Tajiks Need Bigger Stake in Sangtuda Dam Project
Tajiks Need Bigger Stake in Sangtuda Dam Project
Tajikistan risks losing control of a major hydroelectric power station unless it can claim back a bigger share from its Russian partners, analysts warn.
According to an Interfax report on March 6, Russia and Tajikistan have agreed to create additional shares in the Sangtuda-1 power station company, increasing Russia’s shareholding and thereby leaving Tajikistan with a smaller proportion of total stock than before.
With the new share emission, the Tajiks will own 23.2 per cent rather than 25 per cent of the company. That takes the Tajik holding lower than the 25 per cent plus one share formula needed to have a say in the project’s development.
Tajik energy experts say the change in financial structure has made the project unprofitable for their country, which will now have to look for new ways of acquiring the 25 per cent stake it needs.
“The republic must to invest supplementary funds or seek other solutions to retain the initial size of its share,” said Jura Babaev, an official with the hydroelectric power construction department within the national electricity company Barqi Tojik.
Under a project agreement signed in 2004, Tajikistan will own a quarter of the shares in the completed hydroelectric station, with Russia’s United Energy Systems firm, UES, holding the rest. When the deal was signed, total construction costs were put at 480.5 million US dollars, but UES later said the project would require 712 million dollars. The completion date is 2008.
An expert from the energy and industry ministry, who did not want to be named, said Tajikistan may try to claw back its position by seeking funds from international financial institutions. There are institutions of this kind that would be ready to back the project once a full study is completed in the next six months, he said.
He also suggested that Tajikistan could claim a bigger share by adding in the value of land allocated to Sangtuda-1 and a number of substations which Barqi Tojik has built nearby. The water which passes through the station could also be classed as a resource on which Tajikistan could levy revenue – a practice the expert says is common elsewhere in the world.
However, another NBCentralAsia source in the same ministry said the government is concerned not to scare off its investors by trying to raise extra funds in this manner.
According to this source, the Sangtuda experience shows that when the government embarks on similar large projects in future, it would do better to identify investors to fund the entire construction process, and then wait for them to recoup their input costs. After that, the asset reverts to state ownership anyway.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
According to an Interfax report on March 6, Russia and Tajikistan have agreed to create additional shares in the Sangtuda-1 power station company, increasing Russia’s shareholding and thereby leaving Tajikistan with a smaller proportion of total stock than before.
With the new share emission, the Tajiks will own 23.2 per cent rather than 25 per cent of the company. That takes the Tajik holding lower than the 25 per cent plus one share formula needed to have a say in the project’s development.
Tajik energy experts say the change in financial structure has made the project unprofitable for their country, which will now have to look for new ways of acquiring the 25 per cent stake it needs.
“The republic must to invest supplementary funds or seek other solutions to retain the initial size of its share,” said Jura Babaev, an official with the hydroelectric power construction department within the national electricity company Barqi Tojik.
Under a project agreement signed in 2004, Tajikistan will own a quarter of the shares in the completed hydroelectric station, with Russia’s United Energy Systems firm, UES, holding the rest. When the deal was signed, total construction costs were put at 480.5 million US dollars, but UES later said the project would require 712 million dollars. The completion date is 2008.
An expert from the energy and industry ministry, who did not want to be named, said Tajikistan may try to claw back its position by seeking funds from international financial institutions. There are institutions of this kind that would be ready to back the project once a full study is completed in the next six months, he said.
He also suggested that Tajikistan could claim a bigger share by adding in the value of land allocated to Sangtuda-1 and a number of substations which Barqi Tojik has built nearby. The water which passes through the station could also be classed as a resource on which Tajikistan could levy revenue – a practice the expert says is common elsewhere in the world.
However, another NBCentralAsia source in the same ministry said the government is concerned not to scare off its investors by trying to raise extra funds in this manner.
According to this source, the Sangtuda experience shows that when the government embarks on similar large projects in future, it would do better to identify investors to fund the entire construction process, and then wait for them to recoup their input costs. After that, the asset reverts to state ownership anyway.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
