Tajiks going back for more after 2017’s successful bond debut

Tajiks going back for more after 2017’s successful bond debut
The plan is to construct Rogun dam in southwestern Tajikistan, on the Vakhsh River upstream from the Nurek Dam. Hydropower outages at Nurek plunge Tajiks into darkness. / Derived by Bantman (Wiki Commons) from CIA map.
By bne IntelliNews April 25, 2018

Central Asia’s poorest nation, Tajikistan, is reportedly planning to issue more notes following its successful international bond debut in 2017, Radio Ozodi reported on April 23, citing an unnamed official in the Tajik Finance Ministry. Merrill Lynch, the wealth management division of Bank of America, apparently intends to buy a large chunk of the bonds.

Tajikistan raised $500mn from its inaugural Eurobond, which priced at 7.125% for a 10-year term in September. The proceeds from the bond are to go into the Rogun hydropower dam construction. Rogun is to be a 3,600MW hydropower project, complete with the world's tallest dam.

In total, Tajikistan attracted $1.1bn in foreign investment last year. The bond issuance accounted for most of the rise in the Tajik national debt in 2017, recorded at 51.4% of GDP. International investors have for the past year been oversubscribing to debt issues by very weak emerging-market players, including Iraq, Kenya and Mongolia - Tajikistan was the latest to join them as an international bond issuer.

The ex-Soviet country has previously revealed plans to borrow $850mn across 2018-2020. The funds will be allocated for “the country's exit from a communication impasse, achieving energy independence and ensuring food security”, the report said. The overall financing is likely to cover part of the Rogun project. The investment is meant to end the country’s winter energy shortages as well as support its objective to become a regional energy exporter via the CASA-1000 project.

Tajikistan’s draft budget for 2018 projected the country will spend TJS1.1bn (€105.9mn) on servicing its external debt during the year.

Currently, the total capacity of Tajikistan’s hydropower plants amounts to 5,190 MW, but ageing infrastructure makes only 3,600MW of that capacity usable. That, in turn, leads to chronic winter electricity shortages. The Rogun project envisages installing six additional hydropower turbines, with a capacity of 600MW each, that, once fully operational, will put an end to the winter woes.

Pietro Salini, chief executive officer of the Italian construction conglomerate Salini Impregilo, which won a $3.9bn contract for the construction of the embankment dam, said in February that the first hydropower unit of the Rogun project was set to launch in November.

Tajik authorities jump-started the construction of the controversial 335-metre dam on the Vakhsh River – a project seen as not only important for the country’s energy security but for President Emomali Rahmon’s popularity – in October 2016, two months after the death of the dam’s main opponent, Uzbek dictator Islam Karimov. Uzbekistan has previously objected to the infrastructure, first proposed as far back as 1959, saying that it might impact on irrigation available for its lucrative cotton crops.

In March, Uzbekistan officially reaffirmed that it no longer holds objections to the construction of the Rogun dam during Uzbek President Shavkat Mirziyoyev’s first official visit to neighbouring Tajikistan. Prior to last year’s debut bond, only $200mn had been allocated for the construction of the dam and work on it had long been stalled. Over three decades, only preliminary work was performed.

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