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F IRST P HASE OF THE C ENTRAL A SIA S OUTH A SIA R EGIONAL E LECTRICITY M ARKET (CASAREM) March 2012 1.

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Presentation on theme: "F IRST P HASE OF THE C ENTRAL A SIA S OUTH A SIA R EGIONAL E LECTRICITY M ARKET (CASAREM) March 2012 1."— Presentation transcript:

1 F IRST P HASE OF THE C ENTRAL A SIA S OUTH A SIA R EGIONAL E LECTRICITY M ARKET (CASAREM) March

2 The CASAREM Vision 2 The Central Asia South Asia Regional Electricity Market (CASAREM) will help develop a modern, sustainable electricity market between the two neighboring regions. Central Asian countries, endowed with large energy resources, can help South Asian Countries meet their rapidly increasing demand for electricity – a key growth constraint The Central Asian countries could diversify markets for their energy exports and create a source of revenue for their own economic development.

3 Kazakhstan Reserves: Oil 30 billion bbl Natural Gas 8585 TCF Coal 31.3 billion tons Hydro Power 20,000 MW Uzbekistan Reserves: Oil 594 million bbl Natural Gas 66 TCF Coal 3.3 billion tons Hydro Power 1,700 MW Turkmenistan Reserves: Oil 600 million bbl Natural Gas 280 TCF Coal Modest Hydro Power Modest Tajikistan Reserves: Oil 0.01 billion bbl Natural Gas 0.2 TCF Coal 3.6 billion tons Hydro Power 40,000 MW Kyrgyzstan Reserves: Oil 0.04 billion bbl Natural Gas 0.2 TCF Coal 0.9 billion tons Hydro Power 26,000 MW C ENTRAL A SIAN R EPUBLICS ARE E NDOWED WITH V AST E NERGY R ESOURCES

4 S OUTH A SIAN C OUNTRIES F ACE S EVERE E LECTRICITY S HORTAGES WITH R APIDLY I NCREASING D EMAND 4 Country Population Million GNI per capita Current US$ Per Capita Electricity Consumption (KWh/year/cap) Installed Capacity (GW) Access Rate Peak shortage (MW) Afghanistan %-- Bangladesh % 1,500-1,800 (summer) Bhutan %20 (winter) India 1, % 11,460 Maldives Nepal %400 (summer) Pakistan %5,022 Sri Lanka %

5 CASA-1000, THE F IRST P HASE OF CASAREM, WOULD S UPPORT 1,300 MW OF C LEAN E LECTRICITY T RADE B ETWEEN C ENTRAL A SIA (K YRGYZ R EPUBLIC & T AJIKISTAN ) AND S OUTH A SIA (A FGHANISTAN & P AKISTAN ) 5

6 P ROJECT C OMPONENTS 500 kV line Datka-Khudjand (477 km), with Tajik network transferring Kyrgyz exports to Sangtuda Tajikistan Grid Strengthening 1300 MW AC-DC Convertor Station at Sangtuda 750 km HVDC line Sangtuda-Kabul- Peshawar 300 MW Convertor Station at Kabul (with both import & export capability) 1300 MW DC-AC Convertor Station at Peshawar 6

7 7 A C HALLENGING BUT T RANSFORMATIVE P ROJECT A significant first step in realizing the CASA Regional Electricity Market (CASAREM) vision. Would demonstrate landmark cooperation between the Kyrgyz Republic, Tajikistan, Pakistan, and Afghanistan. Provide economic benefits to all four countries. Opportunities Large investment at US$1 billion. Significant security and geopolitical challenges. Involves four countries with constrained commercial borrowing capacity. Challenges

8 CASA-1000 Ensure a steady source of revenue from power exports for Tajikistan and Kyrgyz Republic Alleviate electricity shortages in Pakistan during the peak summer season Establish Afghanistans role as a viable transit country, enhancing growth prospects 8 S IGNIFICANT B ENEFITS TO ALL C OUNTRIES

9 F EASIBILITY S TUDY UPDATE CONFIRMS S OUNDNESS OF P ROJECT 9 Feasibility Study Update Sufficient quantities of surplus electricity are available in summers in the Central Asian Countries (the Kyrgyz Republic and Tajikistan), even under the conservative assumption of no new generation projects. Significant need for electricity imports exists in South Asia (particularly Pakistan) to meet existing and projected demand. Differences in the cost of electricity between the importing and exporting countries provides a strong economic and financial rationale to make transmission investments in order to support the electricity trade.

10 Summer Surplus, in the base case scenario, has been estimated by using: Generation from existing plants only over the projection period; and The countries demand based on GDP growth and other relevant factors. Kyrgyz Republic and Tajikistan have been exporting power to neighbors (up to 2.5 TWh annually ) and spilling water from the reservoirs without any generation. 10 Combined Surplus (GWh) in the base case would reduce every year E STIMATES OF S UMMER S URPLUS BASED ON E XISTING G ENERATION P ROJECTS O NLY

11 F EASIBILITY S TUDY D EMAND FORECAST H IGHER THAN O THER S TUDIES E STIMATES

12 CASA-1000 IS E CONOMICALLY V IABLE E VEN WITH C ONSERVATIVE E STIMATES OF S URPLUS The base case economic analysis gives a Benefits to Cost ratio of 1.34 and EIRR 1 of 15.6% {excludes benefits of GHG reduction and Telecom connectivity). Sensitivity: New generation added enabling a constant yearly exportable surplus of 4 TWh - Benefits to Cost ratio of 2.11 and EIRR of 20.8% Sensitivity: Opportunity cost of US$ 0.20/kWh for Pakistan - Benefits to Cost ratio of 2.89 and EIRR of 31.9% 1- EIRR: Economic internal rate of return. 12

13 H UGE D IFFERENCE IN C OST OF E LECTRICITY BETWEEN IMPORTING AND EXPORTING COUNTRIES Kyrgyz and Tajikistan : Current Cost < US¢ 3.0 /kWh Based on existing IPPs in Tajikistan. Pakistan: the operating cost is US¢ 9.2/kWh and the cost including capacity charges is US¢ 13.2/kWh Fuel costs estimated based on the international crude price of USD per barrel

14 P ROJECT C OST E STIMATES A S PER THE F EASIBILITY S TUDY 14 Kyrgyz RepublicUS$ 200 million TajikistanUS$ 250 million AfghanistanUS$ 300 million PakistanUS$ 200 million Total US$ 950 million

15 M AJOR M ILESTONES 15 May Invitation from the Government of Islamic Republic of Pakistan for the CASA conference and first Inter- Governmental MoU signed. Aug the MOU and the Inter-Governmental Agreement (IGA) for CASA signed by all of the four countries June Pakistan and Afghanistan signed a joint declaration calling for speedy implementation of the CASA-1000 power transmission line Sept Bishkek Inter-Governmental Council (IGC) meeting sought IFI help in speedy preparation of the CASA-1000 Project. Nov Country Working Groups (WG) established and the first monthly Technical WG Meeting in Dushanbe Dec-Feb Three subsequent meetings of the Country Working Groups

16 P ROJECT BUILDING BLOCKS – C URRENT S TATUS 16 Techno-economic feasibility study completed, establishing the economic viability of the project even without new power generation. Initial Environmental and Social Assessment completed; supplementary studies in advanced stages. Financial Model prepared to help all countries build negotiations strategy. Legal and commercial Advisors for the IGC are in place; recruitment of the IGC Executive Director is in progress. Community benefit sharing design studies and project structure and draft Power Purchase Agreements under preparation.

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18 18 N EXT S TEPS Finalizing the Structure of the Project for its development and operation (May 2012) Security Assessment Study (June 2012) Other supporting analysis {Tajik grid strengthening; Governance Arrangements for Export Revenues, etc.} (August- 2012) Bidding Documents and Concession Agreement (Oct 2012) Finalizing Country Specific ESIA based on Consultations (Nov 2012) Closing the Financing Gap (early 2013)

19 D ONOR P ARTICIPATION 19 The US State Department, AusAid, DFID, ADB, Islamic Development Bank, USAID, IFC and the World Bank are among the donors who have supported pre-preparation activities of the project to-date. Donors who attended the Sept 2011 IGC Meeting in Bishkek include: Islamic Development Bank, JICA, KfW, Eurasian Development Bank, DFID, EBRD, IFC, USAID, US State Dept, Russia, China.

20 CASA-1000 P ROJECT T IMELINE February 2011 Feasibility study update completed. June 2011 Draft ESIA delivered September 2011 IGC meeting in Bishkek, MOU signed Nov 2011 – Dec 2011 Country Working Groups were set up and monthly WG meetings started Oct 2006 First Intergovernmental MoU signed. August 2008 Intergovernmental Agreement Signed – Intergovernmental Council (IGC) created and Secretariat established in Kabul - Strengthen IGC, recruiting Executive Director, advisors -Hire country advisors and start negotiation -Completion of ESIA studies and community consultation -Prepare and issue bidding documents - Build the financing plan/structure with firm commitments

21 Around US$ 3 billion in energy-water project investment commitments Development Policy Operations (DPOs) to advance fundamental energy policy reforms at the national level – Kyrgyz Republic and Tajikistan Analytical, institutional development and investment support being provided under the umbrella of the Central Asia Energy Water Development Program W ORLD B ANK E NGAGEMENT IN E NERGY AND W ATER Kyrgyz Republic Improving water management systems Urgent rehabilitation of generation assets, electricity, gas and heat distribution Winter energy support Policy Operations – for energy development strategy, tariff reforms, and energy governance Tajikistan Fergana valley water resources & watershed management Policy Operations – budget control, tariff and governance reforms Climate resiliency pilot- Adaptation investments Energy loss reduction Winter energy management support Power supply options study; Assessment study for proposed Rogun HPP & Rehabilitation for Nurek HPP Afghanistan Improve electricity supply and access in major towns on the North East Power system ; Improve revenue collection and distribution efficiency. Rehabilitate power generation capacity (e.g.Naghlu, Mahipar) Demand side energy efficiency Irrigation rehabilitation Pakistan Reduce excessive dependence on costly imported oil by expanding indigenous hydropower (e.g. Tarbela) and improving efficiency of gas supply. Improving sector financial condition and strengthening the sector, jointly with other development partners. TA for capacity building on all aspects of water resource management including feasibilities of new hydro. Regional Programs Central Asia – South Asia (CASA) electricity exports Analytic work with regional institutions – International Fund for Saving the Aral Sea (IFAS) Central Asia Regional Economic Cooperation (CAREC) Afghanistan-Pakistan trade facilitation and customs Reforms


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