VZCZCXRO3735
RR RUEHLN RUEHVK RUEHYG
DE RUEHDBU #1846/01 2830554
ZNR UUUUU ZZH
R 100554Z OCT 06
FM AMEMBASSY DUSHANBE
TO RUEHC/SECSTATE WASHDC 8770
INFO RUCNCIS/CIS COLLECTIVE
RUEHNE/AMEMBASSY NEW DELHI 1865
RUEHBUL/AMEMBASSY KABUL 1815
RUEHIL/AMEMBASSY ISLAMABAD 1857
RHEFDIA/DIA WASHINGTON DC
RUEAIIA/CIA WASHDC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHDBU/AMEMBASSY DUSHANBE 0211

UNCLAS SECTION 01 OF 02 DUSHANBE 001846 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR SCA/CEN 
 
E.O. 12958: N/A 
TAGS: EAGR ECON EFIN EINV EIND ELAB EAID ETRD PGOV TI
SUBJECT: SOUTHERN TAJIKISTAN'S RUSTED BELT: INDUSTRY IN 
QURGHON-TEPPA 
 
REF: DUSHANBE 1625 
 
DUSHANBE 00001846  001.2 OF 002 
 
 
¶1.  (U)  INTRODUCTION:  Called Kurgan-Tube by the Soviets, 
Qurghon-Teppa is a depressed city of 80,000 people, sixty 
minutes south of Dushanbe in the Khatlon region.  Remains of the 
city's crumbling industrial infrastructure line city streets. 
The mayor threatened to re-nationalize failing industries if 
they fail to increase production.  Meanwhile, major factories 
eagerly await completion of the U.S.-funded Nizhny Pyanj bridge 
so they can increase exports to Afghanistan.  The few hotels in 
the city do not even meet Dushanbe's post-Soviet standards, let 
alone international norms.  Oblivious to these problems, a 
private entrepreneur is pouring millions of dollars into 
renovation of an airport that hardly anyone uses.  END 
INTRODUCTION. 
 
¶2.  (U)  The largest factory located near Qurghon-Teppa is 
called VATZ, a nitrogen fertilizer plant.  In an astonishing 
chemical process, "carbomid" nitrogen fertilizer is produced by 
combining the two ingredients air and natural gas.  VATZ 
receives natural gas from Uzbekistan, and is the single largest 
user of natural gas in Tajikistan.  VATZ receives air inputs for 
free.  The company exports 20% of its product to Iran, 
Afghanistan, and previously to China.  The company plans to 
greatly increase its sales to Afghanistan with completion of the 
U.S.-funded Nizhny Pyanj bridge.  A businessman from Cyprus 
invested $17 million to renovate the plant, and now owns 80% of 
VATZ shares.  The company employs 1,200 workers, who enjoy 
decent medical and social benefits.  Problematically, days after 
the visit by EmbOffs, VATZ directors decided to close the plant 
temporarily due to a lack of natural gas from Uzbekistan. 
(Note: According to some press reports, VATZ's disputed bills 
for natural gas are a major pretext for Uzbekistan's periodic 
shut-down of gas supplies to Tajikistan.)  Tajik farmers can 
still import fertilizer from Russia.  In addition, Turkmenistan 
is currently building a carbomid plant which will produce double 
the capacity of the Tajik plant - 350,000 tons.  Presumably, 
they will receive a steady supply of natural gas internally. 
 
¶3.  (U)  The second largest factory in Qurghon-Teppa is 70 years 
old and produces electrical transformers for Tajikistan and 
Afghanistan.  Since its renovation in 1960, the factory has not 
installed new equipment, but manages to produce 400 working 
transformers each year.  The government-owned Kurgan Tube 
Transformer Company imports parts from Russia and Ukraine, with 
aluminum inputs from Tajikistan.  The company sells 60% of its 
products through Barki Tojik, the state-owned power company. 
 
¶4.  (U)  The director of the company, Zikirullo Muroduloevich 
Begmatov, is the son-in-law of the acting chairman of Khatlon 
Oblast.  Barki Tojik owes the company $1 million for delivered 
goods.  Begmatov told EmbOffs September 22 that the U.S.-funded 
Nizhniy Pyanj bridge will allow the company to greatly expand 
its deliveries to Afghanistan.  The 200 factory workers earn on 
average $70 per month.  The company currently brings in $3 
million in annual income, with $250,000 profit.  According to 
Muroduloevich, Chinese investors have expressed interest in the 
plant, but made no commitments. 
 
¶5.  (U)  In the farming sector, the relative success of a small 
farm and a large farm demonstrate that sometimes, size does 
matter.  Abdurazok Abdullaev farms 25 hectares of cotton, and is 
deeply in debt to a commodities "futures" holding company 
"TAMER."  TAMER financed his land but did not show Abdullaev the 
contract.  TAMER does not disclose the prices of farming inputs 
it supplies, or how much it will pay for the cotton Abdullaev 
will supply at season's end.  Abdullaev is highly unlikely to 
pay off his $1,300 per hectare debt anytime soon. 
 
¶6.  (U)  A 408-hectare cotton farm owned by Raidin Sulaimonov 
employs 600 people.  Raidin managed to switch away from TAMER to 
another futures company that provides better prices for fuel and 
fertilizer supplies.  Each year, Raidin has paid off 25% of its 
$450 debt per hectare, and hopes to be debt-free by 2008. 
Unfortunately, many farmers lack the ability to get out from 
under rapacious futures companies. 
 
¶7.  (U)  The privately-owned NUR Company plans to invest up to 
$15 million in revitalizing the sparingly-used Qurghon-Teppa 
airport (reftel).  NUR's main engineer for the project 
Mirhodjaev Umarhodja showed EmbOffs design plans for the site 
September 22, which include 6,000 square meters of terminal 
 
DUSHANBE 00001846  002.2 OF 002 
 
 
space, able to accommodate 600 passengers per hour.  NUR plans 
to complete construction by summer 2007.  NUR's plans to lease 
four Yak-42's for flights between Qurghon-Teppa and Saratov, 
Russia, (reftel) failed financially, and are not operating. 
 
¶8.  (U)  COMMENT: Although a large population of migrant workers 
flies in and out of Qurghon-Teppa each year, this does not seem 
sufficient to pay off a major airport infrastructure investment. 
 The region's economy lacks the dynamism to support major 
domestic or international travel.  Without significant land 
reform and debt restructuring for the cotton farmers, the 
region's prospects will remain bleak.  END COMMENT. 
HUSHEK