What is CASA-1000?
The Central Asia-South Asia Electricity Transmission and Trade Project (CASA-1000) is a $1.2 billion regional power project designed to bring the benefits of interconnectivity to four countries Kyrgyz Republic, Tajikistan, Afghanistan and Pakistan.
The project will contribute to fighting climate change by providing opportunities for development and use of clean renewable hydropower.
It will help develop the energy sector in all four countries, while providing better and more sustainable access to energy for people and businesses. The project was approved by the World Bank Board in March 2014 with financing from the International Development Association (IDA).
What is the current status of the CASA-1000 project in Afghanistan and other participating countires?
The CASA-1000 project in Afghanistan was paused and 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.
Kyrgyz Republic, Tajikistan, and Pakistan continued the implementation of CASA-1000 and construction activities are nearly complete in all three countries.
Why is it important to resume CASA-1000 in Afghanistan?
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.
What options have been explored to resume CASA-1000 activities in Afghanistan?
CASA countries have explored options to bring in private financing to cover the costs of completing project activities in Afghanistan. As no investors or banks expressed interest, 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.
What does a “ring-fenced resumption” look like?
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. It will also strengthen the existing implementation arrangements agreed at the time of project approval in 2014. These arrangements include the use of international consultants to supervise progress, compliance with the World Bank’s environmental and social safeguards, and using third-party monitoring to verify progress and certify contractor invoices.
The ring-fenced resumption will be in two phases: construction, expected to take three years, and operations after that. In both phases all payments will remain off-budget outside of ITA control and offshore. The construction phase will use existing contractual arrangements, with firms paid outside of Afghanistan, using existing IDA16 financing.
The existing $110 million in uncommitted balance in the project that was paused in 2021 will be used to resume the project. No new IDA resources are proposed or anticipated for the completion of project activities in Afghanistan.
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.
