Turkmenistan : National Power Grid Strengthening Project

Energy / Electricity transmission and distribution

Turkmenistan is a sparsely populated country with a total population of about 5.7 million, the lowest among Central Asian countries. Its economy is built around its vast hydrocarbon resources: Turkmenistan is the 12th largest natural gas producer in the world, and the 10th biggest oil producer in Asia and the Pacific. The country''s economy expanded at an annual rate of 12.3% during 1998-2016. Hydrocarbon-related products consistently averaged close to 90% of annual exports from 2001 to 2015. As the Turkmen economy is highly vulnerable to global oil and gas prices, economic growth slowed from over 10% in 2013-2014 to about 6.5% in 2017 because of a sharp contraction in oil and gas export revenues.

Turkmenistan has the world''s fourth largest share of natural gas reserves, at 9.4% of the global total or 17.5 trillion cubic meters, after the Russian Federation, Iran, and Qatar. Annual production of natural gas averaged about 60 billion cubic meters (bcm) during 2005-2016. The country is an exporter of gas, primarily to the People''s Republic of China, totaling about 45 bcm per year, half of what it used to export in the early 1990s, to its neighbor countries. Turkmenistan has more than 5.4 gigawatts of installed power generation capacity, nearly all of which comes from natural gas-fired power plants. The country clearly has sufficient gas resources to be a major exporter of gas and electricity.

Turkmenistan was a key part of the Central Asia Power System (CAPS) created under the auspices of the Soviet Union in the 1970s. Turkmenistan''s power system was developed at that time with a strong export orientation because of its rich hydrocarbon resources and its proximity to large populations in surrounding countries and regions, such as Afghanistan, Iran, Uzbekistan, and southern Kazakhstan. During the early 1990s, electricity exports from Turkmenistan peaked at 13 terawatt-hours (TWh) per year. The collapse of the Soviet Union resulted in a progressive decline in power trade in the CAPS. Turkmenistan was first to disconnect from the CAPS in 2003. Subsequently, it maintained seasonal export of electricity, especially during the winter months, to Tajikistan through Uzbekistan until 2009, but that also stopped once Tajikistan was disconnected from the CAPS in December 2009. Turkmenistan''s electricity exports declined to 1.5 TWh in 2010. By 2017, its electricity exports had increased to 3.4 TWh thanks to a new export market.

The Asian Development Bank (ADB), under its Central Asian Regional Economic Cooperation (CAREC) Program, has been working closely with all regional countries to achieve energy security through power interconnection and power trade. Within CAREC, there are energy resource complementarities and uneven distribution of energy among countries. Central Asian countries are energy rich and can export it, including to large markets in energy-deficient Afghanistan and Pakistan. While Central Asian countries are 100% electrified with stable demand growth, Afghanistan and Pakistan have large populations without access to energy; demand growth is therefore high. Thus, CAREC''s Central Asia-South Asia Regional Energy Market is one of the key pillars of CAREC''s work plan for the energy sector.

ADB''s regional energy trade initiatives in CAREC have supported linking Turkmenistan''s large energy resources to large new markets. The proposed 1,800 km Turkmenistan-Afghanistan-Pakistan-India gas pipeline aims to export an annual 33 bcm, equivalent to a supply of about 50,000 megawatts (MW) of power generation capacity to South Asia. Within the Central Asia-South Asia Regional Energy Market framework, through the Turkmenistan-Uzbekistan-Tajikistan-Afghanistan-Pakistan (TUTAP) and Turkmenistan-Afghanistan-Pakistan power interconnection initiatives, ADB is financing multiple electricity transmission lines to enable power export initially to Afghanistan. This has enabled Afghanistan to access more than 3 TWh of electricity from its neighbors. Collectively, these imports will supply electricity to about 8 million Afghan households, businesses, and industries. But numerous households in Pakistan and Afghanistan still do not have access to modern electricity, especially in cities close to the border with Turkmenistan. The proposed project will enable future power trade with Pakistan.

With ADB''s support within the CAREC umbrella, Turkmenistan became the third country to export power to Afghanistan, after Tajikistan and Uzbekistan. Under the TUTAP power interconnection framework, Turkmenistan signed a power purchase and sales agreement with Afghanistan extending to 2028, for an estimated export volume of about 1.5 TWh per year valued at about $75 million per year, assuming an average price of $0.05 per kilowatt hours (kWh).

Since 2012, ADB has financed multiple projects in Afghanistan to strengthen Turkmen-Afghan power interconnection. This includes construction of 500-kV transmission line from Afghan-Turkmen border to Kabul, associated sub-stations and distribution networks in several provinces to utilize imported power from Turkmenistan. These projects are under advanced stages of construction and will be completed and put into operation during 2019-2020. ADB is also financing a high voltage direct current back-to-back convertor station inside Afghanistan that will enable synchronized power transfer from Turkmenistan to the Afghan national grid.

In parallel, the recent opening of Uzbekistan for power trade in the CAPS as illustrated by each of its bilateral declarations with the Kyrgyz Republic, Tajikistan, and Turkmenistan has created new dynamism and hope in reinvigorating the CAPS. Turkmenistan and Uzbekistan signed a memorandum of understanding that aims to reconnect Turkmenistan with Uzbekistan initially on an island mode supply with a dedicated generator without connecting the two power gridsfor Turkmenistan to export electricity to part of Uzbekistan. It may open new opportunities for power export to Kazakhstan, the Kyrgyz Republic, and Tajikistan. In the backdrop of this promising power export outlook for Turkmenistan, some part of its power grid needs urgent rehabilitation and expansion as described below.

Turkmenistan has a 100% electrification rate and a transmission network of more than 6,100 km. Primarily built in 1970s during the Soviet era, Turkmenistan's transmission network is in urgent need of rehabilitation and expansion. Transmission losses on 500 kV and 220 kV are high, at about 5%, which could be halved with a modern transmission system. Power supply reliability is low, with a large number of faults in the network, and weak redundancy makes large sections of the network vulnerable to outages. The absence of strong interconnections between different regions of the country further amplifies the problem for remote regions. Turkmenenergo, the State Energy Corporation is the vertically integrated power utility in the country. In 2017, it produced more than 23 TWh of electricity, exporting 15% of that to neighboring countries. Demand for electricity has grown modestly during 20122017, at an annual average of 1.5%2.0%. The domestic demand growth is expected to be steady and moderate in the medium term, with peak electricity demand increasing from about 3,813 MW in summer 2018 to 4,300 MW by 2024. The government is in the process of reinforcing new generation capacity to come online. It plans to add 2.5 gigawatts of additional capacity by 2020, which will provide adequate headroom to export electricity if the grid is strengthened.

Energy exports diversified and capacity improved.

Reliability of power supply improved and export volume of electricity increased.

Power transmission infrastructure strengthened.

Project and financial management capacity of executing agency and implementing agency improved (under attached TA).

Regulatory framework and awareness of energy efficiency in Turkmenistan improved (under attached TA).

Delayed contract negotiations with the bidder due to COVID-19. Contract awarded in June 2020.

Delayed contract negotiations with the bidder due to COVID-19. Contract awarded in June 2020.

Delayed procurement due to delayed contract negotiations with the bidder. Contract was awarded on 26 April 2020

Delayed contract negotiations with the bidder due to COVID-19. Contract awarded in June 2020.

Delayed procurement due to delayed contract negotiations with the bidder. Contract was awarded on 26 April 2020

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