Tajikistan’s existential project to build the colossal 335-meter-high Roghun hydropower dam is proceeding apace, but costs are spiralling, and to a level that is making it hard to see where the government is going to find the funds needed to finish the work.

To complicate matters for Dushanbe, this is happening against the backdrop of calls from environmental watchdogs for international development lenders to pause the allocation of any future funds to Tajikistan pending a fresh assessment of the project.

The extent of the budget overshoot is striking.

In a press conference on February 16, Finance Minister Faiziddin Kahhorzoda revealed that the government spent 5.2 billion somoni ($475 million) on construction work at Roghun in 2023. That was 2.7 billion somoni more than had been planned, he said.

The projected government spend for this year, meanwhile, is 5 billion somoni. It is projected that 2.2 billion somoni can be solicited from foreign-based parties, Kahhorzoda said.

When work on Roghun, a project that was in its origins the brainchild of Soviet engineers, resumed in earnest in 2008, the estimate for the overall cost stood at $3 billion. This climbed upward through the years.

In 2016, officials threw around the figure of $3.9 billion. In mid-2022, the Energy Ministry announced $5 billion would be needed for full project implementation. 

On February 1, Energy Minister Daler Juma offered a new forecast: $6.2 billion. That is high, although admittedly quite a bit short of the $8 billion prognostication he volunteered in an interview to Reuters news agency in June 2022. 

While the budget balloons, the timetable is sliding

Once completed, Roghun will be fitted with six 600 megawatt turbines, amounting to a total installed capacity of 3,600 megawatts. As Milan-based WeBuild (formerly Salini Impregilo), which has been contracted to implement the project, has claimed on its website, that is “the equivalent of three nuclear power plants.”

The first generating units were put into operation in November 2018 and September 2019 to much clamor, but there has been limited progress since then. 

State media accentuates the upside. It cites energy officials as saying that while insufficient water pressure is causing delays, the generating units in place have to date produced around 7 billion kilowatt-hours of electricity. They furthermore value that volume of electricity at 1.5 billion somoni ($137 million).

Current annual electricity production in Tajikistan, much of which is accounted for by the Soviet-vintage Nurek hydropower plant, is around 17 billion kilowatt-hours.

Putting this together, it implies that Roghun has, since the first generating unit began working, likely contributed to well under one-tenth of Tajikistan’s electricity output. 

In 2019, managers of the Roghun hydroelectric plant reportedly predicted — possibly speaking in the spirit of hope rather than pragmatism — that a third generating unit would be installed within another two years. All six units were to be operational by 2026, according to that timetable. 

That was before COVID-19, however. The pandemic caused a major slowdown on work at Roghun along with much other economic activity in the country. 

Another deadline is now in place

“We intend to put the third unit of the Roghun hydroelectric power station into operation in 2025,” President Emomali Rahmon said in an address to the nation in December.

He noted in that speech that the project is employing 15,000 laborers and technicians.

When Rahmon speaks of Roghun in his speeches, he couches the project in talk of the “bright future” awaiting the country and that it should serve as a “source of pride” for every Tajik citizen.

A more sober reality is that Roghun is part of the race against time to keep the country’s economy afloat.

Despite the additional productive capacity added by Roghun, the population still has to endure annual rationing of electricity.

When the temperature sinks below a certain level, output from the Nurek hydropower plant grinds to a near-halt. Under the annually imposed economy regime due to end in March, as is customary, households outside the country’s largest urban centers endure blackouts from 8 a.m. to 5 p.m and then from 10 p.m. to 5 a.m.

Meanwhile, the rate of population growth means that demand for electricity will continue surging. 

The World Bank in 2022 estimated that Tajikistan had the “youngest and fastest growing population in the Europe and Central Asia region.”

“Children under six years old comprise 17 percent of Tajikistan’s population, while roughly one of every three people is under 15 years of age,” the bank said at the time.

State statisticians have said that the current population of Tajikistan is just a whisker over 10.1 million. Fresh figures from last week, based on birth and death data, showed a population increase of 200,000 in 2023. That is a 2 percent rise.

Getting a clear and reliable idea of how much has been spent on Roghun over the past 16 years is tricky. Juma, the Energy Minister, threw out the figure of $3 billion in 2022. 

Dushanbe-based news outlet Asia-Plus cracked some numbers to come up with an updated estimate earlier this month and arrived at around 40 billion somoni, or $4 billion.

Considering current projections, which Juma says were calculated with the assistance of international consultants, that leaves $2.2 billion to go.

Tajikistan makes no secret of the fact that it is hoping for white knight investors to swoop in and provide the cash needed to get it over the line. 

But its efforts to get foreign funding so far have exposed it to considerable debt-servicing expenditure. 

In September 2017, the National Bank issued $500 million worth of eurobonds on the international market. That venture means Tajikistan is on the hook for around $850 million to be paid to investors by 2027.

Important chunks are arriving from here and there, though.

In December, the state-backed Saudi Fund for Development announced it was under a development loan agreement with Tajikistan contributing $100 million to fund the Roghun project.

A few months earlier, in May, China-dominated development lender Asian Infrastructure Investment Bank had reportedly — according to President Rahmon’s office — pledged to extend a soft $500 million loan to Dushanbe for the same purpose. Talk on this commitment has gone a little quiet since then.

Back in 2022, a representative for the European Union’s investment arm, the European Investment Bank, told Reuters that it was exploring becoming “the largest investor” in Roghun. That conversation too has withered for reasons unreported.

Environmental concerns are another factor.

Last month, a coalition of nongovernmental groups — Rivers without Boundaries, the NGO Forum on Asian Development Banks and the Bankwatch Network — issued a collective appeal to development banks to demand public discussions on an updated environmental assessment of Roghun before parting with any funds. The World Bank-backed environmental impact assessment conducted in 2014 is now woefully out of date, the coalition argued in its statement.

“Over the last 10 years we accumulated new knowledge about the dynamics of climate change, new factors of impact on the hydrological regime of the Vakhsh River and the entire Amu Darya basin,” Evgeny Simonov, international coordinator for Rivers without Boundaries, was cited as saying.

“Even the most superficial analysis shows that potential transboundary impacts of the [Roghun] hydropower plant are enormous, and their consideration in the new environmental assessment … is practically non-existent.”

Source: Eurasia

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WASHINGTON, January 12, 2023-The World Bank’s Board of Executive Directors approved today $15 million in grant financing from the International Development Association for the Technical Assistance for Financing Framework for Rogun Hydropower Project in Tajikistan (TA). This TA aims to support the Government of Tajikistan in improving the financial and commercial frameworks of the Rogun Hydropower Plant (HPP) Project and enhancing its technical, environmental and social sustainability.

The Rogun HPP Project, currently under construction, has the potential to generate significant economic, social, and environmental benefits for Tajikistan and other countries in the Central Asia region if it develops in a financially, environmentally, and socially sustainable manner. Once completed, the Rogun HPP Project will be critical in helping Tajikistan to meet its domestic energy demands, especially during wintertime, and to support neighboring countries through the export of surplus electricity. In addition, as a reliable source of clean and affordable electricity, the Rogun HPP Project can contribute to decarbonization of the Central Asia region.

The IDA grant will finance the hiring of experts on dam safety and environmental and social (E&S) frameworks to help with necessary improvements that will bring the project in line with current hydropower industry requirements and alignwith the World Bank’s Environmental and Social Framework. The TA project will also be instrumental in increasing Rogun HPP Project benefits to a larger number of people through a benefit-sharing mechanism whereby a portion of the project’s revenues would be channeled to various socio-economic programs and initiatives.

“Our technical support aims to improve the Rogun project’s development impact through greater sharing of the project’s revenues to benefit the people of Tajikistan, improvement of the project’s environmental and social performance, and expansion of clean electricity,” said Tatiana Proskuryakova, World Bank Country Director for Central Asia.”This support builds on our current investments in Tajikistan’s energy sector, which focus on improving electricity supply reliability for people and the economy, strengthening the governance of the sector, promoting financial sustainability, and increasing its transparency.”

The TA project would also improve the readiness of the Rogun HPP Project to increase the financing required for its completion. In particular, it would help to update the financing plan to ensure that annual spending on the project does not create macro-fiscal risks for the country and that the HPP has a reliable commercial framework for sale of electricity to domestic consumers and for exports.

The World Bank’s Board of Executive Directors also approved today $50 million in grant financing for a Development Policy Operation (DPO) to promote structural reforms to accelerate sustainable economic growth and mitigate economic vulnerabilities. The reforms supported by the DPO will also help improve the overall macroeconomic environment for the development of the Rogun HPP.

Currently, the World Bank is financing 22 projects in Tajikistan totaling $1.47 billion. Since 1996, the World Bank has provided over $2.65 billion in IDA grants, highly concessional credits, and trust funds for Tajikistan. The World Bank is committed to continuing its support as the country strives to improve lives and meet the aspirations of its young and growing population.

Source: Mirage News

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