CASA and the World Bank
EDITORIAL: As per a Business Recorder exclusive, the World Bank is likely to extend the closing date of Central Asia South Asia 1000 (CASA-1000) electricity transmission and trade project for three years (till December 2028). The reason: delays attributed largely to a restive Afghanistan as the required infrastructure is complete in Tajikistan and Kyrgyzstan (including the testing of the High Voltage Direct Current — HVDC — converter station) while in Pakistan the transmission line connecting the Nowshera grid to the electricity grid is 99 percent complete with 375 out of 376 towers complete and the remaining expected to be completed by June this year though the World Bank mission has submitted that (i) HVDC facilities will be tested only after the Afghanistan line is completed; (ii) additional financing will be required once the project goes into operational readiness in 2028 to meet NTDC's legal and technical obligations; and (iii) NTDC must update the information in STEP (step-by-step approach) by end of 2025.
Two observations are critical. First and foremost, this project envisages export of hydroelectricity from Kyrgyzstan and Tajikistan (upstream countries relative to Uzbekistan, an agricultural country, whose water supply may be negatively impacted) coupled with the worsening Afghan-Pakistan relations with rising terror attacks in Pakistan from across the border and retaliation by Pakistan armed forces as well as the decision to expel illegal Afghan refugees from Pakistan. It must be recalled that India pulled out of the Iran Pakistan gas pipeline due to its energy security concerns, and Pakistan may do well to take similar concerns on board with respect to CASA-1000, given the opposition to the project from within and outside the four CASA countries.
And secondly, CASA project began in 2016, a time when the country was suffering from massive daily load-shedding and this particular project was rightly viewed as one that would solve the country's energy shortfall at the cheapest rate possible without the need to construct expensive dams that would have required external financing — dams that are increasingly being opposed by multilaterals as challenging for the environment. Nine years later the situation is different on multiple counts: (i) insurance coverage costs for the required infrastructure in Afghanistan are expected to be prohibitive; (ii) Pakistan has surplus energy reliant on more expensive fuel, furnace oil. Though contracts signed by successive administrations with Independent Power Producers (IPPs) are in the process of being renegotiated — that include capacity payments and repatriation of profits in dollars — yet any additional power supply must take a back seat to first ensuring 100 percent vacation of existing generation, barring government operated generation companies that are at the bottom of the economic merit order; and (iii) the envisaged competitive electricity market may be further delayed as CASA is a government-to-government venture that would require a pledge by the government of Pakistan to pay Afghanistan the transit fees in dollars.
World Bank website indicates that since August 2001 it has provided 2 billion dollars to Afghanistan with 280 million dollars to Afghanistan Resilience Trust Fund (ARTF) — to UNICEF and the World Food Programme as Approach 1.0; it has supported the people of Afghanistan since 2022 by extending funds for health, education, food security, water services and livelihoods as Approach 2; and pledged to continue to make IDA funds to complement ARTF financing as Approach 3.0, which will include assuming CASA-1000 project in a ringfenced manner to ensure construction payments and future revenue to be managed outside Afghanistan and do not involve Interim Taliban Administration (ITA). Without active participation, the vacation of the electricity to Pakistan through CASA-1000 will remain dicey at best.
To conclude, given these circumstances, Pakistan, at the tail end of the supply chain, should reconsider delaying this project's implementation.
Copyright Business Recorder, 2025
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