Tajikistan expects $3.7bn bonanza from gas pipeline to China

By bne IntelliNews December 10, 2014

bne IntelliNews -


Tajikistan expects a total income of $3.7bn in transit fees and taxes from the Tajik trunk of "Line D" of the Central Asia–China gas pipeline (CACGP) over 32 years, local news website Asia-Plus reported.

"The income of the Tajik-Chinese operator Trans-Tajik Gas Pipeline will be $15bn over 32 years," Asia-Plus quoted Saidahmad Shamsiddinzoda, head of state gas distributor Tjiktransgaz, as saying during a parliamentary session in Bishkek on December 9. "Of this amount, Tajikistan will receive $1.2bn in the form of taxes and $2.5bn as dividends."

With a length of only 1,000 kilometres, Line D will be the shortest section of the CACGP network. The pipeline, which at full capacity will carry 30bn cubic metres of natural gas per year, runs from Turkmenistan's giant gas fields all the way to the Chinese border through Uzbekistan, Tajikistan and Kyrgyzstan. Works at Line D kicked off in September and are now scheduled to wrap up in 2020, although initially the completion date was set for 2016.

The existing three lines of the CACGP network take a much longer norther route and reach China through Uzbekistan and Kazakhstan. The network's current capacity is 55bn cu m a year, enough to turn Turkmenistan into China's largest gas supplier - Turkmen gas exports to China amounted to 24.4bn cu m in 2013, or 47% of Chinese total natural gas imports, according to figures from BP's 2014 Statistic Review of World Energy.

Total costs for the development of Line D's Tajik section will reach $3.2bn, Shamsiddinzoda confirmed, most of which will come from Chinese state oil company Chinese National Petroleum Corporation (CNPC). Such investment could represent a turning-point for Tajikistan. The country lags behind most of other CIS countries for economic and social development and 2013 GDP did not surpass $8.5bn.

Besides, the Russian slowdown will further challenge the fragile local economy as the flow of inward remittances from Tajik citizens working in Russia, which make up as much as 42% of the GDP, was down 5% year-on-year in the first half of the year, according to figures from the Central Bank of Russia, and have likely decreased further in the second half of the year as Western sanctions and falling oil prices have taken an additional toll on the Russian economy and the ruble.

Within this challenging environment, Chinese huge investments like the CACGP's Line D project promise to shore up the Tajik economic growth in the coming years. GDP growth is expected at 6.5% in  2014 and 6% in 2015, according to IMF estimates.

Yet there are doubts over the real capability of the CACGP's Line D project to support the local economy as a whole.

"Tajik citizens are not getting any tangible benefits of any social or economic value since the Chinese investors only work with their own companies and with their own labour force and the use of local labour is minimal," Aza Migranyanm, head of the Economics Department of the CIS Institute, tells bne IntelliNews. "Tajikistan plays a passive role. The main benefits to the country are concentrated in the development of its infrastructure and of its potential as a transit zone, which could serve as an additional source of revenue to the country’s budget. Other benefits to the country could partially lie in the use of Chinese investments to develop its oil fields."

Tajik authorities aim at adding Tajik natural gas to the pipeline throughput in the long-term. The country may hold as much as 114 trillion cubic feet of natural gas, according to estimates from energy consultant Gustavson Associates. Russian Gazprom and Toronto and London dual-listed Tethys Petroleum are the primary groups conducting oil and gas exploration in the country.

"Tajikistan does not face a variety of potential investors to choose from, so the cooperation between Tajikistan and China is, to some extent, unavoidable", Konstiantyn Bondarenko, chairman of Tajikistan Free Market Centre, a think-tank in Dushanbe, tells bne IntelliNews.

The country managed to attract foreign investments of only $108mn in 2013, according to figures from the United Nations Conference on Trade and Development's (UNCTAD) 2014 World Investment Report. Very few international investors other than China seem to be willing to take on any risk in Tajikistan. Today, Beijing has become the country's largest commercial partner, creditor and investor.






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