TAPI & CASA-1000, Energy grid in the making

The energy-rich Central Asia has been the centre of attention of energy-hungry South Asian states especially Pakistan, Afghanistan and India. Two projects, Turkmenistan–Afghanistan–Pakistan–India (TAPI) Pipeline and Central Asia-South Asia (CASA-1000) electricity transmission project are of monumental importance in this regard. The groundbreaking ceremony of the former was performed in December 2015 while the latter was inaugurated on May 12, 2016. This write-up is an effort to present a comparative analysis of both these projects as these are being seen as revolutionary step toward resolving the chronic issues of South Asia.

Introduction

Central Asian republics — the Kyrgyz Republic, Tajikistan, Kazakhstan, Turkmenistan and Uzbekistan — and South Asian states of Pakistan, Afghanistan and India, have been pursuing the electricity trading arrangements and the establishment of a Central Asia-South Asia Regional Electricity Market (CASAREM) since long. Currently, there are two such projects — the TAPI and the CASA-1000 — which are rightly said to have the potential to change the fate of the region. Major regional players as well as international agencies such as the Asian Development Bank (ADB), the World Bank (WB), the Islamic Development Bank (IDB), and the United States Agency for International Development (USAID) are pledged partners for both the projects. Among the CARs, Kyrgyzstan and Tajikistan have huge hydropower potential while Kazakhstan, Turkmenistan and Uzbekistan have abounding fossil fuels reserves. The two abovementioned projects would be a significant financial benefit to exporters in Kyrgyzstan, Tajikistan, and Turkmenistan and they will also provide a direly-needed boost to the power supplies in Afghanistan, Pakistan, and India while, simultaneously, would also boost regionalism. Here is a fleeting look at both these projects.

TAPI

“The TAPI gas pipeline project will help promote peace and trade amongst the regional countries.”
Mian Muhammad Nawaz Sharif

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Prime Minister of Pakistan

The Turkmenistan–Afghanistan–Pakistan–India (TAPI) Pipeline, or Trans Afghanistan Pipeline, is a 1,814km pipeline, named after the countries it is designed to cross. The project aims to export up to 33 billion cubic metres (bcm) of natural gas per year from the world’s second largest natural gas field of Galkynysh, Turkmenistan, to other three TAPI countries. The pipeline will pass through Afghanistan’s Herat and Pakistan’s Balochistan before entering India at Fazilka.

The TAPI will reopen a historic route that reconnects South Asia to Central Asia, in the way it was before the British Empire sealed it off. It will also bring South Asian countries much-needed energy at competitive pricing, and could easily supply a quarter of Pakistan’s gas needs, about 15 percent of India’s projected needs, as well as Afghanistan’s requirements, by the time it is completed in the 2020s. Energy is a growing need of Pakistan and the proximity and the abundance of Turkmenistan’s reserves make it an attractive proposition for the country. Besides, the TAPI pipeline gives this fractured region a reason to work on a project together as well, and it is hoped the shared stakes in TAPI’s success will ensure that Pakistan, India and Afghanistan find ways for cooperating on other issues as well.

Although the pipeline has been under discussion since 1995, it came into limelight when Turkmenistan, Afghanistan and Pakistan signed a pipeline pact in 2002. India was formally admitted as a member only in 2008. In the last 10 years, TAPI has been one of the main agenda items at every major conference on Afghanistan and also an integral part of the American ‘New Silk Road Strategy’. It is expected that the pipeline could now be operational in the next four years.

CASA 1000

The Central Asia-South Asia electricity import project for supplying surplus central Asian power in the summers to Afghanistan and Pakistan is the second big project. It’s a $1.16 billion project between Tajikistan, Kyrgyzstan, Afghanistan and Pakistan. CASA-1000 falls under the Central Asian Regional Economic Cooperation (CAREC) programme. The basic premise for the CASA-1000 project is that the Central Asian countries have existing (in the Kyrgyz Republic) or potential (in Tajikistan) surplus of clean energy in summer from their existing hydropower plants without new generation, which is supported by the analysis of past exports and spillage of water. Nearby in South Asia, Afghanistan and Pakistan suffer from chronic electricity shortages while trying to keep pace with a fast-growing demand for it. The potential of the two CASA could be used to offset shortages in Afghanistan and Pakistan.

The summer surplus is primarily linked to the operation of the Nurek and Toktogul reservoirs, which regulate the releases in the Vaksh River (Tajikistan) and the Naryn River (Kyrgyz Republic) respectively.

Pakistan, Afghanistan, the Kyrgyz Republic and Tajikistan have been pursuing the development of electricity trading arrangements and the establishment of the Casa Regional Energy Market (CASAREM) since 2005, starting with the supply of 1,300MW to Pakistan in a few years and going up to 2,800MW in the subsequent years.

The economic analysis of the project suggests that the levelised delivered price would be about 9.50 US cents per kwh till 2035.

Pakistan is expecting its electricity demand to more than double in 10 years to 45,000MW. However, enough investment is not expected for a timely addition of domestic generation capacity, notwithstanding the huge Chinese push under the China-Pakistan Economic Corridor.

Critical Analysis

• Analysts say lack of security is the main challenge to realizing the TAPI pipeline and to a lesser extent the CASA-1000 transmission line. Stakeholders fear that in the absence of security, such multi-billion dollar projects would be taken hostage by militants.
• In respect of CASA 1000, during the construction phase and potentially during the operations stage, there will be some removal of vegetation for right-of-way maintenance and for access roads and other associated facilities, which would impact the environment in negative manner.
• For CASA 1000, the existing system of Tajikistan is mainly hydro (4,900 MW or 94%), with some thermal plants (318 MW or 6%) providing extra energy in dry seasons and peak periods. Existing thermal plants consist of the rehabilitated Dushanbe plant and the Yavan plant. These plants are old and with very high variable cost, mainly used during winter. The capacities shown reflect the projected rehabilitation and the maximum attainable energy production; however the plants are not being considered as a source for exports to CASA. The Kyrgyz Republic’s existing system is mainly hydro (2,910 MW or 85%), with some thermal plants (530 MW or 15%) providing the extra energy in dry seasons and peak periods. The thermal system consists mostly of the Bishkek plant, with a minor contribution from the Osh plant. These plants are old and with very high variable cost, mainly used during winter. Kyrgyzstan’s dams have been plagued by turbine failures and new projects have stalled because of funding issues. So this could lead to the interruption in transmission to Afghanistan and Pakistan. Furthermore, the cost of purchasing could be increased for both importing countries — Afghanistan and Pakistan.
• Another criticism over the CASA-1000 project relates to whether Kyrgyzstan and Tajikistan can actually manage to supply electricity to South Asia. Although both countries have great hydropower potential, they both suffer from shortages in the wintertime, forcing them to import electricity from neighbouring states.
• In addition to moving Turkmenistan closer to realizing its objective of becoming an energy-exporting economic tiger, the TAPI pipeline will also change the regional diplomacy of Central Asia through the establishment of connectivity with India. The success of a trans-national Central Asia-to-India pipeline would certainly spur the expansion of current efforts to create road and rail transportation connectivity between Central Asia and South Asia.
• The TAPI pipeline and CASA 1000 are one of the important lynchpins of the New Silk Road strategy.
• Russia has indicated interest in the project, in spite of the public opposition raised by Turkmenistan. As Russia tries to wrest control of the energy-abundant former Soviet states, the new states are assertive in trying to break free from such control. Turkmenistan in particular has been working to create an alternate pipeline network and to lower its dependence on Russia for certain gas exports. Russia’s backdoor entry into the TAPI project rides heavily on its ability to delay or derail it. · TAPI has ignited fears in Iran of being left out in the new energy export economy and the region’s rapidly developing web of natural gas and oil pipelines. Iran itself needs ever-growing supplies of Turkmen natural gas for its winter heating and fuel requirements and to pump gas to pressurize its aging oil fields to keep them productive. If TAPI is built, Turkmenistan’s dependence on Iranian export routes would be considerably reduced.
• In conflict-ridden Afghanistan, the TAPI has seen a convergence of interests, of both great powers and regional players. Especially, the US hopes that TAPI will, in all likelihood, wean India of the Iran-Pakistan (IP) gas pipeline from Iran’s South Pars gas complex in the Persian Gulf.
• Meanwhile in Afghanistan, the Asian Development Bank is financing an effort to unify the country’s power grid. Titled TUTAP (Turkmenistan-Uzbekistan-Tajikistan-Afghanistan-Pakistan), the project is currently the subject of government infighting over routes. Both TUTAP and CASA-1000 seek to address this issue — with additional lines and important converter stations — but there still remain a multitude of challenges to overcome.

Conclusion

On the surface, Central Asia and South Asia are a perfect fit: South Asians need energy to expand their economies; Central Asians have energy to sell and need to expand and diversify their revenue streams. In the cases of TAPI and CASA-1000, there seems to be genuine interest among Central Asian states as both CASA-1000 and TAPI have received international support and funding, and tangible progress has been made in implementing both projects. Considering the genuine interest of all participating countries and support from international donors, the TAPI pipeline and CASA-1000 transmission line have the potential to change the fate of the region.