Some external mass media, commenting biasedly on the reports of global financial institutions in their analytical materials, predict that 2024 will be driven by various reasons, including increased spending on the construction of the Roghun HPP as a major energy facility, the emergence of a budget deficit, the high risk of a debt crisis and the persistence of full repayment until 2037 in Tajikistan. However, in fact, the content of such statements has no real basis, as the Government of the Republic of Tajikistan, taking into account the available opportunities and potential threats and dangers, has declared “Roghun” as a national and fateful object of the nation and is making efforts for its investment, especially on the basis of contributions from the country’s budget.
It should be particularly noted that in the issue of construction of the Roghun HPP back in 2005 Tajikistan, taking into account objective factors, decided to build this huge object of the century at the expense of its own financing and attraction of investments of development partners. For this purpose, the Open Joint Stock Society “Roghun Hydropower Plant” was established, the charter of which was approved on April 15, 2008 with a capital of 116 million somoni. In 2009, the maximum investment volume was raised to 6 billion somoni. At present, almost 15 thousand specialists and workers are working on this important object of the century, and more than 2,100 units of equipment, machines and mechanisms have been mobilized.
It is worth noting that while other countries will ensure achievement of high economic indicators based on the use of their various natural resources (gas, oil), water–energy resources for Tajikistan are considered as the only important factor, based on the effective use of which it is possible to achieve the Millennium Development Goals. That is why ensuring energy independence and efficient use of electricity, along with other issues, is defined as one of the strategic goals for Tajikistan.
In this regard, the Government of Tajikistan intends, especially on the basis of its natural and energy resources, which are estimated at 527 billion kWh, and the construction of the Roghun HPP by 2030, to increase electricity generation capacity as a key basis for promoting a green economy to 10 GW and its exports to 10 billion kWh. At the same time, the Government is determined to reduce electricity losses to 10 percent.
In 2023 alone, Tajikistan’s energy capacity exceeded 6,000 megawatts, and electricity production amounted to 22 billion kilowatt-hours, which is 4.8 billion kilowatt-hours or 28 percent more than in 2017. These indicators show that Tajikistan is taking decisive steps to achieve its strategic goal of energy independence.
Since 2001, in order to ensure the development of the energy sphere, 36 investment projects have been implemented with the attraction of 2.7 billion US dollars, related to the creation of new energy capacities, construction and rehabilitation of other electrical installations, and at present the realization of 18 more investment projects with the attraction of 1.5 billion US dollars is in progress.
In this context, the first and second aggregates of “Roghun” HPP were commissioned during 2018-2019. The commissioning of the third aggregate of the “Roghun” HPP in 2025 is another decision of the Government of Tajikistan, especially the Honorable President of the country.
With this aim, in 2023 alone, more than 5 billion somoni was allocated from the state budget for the construction of this project, which is 1.1 billion somoni more than in 2018. It is planned that in 2024, 5 billion somoni or 456 million dollars will be allocated for the construction of “Roghun” HPP, including 2.8 billion somoni at the expense of the state budget and 2.2 billion somoni by attracting external investments.
The above mentioned numbers, if, on the one hand, are a clear evidence of the steady growth of financing, especially at the expense of the state budget, for the construction of the “Roghun” HPP, then, on the other hand, they indicate the financial capacity of Tajikistan in this direction.
In general, during the years of independence, the Government of the country has allocated 85.7 billion somoni for modernization, i.e. repair and reconstruction of the energy system of the country.
It should not be forgotten that in the conditions of developing market-economic relations, the achievement of certain strategic goals, including energy independence and efficient use of electricity, largely depends on the maximum attraction of investments.
Therefore, every country, including Tajikistan, along with budgetary funds, constantly strives to attract as much capital as possible, especially capital in credit and grant form for priority industries, and in this direction the country’s legislation provides a lot of guaranteed benefits, including more than 70 types of benefits and more than 240 named benefits in the tax sector, which indicates a good investment climate in the country.
Another important point is that now international and regional financial institutions and other development partners, with whom Tajikistan has been fruitfully cooperating for many years of independence, are interested in investing in the construction of the “Roghun” HPP. Many examples can be given in this direction. For instance:
- Support and approval by the Council of Executive Directors of the Islamic Development Bank of a project to finance the “Roghun” HPP in the amount of 550 million somoni, including 150 million somoni from the IDB reserve and 400 million from the Arab Development Fund in 2024.
- Signing of the Memorandum of Understanding on the Framework Financing between the Republic of Tajikistan and the Organization of the Petroleum Exporting Countries (OPEC) for financing of the project “Roghun” HPP (Lot 4);
- Statement of interest of the Islamic Development Bank in financing “Roghun” HPP. This was stated by the President of the Islamic Development Bank Group Dr. Muhammad Suleiman Al-Jasser after the meeting with the President of the Republic of Tajikistan which was held on 10.06.2024. He noted that the Islamic Development Bank has been cooperating very closely and fruitfully with Tajikistan for many years. This cooperation amounts to more than 900 million US dollars. One of the projects that are under mutual consideration today is the project to support the construction of “Roghun” hydroelectric power plant. The Islamic Development Bank has decided to sign an agreement with the Government of the Republic of Tajikistan for this purpose.
- Preparing the Eurasian Development Bank to participate in the construction of “Roghun” HPP. This was announced this year during a press conference by Nikolay Podguzov, chairman of the Eurasian Bank. He, in particular, noted that “our desire and intention to participate in the financing of this project, namely “Roghun” HPP, remain unchanged”.
In this direction, the bank expects a response from the Tajik side. At the same time, in 2023, one of the heads of the Eurasian Development Bank Denis Ilin during a press conference in Almata said that the Eurasian Development Bank intends to invest next year in the construction of “Roghun” HPP 130 million dollars.
Another important topic is that Tajikistan currently possesses large capacities and resources in terms of construction of solar and wind power plants. In this regard, it is assumed that by 2026, alternative “green energy” production capacity in the republic will be supplied by at least 1000 megawatts.
It should be noted that in 2023, the construction of a 600 kW solar power plant in Murghob region and the Pamir Private Power Project, Phase 3 at a total cost of 124.4 million USD continued.
Development partners and other financial and investment institutions in Tajikistan have also expressed interest in this direction, and the most important of which can be concluded as follows:
- In 2023-2024, signing of a memorandum of understanding between the Ministry of Energy and Water Resources of the Republic of Tajikistan and the companies “POVER — CHINA” and “TBEA” of the People’s Republic of China on the development of renewable energy sources, training and construction of wind and solar power plants in Tajikistan. As part of this, it is planned to gradually build a series of solar and wind power plants on the territory of Tajikistan with a total capacity of 1500 MW.
- Signing of the Memorandum of Understanding between the Ministry of Economic Development and Trade of the Republic of Tajikistan and “Eging PV Technology Co. Co., LTD” of China on construction of solar power plant in FEZ “Panj”. The company plans to build a solar power plant costing 150 million dollars with a capacity of 200 MW on an area of 250 hectares on the territory of FEZ “Panj” at the first stage. The total volume of investments in four stages is 1.5 billion dollars.
- Signing a contract with a consortium of companies JURU Energy Limited (UK) and Rina Consulting (Italy) for the techno-economic feasibility study of the project “construction of a private solar power plant in Sughd region” (200 MW capacity) in 2023;
- Cooperation on such projects continues with other development partners, including the European Bank for Reconstruction and Development with a capacity of 100 MW and the United States Agency for International Cooperation USAID.
The presented statistical data and projects do not mean that Tajikistan in the future will be in debt and will not be able to fulfill its obligations in this direction. Now all countries of the world, including Tajikistan, apply for loans only taking into account the available opportunities for their repayment to achieve their sustainable development goals and solve other important tasks.
As for the possible emergence of a high risk of debt crisis and impossibility of full repayment of Eurobond obligations until 2037, Tajikistan currently has the “Medium-Term Strategy of State Debt Management of the Republic of Tajikistan for 2024-2026” as a guarantee act.
Within the framework of this strategy, the main objective of which is to raise borrowings at minimum cost and to repay them in full by the period 2025-2027, all possible risks and a reasonable level of risk are foreseen for the fulfillment of obligations, especially those related to the repayment of Eurobonds. In particular, in order to achieve the set goals, especially for repayment of obligations, the following measures are provided:
- Attracting concessional loans by maintaining maximum state debt and complying with the grant element;
- fulfillment of obligations on the government debt, including fulfillment of loans on Eurobonds through sub-loan agreements;
- refinancing of Eurobonds taking into account the increase of base interest rates on the international capital market and unchanged credit rating (Moody’s B3 stable);
- attracting non-concessional loans to fulfill obligations on Eurobonds, as well as repayment of Eurobonds by attracting new loans.
It is assumed that in the next three years (2024-2026) the volume of bilateral financing of external loans will remain unchanged with the increase and diversification of the countries’ borrowing. “Roghun” HPP remains a priority project for attracting concessional loans.
It is on the basis of such measures of the Government of Tajikistan that only during the last two years the macroeconomic indicators of the country have been maintained stable and steady, and the average growth rate of the country’s economy has been ensured by at least 8 percent. Only in the first quarter of this year this indicator amounted to 8.2 percent. This is stated in the report of the World Bank.
Within the framework of the action plan implemented by the country, it is envisaged that in 2024 the average rate of economic development of the country will be ensured at the level of at least 8 percent, and the total deficit of the state budget will be maintained at the level of 1.15 billion somoni or 0.8 percent of GDP.
Such ongoing fiscal consolidation efforts of the government will have a direct positive impact on the government debt-to-GDP ratio, which is expected to reach 33.8 percent of GDP at the end of 2024.
From this point of view, the presented facts and figures once again prove that Tajikistan currently and in the future is able to maintain sustainable and stable macroeconomic indicators due to timely fulfillment of its obligations, including repayment of external debts and financing of vital projects such as “Roghun” HPP, especially at the expense of the state budget provided by a far-sighted, guaranteed and actually implemented plan.
Odinazoda A.I., head of the Department of
analysis of entrepreneurship issue and
development of the private sector
