Progress Update and Planning for Next Steps

Dushanbe May 20, 2013

Central Asia is endowed with vast energy potential

Kazakhstan
Oil Natural Gas Coal Hydro Power Reserves: 30 billion bbl 85 TCF 31.3 billion tons 20,000 MW

Kyrgyzstan
Oil Natural Gas Coal Hydro Power Reserves: 0.04 billion bbl 0.2 TCF 0.9 billion tons 26,000 MW

Uzbekistan
Oil Natural Gas Coal Hydro Power Reserves: 594 million bbl 66 TCF 3.3 billion tons 1,700 MW

Turkmenistan
Oil Natural Gas Coal Hydro Power Reserves: 600 million bbl 280 TCF Modest Modest

Tajikistan
Oil Natural Gas Coal Hydro Power Reserves: 0.01 billion bbl 0.2 TCF 3.6 billion tons 40,000 MW

whereas Afghanistan and Pakistan face severe electricity shortages and rapidly increasing demand
Country Afghanistan Pakistan Population GNI per capita Million Current US$ 29 166 310 1000 Per Capita Electricity Installed Consumption Capacity (kWh/year) (GW) 31 413 0.5 19.8 Access Rate 13% 84% Peak shortage (MW) -5,022

Power network in Kabul, Afghanistan

Kabulkarzaiblogspot photo

Electricity riots in Rawalpindi, Pakistan

Guardian photo

The proposed CASA-1000 transmission facilities would: maximize the use of 1,300 MW renewable summer electricity surplus from existing plants in Central Asia (Kyrgyz Republic & Tajikistan) and provide electricity to consumers in electricity deficient South Asia (Afghanistan & Pakistan)

Even without new power generation, Kyrgyz Republic and Tajikistan have sufficient electricity surplus during summers to warrant CASA-1000
Power domestic consumption and summer surplus (est. 2016 based on feasibility report) Tajikistan* 3,750 GWh Kyrgyz Republic 2,150 GWh

18,815 GWh

Summer surplus Domestic consumption

14,585 GWh

*Tajikistan spills water from its dams without generating electricity during the summer

The CASA-1000 project includes:

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-KabulPeshawar.

300 MW Convertor Station at Kabul (with both import & export capability).

1300 MW DC-AC Convertor Station at Peshawar.

CASA-1000 benefits all four countries:

Ensures a steady source of revenue from surplus hydropower exports for Tajikistan and Kyrgyz Republic, the weakest economies in Central Asia Uses excess summer electricity that is currently being spilled Alleviates electricity shortages in Pakistan during the peak summer season Replaces fuel-based power generation in Afghanistan and Pakistan with clean hydropower Establishes Afghanistan as a viable transit country, enhancing growth prospects Requires no new power generation investments
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Project cost estimates per the feasibility study Kyrgyz Republic Tajikistan Afghanistan Pakistan Total US$ 200 million US$ 250 million US$ 300 million US$ 200 million US$ 950 million

US$1 billion investment in countries with constrained borrowing capacity US State Department, AusAid, DFID, ADB, Islamic Development Bank, USAID, IFC and World Bank among the donors supporting pre-preparation activities
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Project Status
Preparation work is proceeding with Joint Working Group (JWG) through monthly VCs and face-to-face meetings. IGC Secretariat strengthened Executive Director (ED) appointed; USAID funding additional Advisor to the ED; Secretariat accounts audited. Project commercial structure finalized two options were reviewed (with and without setting up a separate project company.) The option of Contractual JV (without an SPV for CASA) is preferred by JWG; IGC resolution has been developed and endorsed by two countries (Afghanistan and Tajikistan). Project commercial contract framework and Model PPA developed and is under review/discussion by the countries. IFC Agreement to support procurement of constructor/operator signed by all. The Joint Working Group is working closely with the IFC to prepare bidding documents for procuring engineer/procure/construct/operate services for the project. CASA-1000 included in the CAREC Energy Work Plan (2013-15). Communications established online (www.casa-1000.org)

The CASA IGC and JWG

Intergovernment Council IGC Secretariat

Afghanistan IGC member

Kyrgyz IGC member

Pakistan IGC member

Tajikistan IGC member

Joint Working Group

Afghanistan WG

Kyrgyz WG

Pakistan WG

Tajikistan WG
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Project Structure
Two Main Options for Project Structure
Option A: Contractual Joint Venture Option B: Corporate Joint Venture

Countries preferred the Option A

Government of Kyrgyzstan (GOK)

Government of Tajikistan (GOT)

IGC

Government of Afghanistan (GOA)

Government of Pakistan (GOP)

H G A

H G A

Debt

Debt

Project Agreements
National Electric Grid JSC OJSHC Barki Tojik DABS Central Power Purchase Agency

Power Purchase Agreements incorporating the STCs

Standard Transmission Terms & Conditions ( Commercial Rules and Technical Rules) (STCs)

Debt

Construction Agreements

O&M Agreement re DC Line

EPC Contractor

DC Facilities O&M Contractor

Consortium Agreement ?

Figure 1: Option A- The Contractual Joint Venture

Debt

IFIs and Donors

H G A

H G A

Project past milestones

First InterGovernmental Council (IGC) meeting after feasibility update in Bishkek Second IGC meeting in Dubai agrees on project implementation mobilizing finances Most of supporting studies completed; Commercial framework and model agreements drafted

MOU and InterGovernmental Agreement (IGA) for CASA signed by all four countries

Feasibility Study Update Completed

Joint Working Groups (WG) established

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Key challenges for Project preparation

Country capacity and commitment to work on commercial deal
Maintain continued commitment and build capacity (country advisors) to sustain the overall momentum of the Project. One countrys slowness affects the entire process. Support in bidding process (bidding advisors - IFC) Perception from outside (links to Rogun/Kambarata, security in Afghanistan, etc.)

Financing gap a critical issue

A key assumption for the preferred structure is that the project will be fully financed by IFIs (no private investments). Two committed financiers (WB and IsDB); Gulf Coordination Group (aka Arab Funds) interested in financing via IsDB; the Russian offer remains on the table but its terms/conditions are not clear. Donors conference and visits to capitals planned for 2013. A narrow window late 2013 for approvals and much yet to do
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Proposed plan and actions

IFC to secure funding (from Donors) for services / commence work

Finalize commercial framework

Model PPA; Master Agreement and IGC resolution on key principles

IFC Agreement is signed by all countries

Complete selection of Country Advisors

Adopting the IGC resolution

Lending Commercial PCN review negotiations Bank Board meeting completed Date

Visit major donor capitals

First Donor Conference

Filling the financing gap

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Project building blocks

A. Countries ownership and readiness Dedicated Working Group headed by Deputy Minister level meets every month; Ministerial Inter Governmental Council (IGC) undertakes high level decisions; Full-time IGC Secretariat ED and international advisors in place B. Project structuring and legal framework Project Structure is agreed; Commercial framework designed; The Model Power Purchase Agreement (PPA) drafted; C. Project financing World Bank with IDB and Gulf Coordination Group (GCG) indicated their willingness to finance. Other potential cofinanciers include KfW of Germany, Asian Development Bank, JICA of Japan, DFID of UK, and Russia D. Preparatory studies and assessments Project Feasibility Study completed Environment and Social Assessment and Avian Risk management study for the project completed Community Benefit sharing studies ongoing Security Risk Assessment and Mitigation Plan completed Development of open access rules ongoing

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www.casa-1000.org

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