistan. The project will comprise the development, financing, construction, ownership and operation of the AC and DC facilities.

This would include a 750km high voltage direct current (DC) transmission system between Tajikistan and Pakistan via Afghanistan, together with associated converter stations at Sangtuda (1,300MW), Kabul (300MW) and Peshawar (1,300MW).

A 477km 500kV alternating current facility would also run between the Kyrgyz Republic (Datka) and Tajikistan (Khoujand). System upgrades would also be required to safely and reliably accommodate the AC and DC facilities and the associated power flows.

The Casa-1000 transmission line to Peshawar would be capable of delivering 1,300MW — 1,000MW to Pakistan and 300MW to Afghanistan.

The imported electricity would be available from May to October when power demand in Pakistan goes up exponentially and domestic hydropower generation goes down.

The estimated cost of the project is $1.17 billion, including $208m interest, during construction and taxes, but the final cost will be determined through a competitive bidding process beginning next month. This includes the estimated cost of $232m required for the Pakistan portion of the DC transmission line and convertor station.

The tariff components of the project involve the transmission tariff for paying back the investment, operations and maintenance cost, and two special funds for community support and common funds.

The transmission tariff has been estimated at 2.98 cents per kWh, energy tariff at 5.15 cents per unit and the Afghan transit fee of 1.25 cents per unit. In addition, a transit fee of 0.1 cent per unit will also be paid to Tajikistan for the flow of Kyrgyz energy, while the option for non-member countries to inject energy at 1.5 cents per unit has been kept open.