ISLAMABAD: The World Bank is said to have shown reluctance in the arrangement of funds for the delayed Central Asia-South Asia-1000 (CASA-1000) energy trade project, maintaining it cannot change the financing terms of the loan, well-informed sources told Business Recorder.
CASA-1000 project will transmit 1300 MW of surplus electricity from existing hydel resources in Tajikistan and the Kyrgyz Republic through Afghanistan to Pakistan. Out of the 1300 MW of expected power, 300 MW is meant for Afghanistan while the remaining 1000 MW will be transmitted to Pakistan.
The project is at an advanced stage. However, project activities in Afghanistan have come to a halt due to freezing of funds by the World Bank for the Afghanistan portion of the project.
CASA-1000: WB rates progress as ‘moderately satisfactory’
Responding to a letter of Secretary Economic Affairs Division, which highlighted the impact of pausing of construction activities in the Afghanistan part of CASA-1000 project, that is causing delays in completion of the project and its commercial operation, the Country Director World Bank, Najy Binhassine, stated that the Bank understands the difficulty faced by CASA countries in repayment of loans, where project benefits are delayed due to stoppage of the work on the component in Afghanistan.
Najy Binhassine stated that the World Bank is currently actively exploring options on how to resolve this Issue adding that the World Bank’s lending to Pakistan for CASA-1000 is from International Development Association which provides credits on concessional terms.
He referred to the following points in Article II: (i) the Financing Agreement (Original Financing Agreement) between Pakistan recipient, and the International Development Association of May11, 2015, as amended, for the CASA-1000 project; and (ii) the Financing Agreement (Additional Financing Agreement) between the recipient and the Association of November 26, 2019, as amended, for the Additional Financing for the Project.
“These agreements set forth the financing terms and conditions that the project was approved upon and therefore we are unfortunately not able to make changes to the original terms and conditions as agreed in the financing agreements approved by the World Bank board of directors,” he said adding that World Bank will continue collaboration with the Government of Pakistan and with all interested stakeholders to find a solution for expeditious completion of the CASA-1000 project.
Recently Minister for Power and Petroleum Division and Minister for Energy and Water Resources Tajikistan met with other country representatives and World Bank officials on CASA.
The Minister for Energy and Water Resources Tajikistan mentioned that the three CASA countries are vigorously pursuing project activities at their respective areas to complete the required facilities by next year. However, the political developments in Afghanistan post 15 August 2021 have resulted into the stoppage of project activities due to suspension of funding by the World Bank.
He noted that repayment of financing on CASA debt has started in the CASA countries. Contractors are seeking compensation for the delays and additional cost for the period of validity of equipment guarantees from the converter station contractors; and proposed that a ministerial level meeting be arranged to discuss the issues as well as funding arrangements for Afghanistan portion.
The sources said a meeting of Joint Working Group level was held in Dubai, the primary objective of which was to discuss options for restarting construction activities in Afghanistan and mapping out the way forward for the project’s completion.
The sources further stated that the project may be included in the next Board meeting for specific discussion on next steps on Afghanistan program.
Copyright Business Recorder, 2023
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