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Dushanbe May 20, 2013 Progress Update and Planning for Next Steps

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Kazakhstan Reserves: Oil 30 billion bbl Natural Gas 8585 TCF Coal 31.3 billion tons Hydro Power 20,000 MW Uzbekistan Reserves: Oil 594 million bbl Natural Gas 66 TCF Coal 3.3 billion tons Hydro Power 1,700 MW Turkmenistan Reserves: Oil 600 million bbl Natural Gas 280 TCF Coal Modest Hydro Power Modest Tajikistan Reserves: Oil 0.01 billion bbl Natural Gas 0.2 TCF Coal 3.6 billion tons Hydro Power 40,000 MW Kyrgyzstan Reserves: Oil 0.04 billion bbl Natural Gas 0.2 TCF Coal 0.9 billion tons Hydro Power 26,000 MW Central Asia is endowed with vast energy potential

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whereas Afghanistan and Pakistan face severe electricity shortages and rapidly increasing demand Electricity riots in Rawalpindi, Pakistan Guardian photo Country Population Million GNI per capita Current US$ Per Capita Electricity Consumption (kWh/year) Installed Capacity (GW) Access Rate Peak shortage (MW) Afghanistan 29310310.513%-- Pakistan 166100041319.884%5,022 Power network in Kabul, Afghanistan Kabulkarzaiblogspot photo

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The proposed CASA-1000 transmission facilities would: maximize the use of 1,300 MW renewable summer electricity surplus from existing plants in Central Asia (Kyrgyz Republic & Tajikistan) and provide electricity to consumers in electricity deficient South Asia (Afghanistan & Pakistan) 4

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5 Even without new power generation, Kyrgyz Republic and Tajikistan have sufficient electricity surplus during summers to warrant CASA-1000 Power domestic consumption and summer surplus (est. 2016 based on feasibility report) Tajikistan* Kyrgyz Republic *Tajikistan spills water from its dams without generating electricity during the summer

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The CASA-1000 project includes: 500 kV line Datka-Khudjand (477 km), with Tajik network transferring Kyrgyz exports to Sangtuda. Tajikistan Grid Strengthening. 1300 MW AC-DC Convertor Station at Sangtuda. 750 km HVDC line Sangtuda-Kabul- Peshawar. 300 MW Convertor Station at Kabul (with both import & export capability). 1300 MW DC-AC Convertor Station at Peshawar. 6

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CASA-1000 benefits all four countries: Ensures a steady source of revenue from surplus hydropower exports for Tajikistan and Kyrgyz Republic, the weakest economies in Central Asia Uses excess summer electricity that is currently being spilled Alleviates electricity shortages in Pakistan during the peak summer season Replaces fuel-based power generation in Afghanistan and Pakistan with clean hydropower Establishes Afghanistan as a viable transit country, enhancing growth prospects Requires no new power generation investments 7

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Project cost estimates per the feasibility study 8 Kyrgyz RepublicUS$ 200 million TajikistanUS$ 250 million AfghanistanUS$ 300 million PakistanUS$ 200 million Total US$ 950 million US$1 billion investment in countries with constrained borrowing capacity US State Department, AusAid, DFID, ADB, Islamic Development Bank, USAID, IFC and World Bank among the donors supporting pre-preparation activities

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Project Status Preparation work is proceeding with Joint Working Group (JWG) through monthly VCs and face-to-face meetings. IGC Secretariat strengthened Executive Director (ED) appointed; USAID funding additional Advisor to the ED; Secretariat accounts audited. Project commercial structure finalized two options were reviewed (with and without setting up a separate project company.) The option of Contractual JV (without an SPV for CASA) is preferred by JWG; IGC resolution has been developed and endorsed by two countries (Afghanistan and Tajikistan). Project commercial contract framework and Model PPA developed and is under review/discussion by the countries. IFC Agreement to support procurement of constructor/operator signed by all. The Joint Working Group is working closely with the IFC to prepare bidding documents for procuring engineer/procure/construct/operate services for the project. CASA-1000 included in the CAREC Energy Work Plan (2013-15). Communications established online (www.casa-1000.org)www.casa-1000.org 9

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The CASA IGC and JWG 10 Afghanistan WG Kyrgyz WG Pakistan WG Tajikistan WG Joint Working Group Intergovernment Council Afghanistan IGC member Kyrgyz IGC member Pakistan IGC member Tajikistan IGC member IGC Secretariat

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Two Main Options for Project Structure Option A: Contractual Joint Venture Option B: Corporate Joint Venture Countries preferred the Option A Project Structure

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Project past milestones MOU and Inter- Governmental Agreement (IGA) for CASA signed by all four countries Feasibility Study Update Completed First Inter- Governmental Council (IGC) meeting after feasibility update in Bishkek Joint Working Groups (WG) established Second IGC meeting in Dubai agrees on project implementation mobilizing finances Most of supporting studies completed; Commercial framework and model agreements drafted Aug08 Feb 11 Sep 11 Nov 11 May 12 13 Dec 12

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Key challenges for Project preparation Country capacity and commitment to work on commercial deal Maintain continued commitment and build capacity (country advisors) to sustain the overall momentum of the Project. One countrys slowness affects the entire process. Support in bidding process (bidding advisors - IFC) Perception from outside (links to Rogun/Kambarata, security in Afghanistan, etc.) Financing gap a critical issue A key assumption for the preferred structure is that the project will be fully financed by IFIs (no private investments). Two committed financiers (WB and IsDB); Gulf Coordination Group (aka Arab Funds) interested in financing via IsDB; the Russian offer remains on the table but its terms/conditions are not clear. Donors conference and visits to capitals planned for 2013. A narrow window late 2013 for approvals and much yet to do 14

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Proposed plan and actions IFC Agreement is signed by all countries IFC to secure funding (from Donors) for services / commence work Complete selection of Country Advisors Model PPA; Master Agreement and IGC resolution on key principles Adopting the IGC resolution Visit major donor capitals First Donor Conference Lending PCN review meeting Jan 13 Feb 13 Finalize commercial framework Mar 13 End-May 13 Dec 13 Filling the financing gap May 13 Oct 13 Commercial negotiations completed Bank Board Date 15

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Project building blocks 16 A. Countries ownership and readiness Dedicated Working Group headed by Deputy Minister level meets every month; Ministerial Inter Governmental Council (IGC) undertakes high level decisions; Full-time IGC Secretariat ED and international advisors in place B. Project structuring and legal framework Project Structure is agreed; Commercial framework designed; The Model Power Purchase Agreement (PPA) drafted; C. Project financing World Bank with IDB and Gulf Coordination Group (GCG) indicated their willingness to finance. Other potential co- financiers include KfW of Germany, Asian Development Bank, JICA of Japan, DFID of UK, and Russia D. Preparatory studies and assessments Project Feasibility Study completed Environment and Social Assessment and Avian Risk management study for the project completed Community Benefit sharing studies ongoing Security Risk Assessment and Mitigation Plan completed Development of open access rules ongoing

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17 www.casa-1000.org