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First Asian power grid gets going

ISLAMABAD — The first Asian power grid got going this week as oil prices continued to soar, while demand for energy is overshooting all projections.

The power grid, the first of this magnitude, will have a transmission network of 765 kms. The tentative cost estimate: between $500 to 800 million. But it can come down to a range as low as $340 to 490 million, depending on the route and transmission capacity.

The grid connecting Central Asia to Pakistan will provide 4,000 megawatts of electricity to begin with and can expand fast depending on the demand projections and the still open possibility of India and other countries joining later as consumers.

These decisions were taken at this week’s Islamabad conference of energy ministers of Tajikistan, Kyrgyzstan, Afghanistan and Pakistan. The Tajikistan, Kyrgyzstan, Afghanistan, and Pakistan (TKAP) electricity transmission line will provide Tajik and Kyrgyz power to Pakistan.

The seven-nation South Asian Association for Regional Cooperation (SAARC), that links together Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka already have announced plans to establish an Asian Energy Grid (AEG), besides expanding cooperation in trade, investment, and transportation.

UN Economic Commission for Asia & Far East too has bigger plans to link the region in these fields.

TKAP will transmit electricity from Central Asia to Pakistan and Afghanistan, via the Afghan cities of Pul-e-Humri, Kabul and Jalalabad, according to the decision of the four Energy Ministers, Liaqat Ali Jatoi, the Pakistani Minister for Water and Power said while announcing outcome of the two-day talks with his three other counterparts.

Survey of the route of the transmission line has been done and Pakistan wants its completion within the shortest possible time, as its energy needs are increasing day-by-day, Jatoi said.

"Substantial progress has been made on the TKAP project as all the stakeholders have agreed to transmit electricity via Kabul to Pakistan." Pakistan, he said, has decided to buy 4,000 MW electricity from Tajikistan and Kyrgyzstan. TKAP working group will firm up the grid plans in its meeting at Dushanbe in October this year. The International Financial Institutions (IFIs) have nominated the World Bank as the lead manager for the project. "When there is a will, there is away," said Jatoi, when asked how will the security of the transmission line be assured as it passes through turbulent Afghanistan.

The World Bank, Islamic Development Bank, Asian Development Bank, and Japan Bank for International Cooperation and other IFIs are ready to finance the project. "We are just waiting for funds to be released, as the IFIs and the private electric supply companies have shown their interest in the TKAP project," Jatoi said.

Pakistan already has signed a memorandum of understanding (MOU) with Tajikistan for supply of 1,000 MW of power through Afghanistan.

Afghan Deputy Minister Mohammad Jalil Shams said, "The transit fee for TKAP will not be a hurdle in materialising the project, because our government considers the project as of great importance for our people ….All the countries will jointly assure security of the transmission line." He extended these assurances after USAID and IFIs expressed concern over the security of the transmission line as Afghanistan remains disturbed.

Pakistan itself has a potential to generate 40,000 MW of hydel power which it is also planning to harness by building five mega water and electricity projects by 2016.

Pakistan is also negotiating with Iran for import of electricity for its South-Western province of Balochistan, located close to the Gulf.

The joint declaration issued after the talks says, "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, electricity, financing structures, possible risks and risk mitigation." "This was the first conference of this nature at the technical level. It was held in a very cordial atmosphere with frank discussion on the various matters related to trade of electricity between Central Asia and South Asia," it said.

International interest in TKAP grid is high because of the ongoing Washington-Iran nuclear tussle, its effect in pushing up oil prices while countries like Pakistan require assured energy supplies to stay on high growth trajectories. This was illustrated by state and private sector representation at the Islamabad conference. Besides Mr Jatoi, who hosted the conference, it was attended by Tajik Deputy Prime Minister Assadullo Ghulomov, Adviser to the Kyrgyz Prime Minister Omorov Janybek, and Afghan Deputy Minister Mohammad Jalil Shams.

IFIs were represented by the World Bank (WB), Islamic Development Bank (IDB), Asian Development Bank (ADB), International Finance Corporation (IFC), Japan Bank for International Cooperation (JBIC), USAID, and US Department of State. Giant international private sector companies including AES Corporation of US, and Russian electricity giant Rao-Unified Energy System (UES), also participated.

USAID and IFIs’ informed the Islamabad conference of their "strong desire to support the TKAP project" by way of direct financing, or guarantees and other risk management instruments, including insurance cover. Christian DeAngelis, from US said the project fits very well with the US foreign policy.

"The US policy is to help build regional integration, particularly between South Asia and Central Asia," he said. Washington is also trying to divert India and Pakistan interest away from the proposed Iran-Pakistan-India gas pipeline, in order to punish Teheran for its nuclear plans. It is trying to help Islamabad and New Delhi to look for alternate sources of energy. Washington also hopes that by supporting such alternate projects, it will dissuade Islamabad to go for nuclear power in a big way.

Prime Minister Shaukat Aziz, however, says Pakistan plans to generate 8,500 MW nuclear power by 2015 to cut down on expensive oil imports and ensure the country’s economic growth of seven per cent plus a year. The Planning Commission estimates the power demand to rise from 15,500 MW in 2005 to 21,500 MW in 2010 at an annual average rate of 7.9 per cent. Pakistan’s present generating capacity, in state and private sectors is 19,389 MW. The energy sector comprises power, natural gas, petroleum and coal which supplies 50.8 million tones of oil equivalent (toe). The supply is contributed 29.9 per cent by oil, 49.7 per cent by natural gas, 13.5 per cent by electricity, 6.5 per cent by coal, and 0.4 per cent by liquified petroleum gas. Installed capacity of nuclear power is 462 MW.

Robyn McGuckin, Regional Coordinator and Progranmmne Manager for South Asia Regional Initiative for Energy of USAID said this programme is supported by the State Department, with precisely the mandate of promoting regional energy trade.

Raghuveer Sharma, World Bank team leader for South Asia, suggested that a part of the financial assistance pledged by the international donors for Afghanistan should be set aside and placed in the Bank’s trust fund to pay for Kabul’s electricity consumption when TKAP starts operating.

Kyrgyzstan informed the conference it has 6,000 MW surplus power of which 3,000 MW can be exported in summer.

Kyrgyzstan has two big power plants, including 1.2 giga-watt hydro power plant at Toktogul, and a 0.76 giuga-watt thermal plant at Frunz. It will also build a 6.8 giga-watt hydel plant by 2010.

Pakistani experts estimate the price of Central Asian electricity will be two to three US cents (2 to 3 cents) per unit. They also estimate the length of the tranmission line from Rogun in Tajkistan to Pakistan via Afghan city of Jalalabad will be 650 kms. Tajkistan will lay 170, Afghanistan 430 and Pakistan 50 km of the transmission line. If a 500 KV line is laid, it will cost $340 million. But, if a 760 KV line is laid the cost will go up to $490 million, according to preliminary estimates that need to be firmed up.