ANOTHER DAM CABLE FROM TAJIKISTAN

C O N F I D E N T I A L SECTION 01 OF 02 DUSHANBE 002225

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E.O. 12958: DECL: 12/19/2016
TAGS: PGOV PREL ECON ENRG EFIN TI
SUBJECT: ANOTHER DAM CABLE FROM TAJIKISTAN

CLASSIFIED BY: Tracey Ann Jacobson, Ambassador, U.S. Embassy,
Dushanbe, State.
REASON: 1.4 (d)


1. (U) Boom!! After four hours of waiting for Tajik President
Rahmonov and Russian energy utility RAO UES head Anatoli Chubais
to arrive by car, when thick fog prevented helicopter travel,
observers witnessed a single explosion block the mighty Vaksh
River at Sangtuda. The river was diverted through two tunnels
to a point 500 meters further down the bank, enabling RAO UES to
begin constructing a dam and a 670 megawatt hydropower station.
The first of three turbines is expected to go online in March
2008 although press reports indicate that Rahmonov asked, and
Chubais agreed, to speed up construction and start production by
the end of 2007. The December 15 event was only the second
river diversion in Tajikistan's history; in 1966, the Vaksh was
first blocked to build the Nurek dam and a 3200 MW power
station, still Tajikistan's largest.


2. (C) Hundreds of schoolchildren danced along the roads
leading to two pavilions for spectators of the largely bilateral
event, with Tajik and Russian leaders the only official guests
and no diplomatic or donor representatives in sight. The RAO
UES Sangtuda General Director Vasily Cherneshenko invited the

SIPDIS
Ambassador to attend the event as a private observer, and gave
her a quick tour of the construction site. Supervising the
bulldozers frantically moving boulders away from the diversion
tunnels was Deputy Prime Minister Asadullo Ghulomov, dressed in
mud boots and a hard hat. "I'm a real construction worker
again!" he laughed to the Ambassador. Looking less at home
among the heavy machinery and mud was the new Minister of Energy
and Industry Sherali Gulov, wearing a suit and dress shoes.


3. (C) While killing time, Cherneshenko took the Ambassador to
see the Sangtuda-II site, the 220 MW hydropower station 15
kilometers downstream to be constructed with Iranian funding.
He observed that although Russia and Iran had agreed to finance
and build the Sangtuda stations at the same time, the Iranians
were trying to "outsmart" the Tajiks, and vice versa, which had
led the Sangtuda-II project to stall, while Sangtuda-I
progressed as scheduled.


4. (U) The actual demolition took place shortly after
Rahmonov's motorcade rolled in from Dushanbe. Rahmonov made
public remarks about the need to develop other hydropower
stations along the Vaksh, and stated that he asked RAO UES to
intensify work so that the first Sangtuda-I unit would generate
electricity in December 2007, four months earlier than planned.


5. (U) In an unusual turn of events, Tajikistan did not
experience the nationwide blackout authorities had warned of
weeks in advance. Officials feared that if the diversion
tunnels did not regulate the flow of water right away, they
would have to turn off the water upstream at Nurek, and had
publicly announced a three-day power cut after the diversion.
However, central Dushanbe remained electrified through the
weekend. (NOTE: Most rural parts of Tajikistan have been
entirely without power since mid-November END NOTE.)

AS GOES SANGTUDA~?


6. (C) Sangtuda-I has become a test case for Tajikistan's
hydropower sector, with developers, donor and investors waiting
to see how the Tajik government handles the construction and
financing of the project. Unlike the hotly contested Roghun
project, Sangtuda-I has remained on track, even as RAO UES
appeals to the World Bank and other international financial
institutions for funding.


7. (C) "Great progress!" Deputy Prime Minister Ghulomov
described Sangtuda-I to the Ambassador December 13-ironically,
in a meeting requested to discuss how cement diverted to
Sangtuda-I may potentially delay construction of the U.S. funded
bridge at Nizhniy Pyanj. Government sources had reported that
Ghulomov personally ordered all cement produced by Tajikistan's
single cement factory be sent to Sangtuda-I to finish lining the
water diversion tunnels.


8. (C) Ghulomov acknowledged that he made all decisions
concerning cement, but brushed off the idea that a lack of
cement could hinder future construction of hydropower stations,
and suggested that some of the cement was being siphoned for
sale in Afghanistan. Plans by a Czech company to build an
additional cement plant in southern Tajikistan remain in the
preliminary stages.


9. (C) COMMENT: It's not every day one sees a major river bed

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dry up in a few hours. The success of the diversion should buoy
the spirits of the already confident Tajik government about its
hydropower future. But in order to convince international
investors that Tajikistan's energy sector is a safe bet, the
Tajik government will need Sangtuda-I to stay on track. Given
Ghulomov's micromanagement of cement deliveries, we can assume
that Tajikistan's top officials will do everything in their
power to see the project succeed. However, this kind of effort
and attention does nothing to make the investment climate
better, and only reinforces the bad habits of Tajiks who rely on
personal relationships, not functioning systems, to get anything
done.


10. (C) The lack of a power outage in Dushanbe, despite
repeated warnings, also demonstrates that the government does
not fully know its own technical capacity in the energy sector.
Lights in the capital provided little cheer or confidence in the
government in the many parts of Tajikistan that will remain in
the dark until spring. END COMMENT.
JACOBSON