WASHINGTON- The United States has welcomed the agreement between Afghanistan and Pakistan over transit pricing for the Central Asia South Asia electricity transmission project (CASA-1000).

Pakistan and Afghanistan on Saturday signed the agreement on electricity transit fees, taking an important step forward for energy trading between Central and South Asia.

“This marks an important step in bilateral relations between Afghanistan and Pakistan, and one of the first foreign policy achievements of the new government of national unity in Kabul led by President Ashraf Ghani and Chief Executive Officer Abdullah Abdullah,” the State Department said. When completed, CASA-1000 will enable the Kyrgyz Republic and Tajikistan to sell excess summer hydropower to fill supply gaps in Afghanistan and Pakistan.

“The project forms an essential element of a regional energy market that connects suppliers with customers as a means to promote economic growth. The transit price agreement represents a critical, final step towards completion of a power purchase agreement, and provides the momentum for remaining donors to commit to implementation of CASA-1000,” the State Department said in a statement.

The United States will continue to engage with the four CASA-1000 countries and our international partners to advance this project not only to link suppliers of clean, green hydropower with customers, but also to sustain our long-term commitment to stability, security and prosperity for Afghanistan, its neighbors and the broader region, it said.

The agreement was signed during the Annual Meetings of the World Bank and IMF in Washington, DC by the Minister of Finance for Pakistan Senator Mohammad Ishaq Dar and  the Minister of Finance and National Economic Adviser for Afghanistan, Mr. Omar Zakhilwal.

The Pakistani side negotiated the price bringing it down from the initial asking price of 2.5 cents to 1.25 cents per KW. It helps to establish the commercial arrangements for 1,300 megawatts (MW) of sustainable regional electricity trade between Kyrgyz Republic, Tajikistan, Afghanistan and Pakistan as part of the Central Asia South Asia Electricity Transmission and Trade Project (CASA-1000).

“Now that we have agreed on a transit fee for the electricity, I hope we can move forward quickly on this transformational project,” said Senator Dar. “We are ready to realize the CASA–1000 vision and improve energy security and trade for our countries and region,” said Omar Zakhilwal, Minister of Finance for Afghanistan and National Economic Advisor.

CASA-1000 will build more than 1,200 kilometers of electricity transmission lines and associated substations to transmit excess summer hydropower energy from existing power generation stations in Tajikistan and the Krgyz Republic to Pakistan and Afghanistan. To oversee the complex, four-country process, and inter-Governmental Council has been established to supervise the design and implementation of the project.

In March 2014 for the World Bank Group approved financing for the engineering design, construction and commissioning of transmission lines and three new converter stations. The project would build upon existing power generation stations that will provide the energy to be traded over CASA-1000.

Commercial and operating framework for CASA-1000 is specifically based on “open access” principles that will allow additional energy supplying countries to connect with wider regional transmission networks. CASA-1000 will enable the development of the Central Asia South Asia regional electricity market, (CASAREM) – a long-term plan for regional energy trade.