Work on Afghan portion of CASA-1000 all set to be resumed after long delay

ISLAMABAD  -  After a pause of two and a half years, work on the Afghanistan portion of Central Asia-South Asia Electricity Transmission and Trade Project (CASA-1000) project is all set to be resumed. Work on the CASA-1000 project was paused and all development activities were stopped in August 2021 due to the political unrest in Afghanistan and fol­lowing the return of Taliban to power.

The CASA-1000 is a $1.2 billion region­al project with 1,270km power transmis­sion line planned to export hydropower generated from Tajikistan and Kyrgyz­stan to Pakistan via Afghanistan. The project was approved by the World Bank Board in March 2014 with financing from the International Development Associa­tion (IDA). According to the World Bank announcement, prior to the pause about 18 percent of the towers for the Afghani­stan portion of the CASA Transmission Line had been erected and about 95% of the materials and equipment needed to complete the project in the country had been supplied. Kyrgyz Republic, Tajiki­stan, and Pakistan continued the imple­mentation of CASA-1000 and construc­tion activities are nearly complete in all three countries, the bank said.

According to the details shared by World Bank, the completion of the Af­ghanistan portion is critical as it is the key inter-linking country for the CASA-1000 transmission line. The work in the three other countries is nearly complete and they have started to repay loans to the World Bank and other financiers. If the CASA-1000 project is not completed and operationalized, there will be sig­nificant economic and financial losses for the Kyrgyz Republic, Pakistan and Tajikistan – most notably a $1 billion worth of stranded assets, said the bank.

The Bank said that CASA countries have explored options to bring in private financing to cover the costs of complet­ing project activities in Afghanistan. As no investors or banks expressed interest, the countries have asked the World Bank to resume the project in Afghanistan by continuing its original IDA financ­ing to complete the project. The World Bank has therefore decided to resume CASA-1000 in a ring-fenced manner, it added. A ring-fenced structure would ensure all construction payments and future revenue are managed outside of Afghanistan and do not involve interim Taliban administration (ITA) systems. It will also strengthen the existing imple­mentation arrangements agreed at the time of project approval in 2014. These arrangements include the use of interna­tional consultants to supervise progress, compliance with the World Bank’s en­vironmental and social safeguards, and using third-party monitoring to verify progress and certify contractor invoices, the announcement maintained.

The ring-fenced resumption will be in two phases: construction, expected to take three years, and operations after that. In both phases all payments will remain off-budget outside of ITA control and off­shore, the bank noted. The construction phase will use existing contractual ar­rangements, with firms paid outside of Af­ghanistan, using existing IDA16 financing, it maintained. According the World Bank, the existing $110 million in uncommitted balance in the project that was paused in 2021 will be used to resume the project. No new IDA resources are proposed or an­ticipated for the completion of project ac­tivities in Afghanistan. During the project construction phase, the World Bank will make payments directly to the offshore accounts of international contractors and consultants, based on verification of invoices by the independent monitoring agency. For the operations phase, Offshore Account Bank (Abu Dhabi) arrangements are in place to ensure that payments and revenue are ring-fenced offshore as per commercial contractual agreements with requirements for no objection for use for specified purposes, including purchase of electricity from Tajikistan and Kyrgyz Republic under the CASA-1000 and other existing power purchase agreements.

Meanwhile, the government of Paki­stan welcomed the resumption of CASA-1000 activities in Afghanistan by the World Bank. “The government of Paki­stan welcomes the recent announcement by the World Bank that, amongst other initiatives in support of the people of Af­ghanistan related to its “Approach 3.0”, the CASA-1000 in Afghanistan will be resumed as had been requested in De­cember by all three neighbouring coun­tries participating in the project, the statement said. This announce­ment marks a significant step forward in the region’s commitment to energy col­laboration.” As a result, the government of Pakistan is pleased to announced it has joined the other neighbouring countries – the Kyrgyz Republic and the Republic of Tajikistan – in signing a Joint Declaration to thank the World Bank for its timely re­sponse in approving the “ring-fenced” re­sumption of construction in Afghanistan, as well as to confirm their agreement to fully support the World Bank in imple­mentation of the parameters agreed with its Board for resumption of CASA-1000 construction activities in Afghanistan, the statement said.

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