World Bank had also agreed to fund the laying of power transmission lines and setting up of grid stations for import of electricity from Tajikistan to Pakistan

May 15 - May 21, 2006

The first ever energy conference of Energy Ministers of Tajikistan, Kyrgystan, Afghanistan and Pakistan held in Islamabad on May 8-9 concluded on a highly positive note. The four countries agreed to form a working group for materializing transmission of 1000MW electricity from Tajikistan to Pakistan through Kabul on urgent basis to be increased later to over 4000MW.

The 2-day central Asia and South Asia electricity trade conference, which concluded on Tuesday, was closely monitored by US state Department, USAID and United States Energy Association (USEA). The conference was also attended by delegates from Asian Development Bank, World Bank, Islamic Development Bank representative of some companies in the private sector.

Federal Minister Liaqa Ali Jatoi in a press briefing after the conference on the import of electricity from central Asia to Pakistan via Afghanistan said that substantial progress has been made on the project as all the stakeholders have agreed to transmit the electricity via Kabul to Pakistan. The minister said Pakistan has decided to get 4000 MW electricity from Tajikistan and Kyrgyzstan. He said that the countries have agreed to form a working group to move the process forward adding that the next meeting would be held in Dushanbe some time in October 2006. The minister said that International Financial Institutions (IFIs) nominated the World Bank as their focal institution on their behalf.

When asked as to what would be the mechanism to ensure the electricity of the transmission line trough war ravaged Afghanistan, the minister said; "When there is a will there will be a way". When stressed by the questioner if Pakistan has been given any guarantee by Afghanistan on the security of transmission line, he said that Pakistan and Afghanistan have joined together in a fight against terrorism and both will handle this issue amicably. When asked as to what sort of regulatory mechanism will be in place to ensure the smooth and quality supply of electricity and tariff issues, he said the meeting deliberated the legal issues and these issues will be resolved.

However, the Afghan Minister told that the transit fee will not be a hurdle in materializing the project, as his government considers this project of great importance for Afghan people in the wake of energy needs in the country. To a question about the security of transmission line he said that all the countries will jointly handle this issue.

The draft on the conclusions of the two day meeting says that the conference deliberated upon the demand and supply situation, infrastructure needed for transmission of electricity from Central Asia to South Asia, commercial agreements, elements of pricing of electricity, financing structures, possible risks and risk mitigation.

Regional energy experts were taking paramount importance to the first meeting of the energy ministers of these countries to materialize the import of electricity from Tajikistan and Kyrgyzstan to Pakistan via Afghanistan particularly after the US assistant secretary of state for South and Central Asian affairs announced on April 27 his desire to spearhead the project of transmitting the electricity from Central Asian states to Pakistan and India.

It is pertinent to mention here that negotiation were also under way on importing electricity from Tajikistan since long and the World Bank had also agreed to fund the laying of power transmission lines and setting up of grid stations for import of electricity from Tajikistan to Pakistan.

However, the Bank had earlier linked its funding for the project with the transmitting of electricity through Kabul, arguing it would benefit the war ravaged Afghanistan a lot. Now with the US desire to spearhead this project, the scenario of the talks have changed the pace of parleys manifold and this projects seems to be materialized very soon.

The official sources said that electricity will be imported through a common grid station form Tajikistan and Kyrgyzstan and Pakistan will purchase about 4000MW electricity. Under the plan, electricity will be imported to Pakistan via Afghanistan through two routes Wah Khan and Kabul but World Bank wants Pakistan import electricity through Kabul to Peshawar.

The National Engineering Services of Pakistan (NESPAK) is already engaged in conducting a comprehensive study on t he proposed project. To a question, the official said that Kyrgyzstan's power industry is through to be capable of fully meeting the country's domestic electricity needs while providing surplus for export.

Of the 20-power generating units in Kyrgyzstan, 18 are hydropower. It is believed that only about 15 percent of the mountainous country's potential hydroelectric resources are presently being tapped. Kyrgystan has two major power plants, a 1.2 giga-watt hydro plant at Toktogul, and a 0.7 giga-watt thermal plant at Frunze, with plans for a major 6.8 giga watt hydropower station to be built by 2010. The official went on to say that 96% of Tajikistan's electricity generation is hydroelectric, and the hydroelectric potential is enough to meet all of Tajikistan's energy needs and to export electricity to her neighbours.

The United States has publically supported the energy accord under which Pakistan will buy 4000 MW of electricity from Tajikistan and Kyrgyzstan using Kabul route about 700MW transmission lines costing about 600-700 million US dollars officials of the USAID and US Embassy in Islamabad, while talking to newsmen informally said the US State Department had already allocated funds and staff to promote electricity sales from the central Asian states to Pakistan and Afghanistan because the project would generate jobs and investment opportunities for people and companies and promote peace and stability in the region.

"This kind of project (is a) good way for helping us achieve policy goals, to help Pakistan achieve its energy goals. I think it is a win-in situation for everyone involved," said Chjristan De AnAngelis, deputy economic counselor of the US Embassy in Islamabad.

He said the project "first very well with the US foreign policy, which is to help build regional integration particularly between South and Central Asia".

International financial institutions, including the World Bank, Asian Development Bank, Islamic Development Bank, Japan Bank for International Cooperation, International Finance Corporation and USAID also expressed their "Strong desire to support" the project either through direct financing or guarantees and other risk management instruments, including insurance coverage.

The participants of the two day central Asia South Asia (CASA) electricity trade constituted a working group comprising the four member states and the IFIs to institution-alise progress on political, legal, technical and financial aspects of the 765 kilometer transmission line from Central Asian States to Pakistan via Afghanistan. The inclusion of US energy firm, AES Corporation, and Russian giant Rao-UES in the working group and future technical meetings was opposed by Pakistan and future technical meetings was opposed by Pakistan and Afghanistan on the ground that the project should be carried out in a transparent manner and on international competitive basis edge over other competing investors.

The project will provide much needed relief to Pakistan to meet its energy crises. Although the sale price has not been disclosed or finally worked out as get but it is commonly believed that it would cost much less than what is being paid to IPPs in Pakistan producing electricity on a prohibitive cost of furnace oil.