VZCZCXRO6284
PP RUEHLN RUEHSK RUEHVK RUEHYG
DE RUEHDBU #1348/01 3371126
ZNR UUUUU ZZH
P 031126Z DEC 09
FM AMEMBASSY DUSHANBE
TO RUEHC/SECSTATE WASHDC PRIORITY 0980
INFO RUCNCIS/CIS COLLECTIVE
RUEHBUL/AMEMBASSY KABUL PRIORITY 0324
RUEHBJ/AMEMBASSY BEIJING PRIORITY 0117
RUEHKO/AMEMBASSY TOKYO PRIORITY 0003
RUEHML/AMEMBASSY MANILA PRIORITY 0002
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFISS/DEPT OF ENERGY WASHINGTON DC
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHINGTON DC
RUEHDBU/AMEMBASSY DUSHANBE 2079

UNCLAS SECTION 01 OF 04 DUSHANBE 001348 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR SCA/CEN 
 
E.O. 12958: N/A 
TAGS: PREL ECON PGOV ENRG TI
SUBJECT: RAHMON LAMBASTS UZBEK ENERGY GRID WITHDRAWAL, ASKS FOR DONOR 
HELP 
 
REF: DUSHANBE 1215 
 
DUSHANBE 00001348  001.2 OF 004 
 
 
¶1. (SBU) Summary:  President Rahmon convened a surprise meeting 
of international donors in Dushanbe on November 20 to discuss 
the energy situation and request assistance in the face of an 
economic crisis compounded by Uzbekistan's withdrawal from the 
regional energy system.  He lambasted Uzbekistan's conduct on 
numerous fronts, ranging from energy policy to its meddling in 
Tajikistan's civil war, and urged the international community to 
exert pressure on Tashkent.  He criticized donors for being soft 
on Uzbekistan.  Rahmon repeated earlier threats to hoard water 
instead of letting it flow to Uzbekistan.  He said Tajikistan 
would raise the dam at Roghun ahead of schedule to hold water 
back for winter use downstream at the Nurek hydropower station, 
and the Qairaqqum hydropower station in the north would use its 
water to generate electricity in the winter, rather than saving 
it for agricultural use in Uzbekistan during the spring and 
summer.  Rahmon detailed ongoing and planned energy projects, 
including new transmission lines and hydroelectric stations that 
he said were necessary to achieve energy independence.  Despite 
Rahmon's stern words, it is not clear that Tajikistan has much 
room for maneuver.  Nor is the situation all that much worse 
than usual, given that Uzbekistan limits power to Tajikistan 
each winter anyway.  End summary. 
 
THE BAD NEWS ... 
 
¶2. (SBU) On November 20, the government called donors, including 
USAID Country Director, to a hastily-convened meeting at the 
Presidential Dacha in Dushanbe.  President Rahmon began the 
meeting by discussing the global economic crisis and its impact 
on Tajikistan.  Falling aluminum and cotton prices have reduced 
exports by 35%, with a 10% decrease in overall production, 
worsened by the energy crisis.  Remittances from Tajiks working 
abroad are also down 35% in the first 9 months of 2009, and 
budget fulfillment is 95% of targets.  (Comment: According to 
the International Monetary Fund (IMF), exports have declined by 
only 23%.  Since government figures generally use world prices 
in calculating aluminum exports, even though Tajikistan exports 
its aluminum at a fixed price under a tolling arrangement, the 
statistics are not necessarily reliable.  Nor is there a direct 
correlation between decreased aluminum exports and economic 
difficulties, since profits from aluminum production largely 
flow to offshore accounts controlled by the country's elite. 
End comment.) 
 
... AND SOME GOOD NEWS 
 
¶3. (SBU) There was some good news, Rahmon said.  The country had 
recently built over 150 small hydropower stations, with 50 more 
coming on line this year.  The South-North 500 kilovolt (kV) 
energy transmission line linking Dushanbe and Khujand was 
completed just a few days ago, providing greater energy 
independence for Tajikistan's north, which had largely depended 
on electricity imports from Uzbekistan.  Rahmon noted the 
completion, with Russian investment, of Sangtuda-1 earlier this 
year, and said the first of Sangtuda-2's two turbines, built 
with Iranian investment, will come online next year.  Most 
experts believe Sangtuda-2 will not be ready before 2012. 
Rahmon said the energy situation was better this year than last. 
 Rationing started in November rather than December, and the 
regions are getting 7 hours this year, rather than just two 
hours as in previous years.  (Embassy note:  Rationing started 
in September in 2008.) 
 
REPEATS THREAT TO HOLD WATER BACK FROM UZBEKISTAN 
 
¶4. (SBU) Despite such efforts, however, Uzbekistan's decision to 
leave the Central Asian Unified Energy System would force 
Tajikistan to take drastic measures.  Although the energy 
situation was slightly better this year, the system was 
operating without a backup.  Rahmon said Tajikistan would 
accelerate construction of the massive Roghun hydropower 
station, investing $150 million by the end of this year and the 
same amount in 2010.  (Rahmon had earlier announced that 2009 
expenditures would total $122 million.)  Tajikistan needed about 
$500 million over four years to complete Roghun.  Rahmon 
provided more detail about Tajikistan's plans to hold back water 
to generate electricity, thus reducing the volume of water to 
downstream Uzbekistan.  Initially this threat appeared to be an 
empty one, since Tajikistan already holds back as much water as 
 
DUSHANBE 00001348  002.2 OF 004 
 
 
possible on an annual basis to refill its hydroelectric 
reservoirs (reftel).  But Rahmon specified that Tajikistan 
planned to build the dam at Roghun to a height of 30 meters 
between now and August 2010, even before Roghun's turbines were 
ready, to hold more water back for downstream use at Nurek. 
Tajikistan would continue to raise the Roghun dam every year, 
which would allow for more generation at Nurek, and would export 
excess power to Afghanistan along a new 220 kV line. 
 
¶5. (SBU) Rahmon said Tajikistan would hold water back in the 
Qairaqqum reservoir in the north, on the Syr Darya River, which 
would have a much more serious impact on Uzbekistan's 
agriculture.  Uzbekistan relies on spring and summer outflow 
from the Syr Darya to irrigate crops in three of its districts. 
Rahmon said instead of letting water accumulate in Qairaqqum 
during the winter months for use in spring and summer both to 
generate hydropower and to irrigate crops, Tajikistan would 
generate power all winter long, leaving little for the 
agricultural season. 
 
SCREED AGAINST UZBEKISTAN WIDENS 
 
¶6. (SBU) Rahmon spent most of the meeting delivering a tirade 
against Uzbekistan's perfidy, with donors coming under attack as 
well.  He charged that the timing of Uzbekistan's decision was 
calculated to inflict maximal damage on Tajikistan's economy, to 
bring the country to heel as an "obedient slave."  He cited the 
many times Uzbekistan had shut off natural gas to Tajikistan 
over the past 18 years, and the gratuitous blocking of cargo and 
air and rail links.  Fertilizers, for example, had only been 
available via Afghanistan, Pakistan, and Kazakhstan.  (Note: In 
fact most of Tajikistan's imports come via rail through 
Uzbekistan.  Fertilizer smuggled from Uzbekistan is available on 
the Tajik market, according to Embassy contacts.  End note.) 
 
¶7. (SBU) Rahmon said Uzbekistan forced Tajikistan to waste half 
its hydropower production, since Tashkent made it difficult for 
Tajikistan to export its excess summer generation from Nurek via 
Uzbek transmission lines.  This year, Tajikistan produced 2 
billion kilowatt hours (kWh) of surplus power at Nurek, half of 
which was lost because Uzbekistan refused to allow onward power 
distribution, and the remainder of which was sold to Uzbekistan 
at rock-bottom prices for lack of another market.  Rahmon was 
angry as well at Tashkent's refusal to allow winter energy from 
Turkmenistan to transit the Uzbek grid to Tajikistan.  Going 
further back, Rahmon criticized Uzbekistan's role in the civil 
war, complained about its land mines along the Tajik border, and 
blamed Uzbekistan for destroying the Aral Sea. 
 
DONORS COME IN FOR DRUBBING TOO 
 
¶8. (SBU) Rahmon then rounded on donors, criticizing them for 
strengthening Uzbekistan's hand vis-a-vis Tajikistan and failing 
to take Uzbekistan to task on child labor and land mine issues. 
The Asian Development Bank (ADB) came in for particular 
criticism.  Rahmon alleged that the Japanese and Koreans lobbied 
the ADB to provide loans to Uzbekistan -- for example, $180 
million for a railroad link to Afghanistan -- while the Bank 
withdrew support for the CASA 1000 project to build an electric 
transmission line linking Kyrgyzstan, Tajikistan, Afghanistan, 
and Pakistan.  (Comment: Sources at the ADB have told us the 
project was not economically viable.  Another source, however, 
has suggested they may have been influenced, at least in part, 
by a desire to avoid upsetting Karimov.  End comment.)  ADB 
assistance helped Uzbekistan preserve the railway monopoly into 
and out of Tajikistan that it has enjoyed since Soviet days, so 
that Tajikistan must use the Uzbek city of Termez even to ship 
cargo by rail to neighboring Afghanistan.  Rahmon bitterly 
criticized the ADB's decision to host its annual international 
meeting in Tashkent in the spring of 2010, charging that it gave 
inappropriate political support to the regime. 
 
REQUEST FOR ASSISTANCE 
 
¶9. (SBU) Rahmon said he was sending letters to the presidents of 
all donor organizations and representations requesting 
assistance and criticizing Uzbekistan's destructive activities. 
He sought donor support for several specific projects.  Among 
them were three critical power lines: a 220 kV lines from 
Khujand via Penjakent to Ayni, another 220 kV line from 
 
DUSHANBE 00001348  003.2 OF 004 
 
 
Qairaqqum to Asht, and, in the south, a 500 kV line from 
Sangtuda-1 to Dushanbe, helping to protect the capital and 
Tajikistan's sole large industry, the Talco aluminum plant at 
Tursonzoda.  Rahmon said the 220 kV line to Afghanistan was 
urgently needed before May 2010, so Tajikistan could export 
excess summer power directly.  (Note:  According to ADB 
representatives, it will not likely be completed before December 
¶2010.  End note.)  He cited as well the geopolitical importance 
of completing the CASA 1000 line to supply power to Afghanistan 
and Pakistan. 
 
¶10. (SBU) Rahmon also requested support for various hydropower 
projects.  He said Tajikistan needed 2,000 megawatts (MW) of 
additional capacity to satisfy domestic needs.  Projects 
underway included the 220 MW Sangtuda-2; Roghun, which is 
expected to generate 3,600 MW; a 270 MW thermal plant in 
Dushanbe to be built with Chinese assistance; the 160 MW 
Zaravshan hydropower station, which would have no reservoir and 
hence no downstream impact, but which Uzbekistan objected to 
anyway; modernization of the Qairaqqum hydropower station; a 400 
MW station near Isfara; and two 500 MW stations in Nurobad, 
above the Roghun site.  Some $500 million is also needed for 
reconstruction at Nurek, which had been in operation for 36 
years, 15 years beyond its expected useful life.  The Zaravshan 
project has had a feasibility study conducted by the German 
Technical Assistance Agency (GTZ) and could be ready in 
two-and-a-half years.  The Qairaqqum modernization was under 
consideration at the European Bank for Reconstruction and 
Development (EBRD), although Rahmon would rather they invested 
in Zaravshan.  More immediately, Dushanbe needs some 40,000 tons 
of fuel to start its thermal plant.  He mentioned a joint 
electricity and gas pipeline between Tajikistan, Afghanistan, 
and Turkmenistan, for which some $40 million is needed.  In 
response to donor concerns about transparency, Rahmon said he 
was "for reform," although he was not specific.  He noted the 
$30-40 million debt owed by the Ministry of Water Resources to 
Barqi Tojik, resulting in the latter's inability to pay for 
Sangtuda-1 power generation. 
 
DONORS DETAIL SUPPORT 
 
¶11. (SBU) Donors noted plans underway to assist Tajikistan.  The 
ADB said its energy team would visit the following week, while 
the World Bank would send its regional director and energy team 
the week of December 7, during which they would request a 
meeting with the President.  The World Bank announced it would 
help buy the fuel to start Dushanbe's thermal plant.  If 
additional funds are available, the World Bank would consider 
more funding to expand electrical metering.  The Bank was 
continuing its environmental and social assessments of Roghun 
and CASA 1000.  The EBRD said it did not have concessional loans 
available for infrastructure, but with EU, Swiss, and Japanese 
help it was supporting an energy efficiency effort, refurbishing 
existing hydro plants, and seeking support for additional small 
and medium hydro projects, while developing the legal framework 
governing those operations. 
 
COMMENT: TAJIKISTAN HOLDS FEW CARDS 
 
¶12. (SBU) The fact that Rahmon personally called in donors to 
discuss the power issue is evidence of just how rattled he and 
his government are by Uzbekistan's withdrawal from the energy 
grid.  The question remains, however: what can Tajikistan do? 
Threats to hold back water from Uzbekistan may be more Kabuki 
theater than realistic options: to the extent water is held 
back, it cannot be used to generate much-needed power in 
Tajikistan.  Although plans to raise the dam at Roghun ahead of 
schedule may have some impact on downstream users, only at 
Qairaqqum, which generates a mere 126 MW at peak capacity, does 
Tajikistan have the ability to really interfere with Uzbek 
agriculture. 
 
¶13. (SBU) Rahmon's plea for power lines to protect Talco brings 
us to another elephant in the room: a major threat to 
Tajikistan's energy security is the aluminum plant, which 
consumes the lion's share of Tajikistan's electricity at highly 
subsidized rates, while most of the population sits in the dark. 
 It is financially non-transparent and returns little of its 
revenue to Tajikistan's budget.  Rahmon was, in effect, pleading 
with donors to subsidize his personal wealth, at the expense of 
 
DUSHANBE 00001348  004.2 OF 004 
 
 
the people of Tajikistan.  Any assistance to Tajikistan to 
resolve its energy shortages must address Talco's consumption 
and financial structure.  Meanwhile, despite the heightened 
rhetoric, the situation is not significantly worse than in 
previous years, since Uzbekistan routinely withheld power 
exports to Tajikistan during much of the winter, and blocked the 
transit of power from Turkmenistan as well.  With full 
reservoirs after a rainy summer, Tajikistan may not be much 
worse off than last year.  End comment. 
 
ATTENDEES AT THE MEETING 
 
¶14. (U) Government representatives at the meeting included 
Matlubhon Davlatov, Presidential Advisor on Economic Affairs; 
Farrukh Hamraliev, Minister of Economic Development and Trade; 
and Pulod Muhiddinov, First Deputy Minister of Energy and 
Industry.  Donor representatives included the Asian Development 
Bank (ADB), the European Bank of Reconstruction and Development 
(EBRD), the International Finance Corporation (IFC), the World 
Bank, the International Monetary Fund (IMF), the UK Department 
for International Development (DFID), the European Union, the 
German Agency for Technical Cooperation (GTZ), the Swiss Agency 
for Development and Cooperation (SDC), the Swedish International 
Development Cooperation Agency (SIDA), and USAID. 
QUAST