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UNCLAS SECTION 01 OF 02 DUSHANBE 001460 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR SCA/CEN 
 
E.O. 12958: N/A 
TAGS: ENRG ECON ETRD PGOV PREL EAID TI
SUBJECT: PRIVATE POWER STATION IN EASTERN TAJIKISTAN RECOVERS FROM 
DAMAGING ACCIDENT, AND PLANS TO SUPPLY TO AFGHANISTAN 
 
 
DUSHANBE 00001460  001.2 OF 002 
 
 
¶1. Summary: Pamir Energy, the private energy company serving all 
of Gorno-Badakhshan in eastern Tajikistan, has largely bounced 
back from its catastrophic accident in February 2007 when its 
main hydropower station Pamir 1 flooded, but continues to face 
cash flow problems due to inefficient distribution and billing. 
The company's Soviet-era grid continues to deteriorate, and the 
company is seeking new investment to sustain power supplies to 
the region and to develop new hydropower projects.  The 
company's parent organization, the Aga Khan Fund for Economic 
Development, signed a Memorandum of Understanding with the 
governments of Tajikistan and Afghanistan in August to supply up 
to 11MW of electricity across the border into Afghanistan during 
the summer months beginning next year.  U.S. funding could help 
the region by supporting feasibility studies of hydropower 
plants at Rushan and Sarez.  End Summary. 
 
¶2. Pamir 1 generates up to 28MW of Pamir Energy's overall 42MW 
capacity during summer months.  Demand for electricity increases 
during the winter, and on average each resident uses 1,500 kWh 
-- one of the highest usage rates in the world according to 
Pamir Energy officials.  The winter shortfall of electricity to 
on-grid customers is 14MW, while off-grid customers require 10MW 
more energy.  The company plans to begin construction this month 
of a transmission line across the border to Afghanistan from 
Khorog, and complete a contract to sell 0.5MW of wholesale 
electricity to Afghanistan to supply five Afghan villages during 
the seven summer months, with the intent to expand the exports 
up to 11MW in coming years. 
 
¶3. Pamir Energy continues to struggle with profitability, and 
relies on continued contributions from its investors, who 
according to General Director Daler Jumaev, are growing 
impatient.  Pamir Energy currently charges 1.97 cents per kWh on 
average for electricity, higher than much of Tajikistan, but 
still loses $1 million per year.  Next year the company expects 
to become profitable on a cash flow basis, but without repayment 
to its investors.  Pamir Energy plans to increase tariffs 15% 
each year through 2010 according to its concession agreement. 
 
¶4. The company is also seeking to stem its losses from theft and 
nonpayment, up to 39% of the company's output.  City 
non-commercial residents are the biggest non-payers - 73% of 
debts come from Khorog.  Rather than individual meters, the 
company relies on a Soviet-era feeder system that controls 
electricity supply to housing blocks, making cutting off 
electricity to debtors difficult.  Crafty residents readily tap 
into the wires when cut off, and string electricity to their 
homes. 
 
¶5. The regions outside Khorog on the grid receive less 
electricity than the city.  Khaillakum receives 16 hours a day 
during the summer but as little as one hour during the winter, 
and Pamir Energy buys power from state-owned Barqi Tojik to help 
supply this western region.  Some villages have sought credit to 
install 1-2kWh micro-hydro plants to help supplement unreliable 
electricity in remote areas. 
 
¶6. Off the grid, the 7,000 residents of Murghab are supplied by 
a 300kW hydropower plant that USAID helped repair in 2002.  The 
weak 150-volt wattage the power plant supplies to the 220-volt 
system provides homes with a dim yellowish glow.  Pamir Energy 
estimates that $6 million is needed to rehabilitate its nine 
off-grid mini hydro plants that serve thousands of the region's 
more isolated residents.  China is considering building a 
hydropower plant on its side of the border at the Kulma Pass 
which would serve residents 90km-away in Murghab.  Pamir Energy 
hopes that other donors, particularly Aga Khan's Mountain 
Society Development Support Program, will take over its 
money-losing regional power stations.  The Mountain Society 
Development Support Program already runs 38 micro-hydro plants 
in Gorno-Badakhshan. 
 
 
DUSHANBE 00001460  002.2 OF 002 
 
 
¶7. Although Pamir Energy provides the residents of 
Gorno-Badakhshan a more reliable supply than most of the country 
receives from state-owned Barqi Tojik, its residents demand yet 
lower tariffs, and the local government harps on the company to 
reduce its rates.  [Comment: This experience counters the 
argument that if the population is provided steady electricity 
they won't mind paying more for it.  End Comment.]  The February 
flooding accident helped improve Pamir Energy's image, as 
residents chipped in to help bring the first of the power 
plant's generators back online in 45 days. 
 
¶8. Pamir Energy discussed two potential hydropower projects with 
EconOffs October 5 -- Rushan and Sarez Lake -- that could serve 
Tajik and Afghan areas.  The Rushan dam would provide up to 
300MW in the summer and 60-80MW in the winter, with Faisabad in 
Afghanistan as the main customer, using 20-40MW.  A hydropower 
plant at the natural dam at Sarez Lake could provide up to 200MW 
and would connect to the Nurek dam grid, potentially sending 
electricity to Afghanistan and Pakistan.  Installing a 
hydropower station at Sarez would also address a regional safety 
issue.  Sarez Lake is contained by a "natural dam" created when 
a powerful earthquake caused a landslide which blocked the 
Murghab River in 1911.  This barrier is believed to be unstable 
and the area below the lake vulnerable to catastrophic flooding 
if another earthquake were to break the dam.  A hydropower 
station would mitigate the risk of a catastrophic flood by 
reducing the water level in the reservoir and would be less 
problematic to Uzbekistan than other hydro projects.  A recent 
study by the Swiss consulting firm "Stucky" assessed that the 
natural dam can be used for hydropower purposes.  Both projects 
require feasibility studies to assess market and technical 
issues. 
 
¶9. Pamir Energy also faces a shortage in newly trained 
specialists to help run its hydropower operations.  Talent must 
be developed locally through the Khorog State University 
engineering program, or the developing Central Asia University 
in Khorog, also funded by the Aga Khan network.  Company 
officials suggested that a university exchange program with a 
U.S. hydrological program could help develop new expertise from 
the area. 
 
¶10. General Director Daler Jumaev took the reins of Pamir Energy 
last year after several unsuccessful predecessors lasted, on 
average, six months each.  Originally from Khorog and trained in 
hydrological engineering, the English-speaking Jumaev (a USG 
exchange program alumnus) brings the company increased local 
credibility to further the company's agenda. 
 
¶11. Comment: The United States could help develop Tajikistan's 
massive hydropower resources and strengthen its capacity to send 
energy to South Asia by funding feasibility studies for the 
Rushan and Sarez projects.  While U.S. programs struggle to help 
reform the government-owned energy company Barqi Tojik, 
privately-owned Pamir Energy leads the sector financially and in 
providing services.  End Comment. 
JACOBSON