TAHIR AMIN

ISLAMABAD: Central Asian countries have identified power investment needs of about $94 billion between 2017 and 2023, according to an Asian Development Bank (ADB)-commissioned study presented at an energy forum on Monday.

Further, the financing gap that the private sector has to fill in the same period amounts to about $38 billion.

The findings were presented at the 1st Energy Investment Forum (EIF) of the Central Asia Regional Economic Cooperation (CAREC). In preparation for the EIF, the ADB commissioned a study to identify specific opportunities for private investment in Central Asian countries.

“Energy is a key component for achieving broad-based and sustainable economic development for not only the CAREC countries but also for the entire Asia and Pacific region,” ADB Vice-President Wencai Zhang said in opening remarks. The event was organized by the ADB and the Private Power Infrastructure Board of Pakistan.

The EIF was held to highlight investment opportunities in the CAREC region by bringing together key government officials, project developers/sponsors, project financiers, equipment manufacturers, and engineering, procurement, and construction contractors. More than 150 high-level government officials and business leaders from 10 countries attended while main topic discussed was that how to introduce policies and incentives in CAREC member countries those support investments in the energy sector.

Participants shared experiences on successful investments in the CAREC countries, with selected case studies in CAREC member countries, including Pakistan. They also discussed that how development funding can be used to systematically address investment risks and encourage private sector participation in energy projects.

“In order to ensure a secure supply of energy, a substantial amount of investments will be needed over the next 20 to 30 years,” Zhang said, adding that energy is a key component for achieving broad based and sustainable economic development for not only the CAREC countries but also for the entire Asia and Pacific region. The 2009 study shows that for Asia to keep its current rate of economic growth, Asia will need $8.3 trillion in infrastructure investments. Specific to Central Asia, about $170 billion is needed in energy, about $100 billion in transport, about $80 billion for telecommunications and about $25 billion for water and sanitation. Based on the findings of the ADB new study, the financing needs would be much larger than original estimates.

To provide an update on the infrastructure investment needs for the region, said the ADB Vice-President, adding that a special study has been commissioned to look at the financing needs for electricity infrastructure for the Central Asian Countries of CAREC. This is a first of its kind study to include all the countries in Central Asia. It builds on an earlier pilot study in 2011 that looked at only Kazakhstan, Kyrgyz Republic, Tajikistan, and Uzbekistan, and a separate one for Afghanistan. The study asked each of the CAREC countries, except China, what their high priority projects are for the power sector for the next seven years - between 2017 and 2023. These projects total $94 billion. In addition, the study also found that the financing gap that the private sector has to fill is expected to be at about $38 billion, he added.

Since 2001, the ADB provided more than $2 billion in lending and technical assistance for CAREC-related regional connectivity projects. Our assistance helped construct the Uzbekistan-Afghanistan interconnection, which was completed in 2009; the Tajikistan-Afghanistan interconnection, which was completed in 2011, and the Turkmenistan-Afghanistan interconnection is under construction and expected to be completed by 2018.

These projects are a part of the larger Turkmenistan–Uzbekistan–Tajikistan–Afghanistan–Pakistan or TUTAP investment program. More recently, we have been providing assistance to the Turkmenistan-Afghanistan-Pakistan or TAP power interconnection program. In the gas sector, we are also assisting the Turkmenistan-Afghanistan-Pakistan-India pipeline or TAPI. We believe such interconnections will bring greater efficiency in the energy sector and will also lead to greater regional cooperation, a key component of regional growth and development.

According to the ADB’s Asian Development Outlook Update, he said that region will need to invest an extra $300 billion annually to meet the “2 degree” target for global warming. Given the demands facing Asia, in September last year, ADB’s President, Takehiko Nakao, announced that the ADB will double the climate financing of projects that help to mitigate greenhouse gas emissions and help countries adapt to climate change impacts—from $3 billion annually to $6 billion by 2020.

The CAREC program is a partnership of 10 countries (Afghanistan, Azerbaijan, the People’s Republic of China, Kazakhstan, Kyrgyz Republic, Mongolia, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan), supported by the six multilateral institutions, working together to promote development through cooperation. Georgia is set to be admitted as the 11 member. CAREC helps Central Asia and its neighbors realize their significant potential by promoting regional cooperation in four priority areas: transport, trade facilitation, energy, and trade policy.