CAREC Institute Contributes to Discussions about Energy Corridor CASA-1000

On December 6, Mr. Khalid Umar, Chief of Strategic Planning Division, and Dr. Ghulam Samad, Senior Research Specialist of the CAREC Institute, participated and contributed at the 25th Sustainable Development Conference organized by CAREC Institute’s partner organization — the Sustainable Development Policy Institute (SDPI) in Islamabad, Pakistan. Dr. Ghulam Samad spoke at the panel discussion about “Energy Corridors: CASA 1000”. The conference, titled “Sustainable Development in Unusual Times: Building Forward Better”, was held to promote dialogue and discussion among representatives of the government, civil society organizations, think tanks, academia, and the private sector, as well as international development partners.

Dr. Ghulam Samad spoke about the history of CASA-1000, its progress, current issues and provided some recommendations for policy actions. The CASA-1000 was initiated in 2006 to create conditions for sustainable trade in electricity between Central Asian countries of the Kyrgyz Republic and the Republic of Tajikistan and the South Asian countries of the Islamic Republic of Afghanistan and the Islamic Republic of Pakistan. The project provides mutual benefit from the cross-border energy connectivity for its participating countries, allowing them to trade energy at competitive prices, diversify energy sources and routes. While most CAREC countries are rich in fossil and hydro resources, other countries, particularly in South Asia, face challenges in meeting energy demand from domestic resources. The uneven distribution of energy resources in the region and their seasonal complementarities provide a strong imperative for regional collaboration and partnerships. Hence, creating smart links throughout the region to allow energy to flow from countries with excess supply to those with high demand will reinforce energy security and economic gains for all. The interconnection of natural gas and electricity industries across borders can justify mobilizing investments by expanding market size. Increased competition and lower costs lead to a win-win situation for all countries involved, creating a more conducive environment for broader economic integration and trade. These are aligned with CAREC Energy 2030 Strategy.

The CASA-1000 project is facing implementation challenges. However, the progress in most of the activities is moderately satisfactory. Two critical elements for the successful implementation and operation of the CASA-1000 project are the implementation of the open access regime and the possibility of reverse power flows from Pakistan to Tajikistan, which were discussed at length during several meetings. Dr. Ghulam Samad highlighted that the vertically integrated value chains continue to dominate in many CAREC countries. Therefore, separating the individual activities into distinct entities for generation and network-related activities will enhance the performance of the sector, as each entity will have to sustain itself financially without backup and cross-subsidies from the vertically integrated structure. Current end-user tariff rates in many CAREC countries are low and service quality lags because low rates do not reflect the actual costs incurred in operating and maintaining the network, let alone crucial investments are needed to perform quality service over a longer period. “For this, an adequate definition of the base cost, the gradual elimination of energy subsidies, the creation of a cleaner energy balance and the diversification of the economy are important,” said Dr. Ghulam Samad.