Kabul to cut power transit fee

July 08, 2014 - 1:54:51 am

ISLAMABAD: Afghanistan has hinted that it may reduce the transit fee it wants to levy on electricity imported from Tajikistan and Kyrgyzstan through the proposed 1000-megawatt Central Asia-South Asia (CASA-1000) transmission line project.

This has raised hopes in Islamabad, where policymakers were concerned by recent offers made by Moscow to its former central Asian states to buy out all surplus energy because Kabul’s exorbitant demands for transit fees were becoming an irritant for Tajikistan and Kyrgyzstan, despite all possible support by the United States and the World Bank.

A senior government official said that in a couple of recent interactions with Finance Minister Ishaq Dar, both the Afghan ambassador in Islamabad and the Afghan finance minister gave clear indications that Kabul was ready to show flexibility.

Kabul had been demanding 2.5 US cents per unit as transit fee for the delivery of Central Asian electricity to Pakistan, a demand considered “unreasonable and unrealistic” by Islamabad.

Pakistan had offered to pay 0.56 US cents per unit to Afghanistan, according to World Bank estimates.

But in the interests of moving the project along, Finance Minister Ishaq Dar is reported to have conveyed: “As a goodwill gesture towards a friendly neighbour, we can go up to 0.99 cents per unit but will not cross one cent per unit,” an official privy to the communication said. 

The official said Afghanistan’s response was very encouraging as it signalled willingness on its part to move things forward. 

The Afghan side, he said, was appreciative of Pakistan’s overtures, including Pak-Afghan transit trade, and admitted that it was time for Kabul to reciprocate.

Energy and economic affairs officials from both sides were directed to follow up and technical teams are expected to meet soon. But a final decision would be announced only after the new Afghan president takes office in a few weeks.

This move comes as Pakistan and Tajikistan agreed on a sale purchase rate of 5.1 cents per unit under the CASA-1000 project during a recent visit there by Prime Minister Nawaz Sharif.

Buying electricity from Central Asia suits Pakistan because it can feed Pakistan’ struggling power grid during the summer months when demand is highest.

Originally, Tajikistan had also sought 3.5 cents per unit, but then increased the asking rate to seven cents per unit. Finally, the deal was closed at 5.1 cents per unit.

Peace in Afghanistan continues to remain a major challenge to the project because a major part of the transmission line has to pass through troubled parts of Afghanistan.