The Central Asia-South Asia Electricity Transmission and Trade Project (CASA-1000), a $1.2 billion regional initiative, will resume in Afghanistan following requests from three neighboring countries, World Bank says.
The project aims to bring clean energy from Tajikistan and the Kyrgyz Republic to Pakistan through Afghanistan. As construction nears completion in the other participating nations, resuming work in Afghanistan is crucial to avoid the risk of the project becoming a stranded asset.
The project in Afghanistan will resume in a ring-fenced manner to ensure all construction payments and future revenue are managed outside of Afghanistan.
The project was approved by the World Bank Board in March 2014 with financing from the International Development Association (IDA). However, all implementation activities were stopped in the wake of the political situation in August 2021.
Before the project was paused, about 18% 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.
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.
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.
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.
The ring-fenced resumption will be in two phases: construction, expected to take three years, and operations after that.
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. ///nCa, 28 February 2024 (based on WB press releases)