Russia Controlling Tajikistan Projects with $2 Billion Investments and Debt Leverage

---

Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Set against the current east-west pull of political allegiances in the Ukraine, it does not take a Russian rocket scientist to understand the enthusiasm with which Russia is moving to invest in projects in the central Asian states. Apart from gas, power, metal, and mining projects now on the table, one of those states, Tajikistan, has just been announced as the host country for a command post exercise of the Collective Security Treaty Organization (CSTO) in April 2005. The CSTO comprises of Russia, Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Tajikistan. Speaking from the organization's Moscow headquarters, Lieutenant General Vasily Zavorogodiny said, "The main goal of the Rubezh 2005 joint command exercise is to rehearse coordinated activity of the CSTO Unified Headquarters, staff bodies of the collective rapid deployment forces and other staff bodies, while preparing joint stabilization efforts in Central Asia."

In the same week in late November, it was reported that Russia gas majors Gazprom (Moscow, Russia) and state-owned Tajikgaz (Dushanbe, Tajikistan) are considering setting up a joint venture for natural gas prospecting and production in Tajikistan. At present 26 billion cubic meters (bcm) of gas is being extracted per annum and the country's domestic needs only amount to two bcm per annum. Negotiations have been ongoing for more than a year on creating a joint venture for southern Tajik deposits with aggregate gas reserves of 200 bcm. A 25-year Tajik-Russian agreement on strategic gas cooperation is under discussion. Although Tajikistan lies more to the east than to the west, and shares a border with China, Russia's gas export pipeline to Europe lies through Ukraine - all part of the pipeline power game.

Click on the image at right to view the Tajikistan and Vacinity Map.

Tajik President, Emomali Rakhmonov said, after signing agreements with Russia in October, that Russia would pump $2 billion into the Tajik economy through its involvement in various projects. This was followed through in November when the Russian government approved involvement in the 670 MW Sangtuda hydropower dam situated 100 kilometers south of the Tajik capital, Dushanbe. The two countries will set up a company to complete construction on the project, which began in 1987. Russia is looking to attract $200 million to the project, which could cost a total of $520 million. By building conditional debt forgiveness into the deal, which will be handled by Russian utility UES, Russia is expected to eventually gain control of the project.

Hydroelectric energy and the joint solution of water issues will become priority areas of bilateral cooperation and UES is in line to finish construction on the $560 million Rogun hydropower plant. This will represent the sixth stage in the Vaksh River cascade, which already has the 3,000 MW Nurek dam, the 600 MW Baipaza plant, and the 240 MW Golovnaya plant in operation. Rakhmonov said that fulfillment of Tajikistan's immense hydroelectric potential - 528 billion kWh - would benefit the country and also be of great regional importance. Another, as yet unspecified, major hydropower project is also at the project concept stage.

Russia's Rusal (owned by Base Element and oil major Sibneft) will also invest in the $600 million, 200,000-ton-per-annum aluminum smelter to be constructed in southern Tajikistan and will assist in the upgrade of two divisions of the existing TadAZ smelter. The project will need an investment of $160 million and will boost the plant's production capacity by 100,000 tpa.

Leverage for Russia in the power play stems from the fact that in mid-July Tajikistan owed Russia $305.73 million, which included $6.06 million interest. In the trade-offs and payback Turkmenistan will hand over the Nurek optic electronic unit, which has been valued at 242.43 million, to the Russian military. The handover includes the radar station at Okno, Interfax reported.

Observers say that Russia's ability to seal its hegemony in the region with bilateral deals is partly due to the funds made available by the peaking global oil price. As the Turkmenistan deals were coming through the Russian embassy in Uzbekistan announced that Gazprom plans to invest $1 billion to develop gas condensate fields in the west of the country and invest $15 million to extend the life of another field. Lukoil plans to invest $995 million for natural gas extraction in the Bukhara-Khiva region.

The Russian political kingdom also benefited when President Vladimir Putin visited Dushnabe in October and signed an agreement admitting Russia to the Central Asian Cooperation Organization (CACO), which includes Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan.

View Project Reports - 98900003 98900004

Industrialinfo.com is the leading provider of global industrial market research. We specialize in helping companies develop information solutions to maximize their sales and marketing efforts.