Politics gets in way of hydropower investment in Central Asia

By bne IntelliNews March 8, 2010

Clare Nuttall in Almaty -

The planned construction of a new power line connecting Kazakhstan to Tajikistan will allow Central Asia's common energy system to be reactivated. But plans to attract investment into new hydroelectric power plants are being held back by their political sensitivity.

Three months after Uzbekistan withdrew from the region's common energy system, its three remaining members - Kazakhstan, Kyrgyzstan and Tajikistan - are considering ways to resume energy sharing. Uzbekistan carried out its threat to quit the system on December 1 due to the non-payment of bills and unauthorised withdrawals of electricity from the grid by electricity-starved Tajikistan. Kazakhstan's national grid operator, Kegoc, had reported the same problem back in September.

Energy ministers from Kazakhstan, Kyrgyzstan and Tajikistan are now in talks over the building of a new transmission line running from Osh in south Kyrgyzstan to Khujend in north Tajikistan, which would allow Kazakhstan's electricity grid to be connected to Tajikistan's via Kyrgyzstan, bypassing Uzbekistan.

Funding for the project is likely to be obtained from international organisations. In a recent interview with bne, the chairman of the Eurasian Development Bank, Igor Finogneov, said: "We are considering some projects to build a power line from Tajikistan to Kazakhstan through Kyrgyzstan's territory."

Water under the bridge

In addition to the power line, Kyrgyzstan and Tajikistan, because they lack the large oil and gas reserves of the neighbouring countries, are also planning to build major new hydropower plants to improve their energy security.

Electricity is already rationed to a few hours a day in most parts of Tajikistan, while central heating in the capital Dushanbe was switched off on February 1. A cold snap in mid-February forced Dushanbe Heat and Power Station to switch it back on, but it could only supply a few districts of the city before running out of fuel after two days. Even the crucial Tajik Aluminium Company (Talco) is reportedly running at below full capacity due to energy shortages. Talco, Tajikistan's largest enterprise by far, accounts for around 40% of total electricity consumption and is usually given priority over other electricity users.

In Kyrgyzstan, the situation is somewhat better, but the country also relies on gas imports from Uzbekistan, which are periodically cut off. The government hopes that the widely unpopular decision to increase tariffs for heat, gas and electricity closer to market rates will encourage investment into the sector.

However, plans to build two massive hydropower stations - Roghun in Tajikistan and Kambarata in Kyrgyzstan - have angered neighbouring Uzbekistan, which fears that this will interrupt the flow of water needed for irrigation.

In a letter to his Tajik counterpart Oqil Oqilov, Uzbek Prime Minister Shavkat Mirziyoyev called for an independent investigation into the Rogun hydropower plant. Mirziyoyev claims the project would both reduce the water available for irrigation and in the case of an earthquake could put at risk thousands of people living downstream in both countries. "Despite our repeated requests on this issue, there has been a total disregard on the part of the government of the Republic of Tajikistan, which, without considering the possible consequences or the proper design and technical support, is continuing to with the construction of this facility," Mirziyoyev wrote in the letter, which was published in the Vostoka Pravda newspaper.

Dushanbe dismissed the claims, saying that full environmental assessments of the project have been carried out, and that the dam's construction is based on technologies able to withstand earthquakes of up to 9 on the Richter scale - higher than has ever been recorded in the area.

There is certainly a lot of impetus behind the hydropower plans. Helping Central Asia to realise its hydropower generation potential would benefit not only the countries involved, but also make it possible to export to Afghanistan and Pakistan, which also suffer from energy deficits. The World Bank and other international institutions are already funding construction of small-scale hydropower plants to provide electricity to local communities in Tajikistan.

However, Tashkent's opposition makes funding either Roghun or Kambarata a political hot potato. Russia previously funded the Sangtuda-1 power plant in Tajikistan and in February 2009 had pledged $1.3bn for Kambarata as part of a package announced the same day Bishkek said it would close down the US-led Manas airbase. A year on, the base is still open and much of the money hasn't yet materialised.

Speaking to journalists in Dushanbe March 2, Russia's first deputy prime minister, Igor Shuvalov, said that Russia understood the "difficult situation" in Central Asia. "We are ready to participate in development of a power complex in the Central Asia and we recognize that the interests of the various states should be balanced," Regnum quoted Shuvalov as saying. "Russia should not do anything that could bring a certain disbalance in these relations [but] Russia is ready to participate as a partner investing in hydropower constructions."

Meanwhile, Tajikistan's government has launched a Soviet-style campaign to fund the Roghun construction through "donations" from the general population. Virtually every day the Tajik press announces that employees of another state-owned enterprise or government office have donated a week of their salary to the project. In February, the government also announced an amnesty legalisation of undeclared funds, aimed at selling shares in Roghun.

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