VZCZCXRO8130
PP RUEHLN RUEHVK RUEHYG
DE RUEHDBU #0493/01 0731355
ZNR UUUUU ZZH
P 141355Z MAR 06
FM AMEMBASSY DUSHANBE
TO RUEHC/SECSTATE WASHDC PRIORITY 6965
INFO RUCNCIS/CIS COLLECTIVE
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC
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RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 03 DUSHANBE 000493 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN 
EMBASSY MANILA:  PLEASE PASS TO ADB AMBASSADOR SPELTZ 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ENRG ECON RS TI AF
SUBJECT: TAJIKISTAN'S MOI WITH AES ON POWER TRANSMISSION LINES 
 
 
DUSHANBE 00000493  001.2 OF 003 
 
 
¶1.  (SBU)  SUMMARY:   Post received the following letter from 
the Minister of Energy regarding Tajik government cooperation 
with AES, including the nine-page Memorandum of Intent for the 
"construction of a 220kV transmission line connecting the energy 
systems of Tajikistan and Afghanistan."  The letter summarized 
the events and negotiations of the preceding months and outlined 
AES's requirements for participation in Tajikistan's energy 
sector and a timeline for the project, scheduled to be completed 
in November 2007.  END SUMMARY 
 
¶2.  (SBU) COMMENT:  If things move according to schedule, the 
transmission lines will give AES the toehold in the Tajik energy 
sector that eluded them as hydropower station projects went one 
after another to other investors.  Contacts in the Ministry of 
Energy have always mentioned AES as the prime candidate to build 
the transmission lines, but failed to understand AES's need to 
control some power generation as well.  We hope this agreement 
will mark the first step towards AES participating in a power 
station project, either Rogun, or another smaller project.  END 
COMMENT. 
 
¶3.  Begin text: 
 
 March 6 
 
TO THE EMBASSY OF THE 
UNITED STATES OF AMERICA 
 
Herewith, we would like to inform you that beginning 2005 the 
Ministry of Energy of Tajikistan and AES Silk Road (USA) held 
intensive negotiations in the area of energy, in particular 
construction and maintenance of energy facilities and 
possibilities of export Tajik electricity to Islamic Republic of 
Afghanistan and Islamic Republic of Pakistan. 
 
In the course of series of negotiations proposals were reviewed 
to construct a 500- or 765 kV transmission lines on following 
routes: Roghun - Khorog - Vahang Corridor - Chirtal - Peshawar, 
and Roghun - Sangtuda - Shirhon Bandar - Kunduz - Puli Humri - 
Kobul Peshawar to enable future exports of electricity upon 
completion of construction at Roghun, Sangtuda I and Sangtuda II 
hydroelectric power stations. 
 
        As a result of activities a Memorandum of Intention was 
signed between Open Joint Stock Holding Company "Barqi Tojik" of 
the Ministry of Energy of Tajikistan and AES Nurenergoservice of 
AES Silk Group in the area of collaboration of excess 
electricity produced during summer period at hydroelectric power 
stations in Tajikistan.  Then, since December 2005 AES actively 
participated in negotiations between the Ministry of Energy of 
Tajikistan and the Ministry of Energy and Water Resources of 
Islamic Republic of Afghanistan on collaboration in the energy 
sector; negotiations discussed issues concerning implementation 
of projects to build the aforementioned transmission lines. 
 
        Then, in January 16, 2006 the Government of Tajikistan 
conducted a meeting to discuss Hydropower Development Strategy 
and to create an international hydropower consortium.  The 
meeting was attended by representatives of the Government of 
Tajikistan, RAO UES, Rusal JSC, Kazakhstan Development Bank, 
Kazakhstan Investment Fund, Asian Development Bank and European 
Bank for Reconstruction and Development. 
 
        A Protocol of Second International Meeting was signed in a 
 
DUSHANBE 00000493  002.2 OF 003 
 
 
course of the meeting to establish an international hydropower 
consortium; in accordance with Protocol AES committed to be an 
investment partner for construction of electric transmission 
lines and to export electricity to Afghanistan and Pakistan 
under the following conditions: 
 
--Financial support from IFIs 
--Government of Tajikistan as one of the partners 
--Commercial purchase agreement with Afghanistan and Pakistan, 
as future consumers of Tajik electricity 
--Partnership with companies for the Russian Federation 
--Intention to play a key role in development, design, 
construction and management of transmission lines and generating 
facilities 
--Expresses interest to actively work with the Government of 
Tajikistan and IFI in implementation of a project 220 kV 
Transmission Line (construction of 220 kV two-circuit 
transmission line Sangtuda - Geran - Sherhon Bandar - Kunduz to 
export electricity to Afghanistan). 
 
With a purpose to implement commitments within the framework of 
mentioned above Protocol, AES presented a draft of Memorandum of 
Intent between Ministry of Energy of Tajikistan and AES Silk 
Road Inc for construction of a 220 kV transmission line 
connecting energy systems of Tajikistan and Afghanistan.  This 
Memorandum was reviewed by us and with amended changes was 
forward to AES office in Almaty on February 28, 2006. 
 
Based on said above, Ministry of Energy is forwarding for your 
information a copy of the draft Memorandum of Intent between 
Ministry of Energy of Tajikistan and AES Silk Road Inc. for 
construction of a 220 kV transmission line connecting energy 
systems of Tajikistan and Afghanistan. 
 
        We request your assistance in implementation of the 
project. 
 
Attachment: 9 pages 
 
Sincerely, 
 
Minister J. Nurmahmatov 
 
End text 
 
 
¶4. Following are the Memorandum of Intent's main points. A 
complete text is available in Russian. 
 
MEMORANDUM OF INTENT 
 
Preamble: 
 
Parties to Memorandum: Government of Tajikistan represented by 
the Ministry of Energy, and AES Corporation (U.S.) represented 
by AES Silk Road Inc. (fully owned by AES Corporation). 
 
Parties agreed to incorporate a Transmission Company to 
implement the Project agreed on principle Build - Operate - 
Transfer (BOT) 
 
Project will: (i) build two-circuit transmission line 220KV (90 
km) to Afghanistan border; (ii) open a representative office; 
 
 
DUSHANBE 00000493  003.2 OF 003 
 
 
Parties agreed to: 
 
AES and Ministry of Energy will establish a company that will 
(i) implement the project; (ii) manage and own all facilities as 
provided in the project; 
 
Shares of each party in the Company will be determined upon 
completion of Feasibility Study; 
 
Project will be implemented on phase-by-phase basis; 
 
Schedule: 
 
March 10, 2006 - signing of proposed Memorandum of Intent; 
March 20, 2006 - expected signing date for BOT Agreement between 
AES and Ministry of Energy; 
July 30, 2006 - expected completion of feasibility study; 
August 31, 2006 - expected date when Basic Agreements will come 
into effect 
September 15, 2006 - expected approval on final Feasibility 
Study.  Negotiations with Government of Tajikistan on proposed 
articles of agreement by AES 
October 2006 - inception of Agreements of the Project 
November 2006 - obtaining investment license for project 
implementation 
February 2007 - proposed financing proposal will be available 
March - 2007 - inception of construction works 
November 2007 - completion of construction works 
HOAGLAND