1. INTERIM CG MEETING Copenhagen April 29, 2002 The Electricity Opportunity for Integrating Central Asia into the World Economy Role of Energy and Transport Infrastructure A Conference Hosted by Brookings Institution and Carnegie Endowment for International Peace in Association with Asian Development Bank and Central Asia Regional Economic Cooperation (CAREC) Raghuveer Sharma The World Bank Washington DC, October 23, 2007

2. INTERIM CG MEETING Copenhagen April 29, 2002 Current Global Conditions High Energy Prices

3. INTERIM CG MEETING Copenhagen April 29, 2002 Global demand grows by more than half over the next quarter of a century, with coal use rising most in absolute terms Oil Coal Gas Biomass Nuclear Other renewables 0 2 000 4 000 6 000 8 000 10 000 12 000 14 000 16 000 18 000 1970198019902000201020202030 Mtoe Current Global Conditions: Growing Demand Source: IEA

4. INTERIM CG MEETING Copenhagen April 29, 2002 Oil 21% Electricity 56% Coal 3% Gas 19% Just over half of all investment needs to 2030 are in developing countries, 18% in China alone Cumulative Investment in Energy-Supply Infrastructure, 2005-2030 = $20.2 trillion (in $2005) Power generation 54% 46% Other Refining 73% 18% 9% LNG chain Transmission and distribution 56% 37% 7% Mining Shipping & ports 11% 89% $4.3 trillion $11.3 trillion $3.9 trillion $0.6 trillion Biofuels 1% Exploration & development Transmission & distribution Exploration & development Current Global Conditions: Huge Investment Needs Source: IEA

5. INTERIM CG MEETING Copenhagen April 29, 2002 Half of the projected increase in emissions comes from new power stations, mainly using coal & mainly located in China & India Increase of 14.3 Gt (55%) 0 10 20 30 40 50 19902004201020152030 billion tonnes CoalOilGas Current Global Conditions: Deepening climate change concerns Source: IEA

6. INTERIM CG MEETING Copenhagen April 29, 2002 Can the Central Asian Republics contribute to, and benefit from, the global energy conditions?

7. INTERIM CG MEETING Copenhagen April 29, 2002 Central Asian Republics possess significant energy resources 5,400 5 2 68 82 2,700 5 5 2,610 1,674 16,000 580 507 0 2,851 24,100 590 514 2,678 4,607 Kazakhstan The Kyrgyz Republic TajikistanTurkmenistan Uzbekistan Total Fossil Fuel MTOE Coal MTOE Gas MTOE Crude Oil MTOE Legend 27 163 317 2 15 Hydro Potential TWh/year

8. INTERIM CG MEETING Copenhagen April 29, 2002 Regional Market Cost-Price Gaps Private Investor (AES) View $10 to $40 per MWh $65 to $120 per MWh $8 to $30 per MWh $30 to $75 per MWh $25 MWh to $350 MWh $15 to $45 per MWh $15 to $40 per MWh

9. INTERIM CG MEETING Copenhagen April 29, 2002 Central Asian Republics Power Development and Trade Strategy Loss Reduction & Rehab. Programs Transmission Links: North-South Project Power Trading Capacity: Sangtuda Level of Risk Low High Time Frame Near-Term 1- 5 yrs Medium -Term 3 - 10 yrs Long -Term 8 - 15 yrs Domestic & Regional Capacity Balance: Bishkek II & Talimardjan I Export Market Negotiation South Transmission Links Development Export Capacity PPP: Rogun & Talimardjan II Russia Afghanistan Pakistan Iran China?

10. INTERIM CG MEETING Copenhagen April 29, 2002 Specific Generation projects for exports developed-Sangtuda 1 with Russian funds

11. INTERIM CG MEETING Copenhagen April 29, 2002 North South Transmission Line in Taj Varzob HPP Vanj HPP Perepadnaya HPP Shujand HPP Pamir HPP Khorog HPP Namangut HPP Ak-Su HPP Regar Aigul Tash Financed by China

12. INTERIM CG MEETING Copenhagen April 29, 2002 Tajikistan Afghanistan 220 kV Transmission Line Project Tajikistan:Tajikistan: construction of 220kV double-circuit transmission from Sangtuda HPP to Sherhan Bandar Afghanistan:Afghanistan: Sherkhan Bandar to Phul-e-Khumri ADB/IsDB/OPEC fund financing

13. INTERIM CG MEETING Copenhagen April 29, 2002 CASA 1000 Transmission Project to transfer 1000 MW to Pakistan Tajikistan 166 22% Nurek to Sangtuda 160 Sangtuda I to Shekhanbandar106 Afghanistan 544 70% Shekhanbandar to Pul-e-Khumri154 Pul-e-Khumri to Kabul220 Kabul to Jalalabad 90 Jalalabad to AFG border 80 Pakistan 60 8% AFG border to Peshawar 60 770 Transmission Line Length (km) Feasibility Studies Phase 1 done Resource Assessment in CA Demand Assessment in SA Techno-economics of trans. Line Institutional Financial Risk Mitigation Legal Framework

14. INTERIM CG MEETING Copenhagen April 29, 2002 Tajikistan launched development of coal resources Quality of coal reserves is high – average 7000 kcal/kg Developing these resources crucial for meeting: domestic winter demand; year round power demand in export markets Fan Yagnob Mine Held an Investor Roundtable in May 2007 in which private investors, IFIs and bilateral donors participated Decisions reached: Integrated development of Mine and power plant Fan Yagnob mine would be the first one to be developed 1500 MW targeted (1000 MW for exports rest for domestic market) Will be developed as a Public private partnership Tajik Government will bear all initial development costs USTDA willing to help with funding feasibility study New Thermal Generation Capacity Being planned

15. INTERIM CG MEETING Copenhagen April 29, 2002 Roghun Hydroelectric Project 3600 MW storage hydro upstream of Nurek HPP in Tajikistan Circa 30% constructed during Soviet times –Government is looking to complete it w/ international investors and financiers –In 2004 a deal was reached with RusAl, did not work –Currently negotiating a new agreement with Russian Government –Government keen on World Bank involvement in structuring and financing this project –World Bank agreed to finance feasibility study compliant with Bank Group guidelines Which includes assessment of environmental, social and importantly riparian issues –Economic viability depends on exporting majority of production –Pakistan keen to import –Another interesting large project option for PPP

16. INTERIM CG MEETING Copenhagen April 29, 2002 Peshawar Kabul Facilities Under Construction 500 kV OHL South-North Financing: China Exim bank Sangtuda 1 HPP Financing: Russia Sangtuda 2 HPP Financing: Iran 220 kV OHL SS Sarban – Tajik/Afghan border Financing: ADB/IsDB Existing Facilities Toktogul HPP Existing Surplus Nurek HPP Existing Surplus Perspective Facilities 220/500 kV Uzbek by pass SS Datka (Kyrgyz) – SS Hojent (Tajik) Cascade of Zarafshan HPPs (Yavan and Oburdon HPP) Annual generation 1680 GWh Rogun HPP Annual generation 13000 GWh Coal TPP Annual generation 3900-6400 GWh 500 kV OHL CASA 1000 Nurek HPP – Kabul - Peshawar Pakistan Afghanistan Kyrgyzstan Tajikistan Uzbekistan Kazakhstan India China CASAREM is a set of projects and institutional framework for enabling this trade

17. INTERIM CG MEETING Copenhagen April 29, 2002 Projects are justifiable based on exports –Which bring its own set of political and security risks Project sizes are huge compared to size of economy –While export orientation should address this to some extent, sustained domestic reforms are needed These are underway, but at different pace in each country Private sector is needed, and there is interest –But limited interest –Many of them are majority foreign state owned Russia, Iran, China, India Governance Issues –These are real, but Government has shown willingness to address them World Bank Group with other IFI partners, bilateral donors and private sector can address these risks There Are Significant Risks

18. INTERIM CG MEETING Copenhagen April 29, 2002 Partnerships of Partnerships Inter-Ministerial Council Multi-Country Working Group AfghanistanKyrgyz Rep. PakistanTajikistan International Financial Institutions Interested Private Investors Bilateral Donors/Institutions

19. INTERIM CG MEETING Copenhagen April 29, 2002 Regional Cooperation is Imperative Necessity for Regional Cooperation –Existing dependencies – land locked nature, complementary resource –New Opportunities Forms of Regional Cooperation –Market relationships; transit relationships; Investment relationships; riparian relationships; littoral relationships; Knowledge sharing Benefits of Regional Cooperation –Significant boost to economic growth –New Opportunities; Transit revenues –Least cost development – sharing hydro resources Pre-conditions for Successful Regional Cooperation –Win-win for participants; no excessive dependence on one another; diversify dependencies; commercial orientation IFIs and bilateral donors can facilitate, and finance

20. INTERIM CG MEETING Copenhagen April 29, 2002 Thank You Very Much