Tajikistan: Italians Picked for Rogun Dam Contract
The state commission in charge of the project for Tajikistan’s Rogun mega-dam has picked Italian company Salini Impregilo to carry out the construction, although it remains unclear where the money is to come from.
Khovar state news agency reported on July 1 that the agreement to design, source material and build the hydroelectric power plant will set Tajikistan back $3.9 billion. The project is broken down into four components, with the most expensive one involving the building of a 335-meter-high rockfill dam — the tallest in the world — which will entail costs of around $1.95 billion.
“The three remaining lots are seen being assigned to the Group by Sept. 30, 2016,” Milan-based Salini Impregilo said in a statement.
The Italian company boasts on its website of significant experience in major dam-building projects. One listed on its website is a €2.5 billion ($2.8 billion) hydroelectric plant in Ethiopia with an installed capacity of 2,200 megawatts. That comes substantially short of Rogun, however, which will, if completed under the current design, have six 600 megwatt turbines to make up for a total installed capacity of 3,600 megawatts — equivalent to three nuclear plants, as Salini Impregilo points out.
Rogun is a vast proposed undertaking that has its roots in the Soviet period. With the outbreak of the civil in the 1990s, the project was put on the back-burner. Dushanbe thought its had found the needed investment to resume work after they signed an agreement in 2004 with the Russian conglomerate Rusal. But mutual differences led to the dissolution of that deal in 2009. The government subsequently announced it was nationalizing the project and that it would source the funding itself.
That came in part in 2010 through a frenetic share sale campaign that saw many Tajiks heavily pressured into buying stock. The shares were only made available to citizens of Tajikistan.
State television aired advertisements round the clock urging people to buy the stock. Such was the frenzy over the campaign that some people even named newborn babies Rogunshoh (King Rogun) or Sahmiyabon (Share) in honor of the dam.
With all the good will and coercion in the world, however, Tajiks simply did not have the money to buy the amount of stock needed to make a big difference. Out of the 6 billion somoni (around $1.37 billion) in shares issued, only around 830 million somoni ($188 million) were bought.
Emissions of shares were eventually halted amid pressure from international financial organizations, although the fear is that a new round of stock sales could be in the offing.
The financial wellbeing of average Tajik families is arguably even worse now than it was in 2010 because of the sharp decline in remittances from labor migrants in Russia. And people will be wiser to the grand promises made last time around, when share-buyers were told the first two generating units would be online by no later than the start of 2012. In reality, the project is nowhere even close to reaching that stage.
The government has sold Rogun on the basis of rash and extravagant promises of a prosperous and comfortable future. The intention is for Rogun to double electricity production, putting an end to power shortages and leaving large volumes left over for export to Pakistan and Afghanistan. In an address to parliament in 2009, President Emomali Rahmon promised that Tajikistan would attain energy independence within four years. Technically, Tajikistan is energy independent already insofar as it doesn’t import power, but that is only at the cost of enforcing rolling brownouts throughout the winter that plunge everybody beyond the country’s major cities into hours of darkness on a daily basis.
As of July 2015, officials said that the around 6.4 billion somoni ($1 billion at the exchange rate of the time) had been spent on building efforts since work resumed in 2007. Part of the financing came straight out of the government coffers, so it is not know how much of the cash raised through share sales is still available.
Another elephant in the room is the constant objection to the project posed by Uzbekistan. Tashkent has expressed concerns that the dam could be ruptured by an earthquake and worries that filling the dam will deprive its agriculture sector of irrigation water — both potentially calamitous outcomes.
Tajikistan’s arguments were given a major fillip in 2014, however, when the World Bank released feasibility reports essentially giving the project the green light. The only sting in the reports was that the economic model underpinning the project envision financial reforms and rationalizations in the costs of the electricity sector that have yet to materialize.