Identifier
Created
Classification
Origin
06DUSHANBE2243
2006-12-22 09:59:00
CONFIDENTIAL
Embassy Dushanbe
Cable title:
A MINOR MIRACLE? TAJIK SETTLEMENT WITH NORSK HYDRO COULD BE
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C O N F I D E N T I A L DUSHANBE 002243
SIPDIS
SIPDIS
E.O. 12958: DECL: 12/22/2016
TAGS: PGOV PREL ECON ENRG EINV ETRD TI NO
SUBJECT: A MINOR MIRACLE? TAJIK SETTLEMENT WITH NORSK HYDRO COULD BE
MAJOR VICTORY FOR POTENTIAL INVESTORS
REF: DUSHANBE 1545
CLASSIFIED BY: Tom Hushek, CdA, U.S. Embassy, Dushanbe, State.
REASON: 1.4 (b),(d)
C O N F I D E N T I A L DUSHANBE 002243
SIPDIS
SIPDIS
E.O. 12958: DECL: 12/22/2016
TAGS: PGOV PREL ECON ENRG EINV ETRD TI NO
SUBJECT: A MINOR MIRACLE? TAJIK SETTLEMENT WITH NORSK HYDRO COULD BE
MAJOR VICTORY FOR POTENTIAL INVESTORS
REF: DUSHANBE 1545
CLASSIFIED BY: Tom Hushek, CdA, U.S. Embassy, Dushanbe, State.
REASON: 1.4 (b),(d)
1. (C) With the December 20 signing of a cooperation agreement
between Norwegian aluminum giant Norsk Hydro and Tajikistan's
state-owned aluminum factory TadAZ, Tajikistan resolved one of
its stickiest investment cases. Moscow-based Norwegian
Ambassador Oyvind Nordsletten called on Ambassador Jacobson and
confirmed the Tajik government had accepted a recent London
Court of International Arbitration ruling in favor of Norsk
Hydro. Under the new commercial agreement, the Norwegian
company will provide raw alumina to TadAZ, and receive 200,000
tons of aluminum each year for the next four years, roughly half
of TadAZ's annual 425,000 tons current production. Norsk Hydro
will also provide technical assistance to improve the plant's
efficiency and lessen its environmental impact. Nordsletten
said that if initial improvements go well, Norsk Hydro was
prepared to increase the plant's capacity to 600,000 tons
annually.
2. (C) Despite a record $150 million political risk insurance
settlement from Chubb, Norsk Hydro has been quietly working to
find a settlement that would allow continued trade with
Tajikistan after a 2004 dispute. With the blessings of the
World Bank and the European Bank for Reconstruction and
Development, also present at the signing, TadAZ will begin
repaying its debt in January 2007. Nordsletten said he did not
know the exact details of how Norsk Hydro would pay back Chubb,
or whether Chubb would again start issuing political risk
insurance for Tajikistan, but said there was "general
satisfaction" among all parties and a great deal of optimism
about the future.
3. (C) Nordsletten indicated that Norsk Hydro was already
considering investing in Tajikistan's hydro-energy sector, and
mentioned the 3600 megawatt power station Rogun as a possible
project, with potential long term plans for a second aluminum
smelter. "In 1905, Norway was one of the poorest countries in
Europe. We developed our hydropower and were able to create a
thriving economy," Nordsletten said. He saw similarities
between the two mountainous countries, and reported he was
pushing Oslo to issue an invitation to Tajik President Rahmonov
for a state visit.
WHAT ABOUT RUSAL?
4. (C) During the meeting with Norsk Hydro executives,
Nordsletten said President Rahmonov sharply criticized Russian
aluminum giant RusAl for its tactics over the Rogun hydropower
station and aluminum. Nordsletten acknowledged that Norsk Hydro
may present a threat to RusAl, particularly since Norsk Hydro is
now the world's third largest aluminum company, but felt
confident that Norsk Hydro's transparent dealings would make it
a more attractive partner for Tajikistan.
5. (C) COMMENT: At the risk of seeming overly optimistic,
this could represent a significant shift in Tajikistan's
investment climate and geopolitical alliances. Several
multimillion dollar cases against TadAZ have marked Tajikistan
as a bad investment risk, and this settlement suggests the Tajik
government understands a) that it takes more than lip service to
attract foreign companies and b) that they must honor their
obligations and contracts. Norsk Hydro's approach of a
constructive resolution through arbitration appears to have
proven more successful that the U.S. company Gerald Metals'
tactic of pressuring and threatening the Tajik government.
6. (C) Norsk Hydro could give Tajikistan an alternative to
RusAl on key infrastructure projects. RusAl's development of
Rogun and a second aluminum smelter was one of the key
deliverables during Russian President Putin's October 2004 visit
to Tajikistan. However, in recent months, the Tajiks and RusAl
have engaged in a war of the words over the projects (reftel),
and Tajik government officials, including President Rahmonov,
have openly stated they will develop the project on their own.
Norsk Hydro may present Rahmonov with a new partner, and one who
does not assume the domineering big brother role that has so
rankled Tajik officials. END COMMENT.
HUSHEK
SIPDIS
SIPDIS
E.O. 12958: DECL: 12/22/2016
TAGS: PGOV PREL ECON ENRG EINV ETRD TI NO
SUBJECT: A MINOR MIRACLE? TAJIK SETTLEMENT WITH NORSK HYDRO COULD BE
MAJOR VICTORY FOR POTENTIAL INVESTORS
REF: DUSHANBE 1545
CLASSIFIED BY: Tom Hushek, CdA, U.S. Embassy, Dushanbe, State.
REASON: 1.4 (b),(d)
1. (C) With the December 20 signing of a cooperation agreement
between Norwegian aluminum giant Norsk Hydro and Tajikistan's
state-owned aluminum factory TadAZ, Tajikistan resolved one of
its stickiest investment cases. Moscow-based Norwegian
Ambassador Oyvind Nordsletten called on Ambassador Jacobson and
confirmed the Tajik government had accepted a recent London
Court of International Arbitration ruling in favor of Norsk
Hydro. Under the new commercial agreement, the Norwegian
company will provide raw alumina to TadAZ, and receive 200,000
tons of aluminum each year for the next four years, roughly half
of TadAZ's annual 425,000 tons current production. Norsk Hydro
will also provide technical assistance to improve the plant's
efficiency and lessen its environmental impact. Nordsletten
said that if initial improvements go well, Norsk Hydro was
prepared to increase the plant's capacity to 600,000 tons
annually.
2. (C) Despite a record $150 million political risk insurance
settlement from Chubb, Norsk Hydro has been quietly working to
find a settlement that would allow continued trade with
Tajikistan after a 2004 dispute. With the blessings of the
World Bank and the European Bank for Reconstruction and
Development, also present at the signing, TadAZ will begin
repaying its debt in January 2007. Nordsletten said he did not
know the exact details of how Norsk Hydro would pay back Chubb,
or whether Chubb would again start issuing political risk
insurance for Tajikistan, but said there was "general
satisfaction" among all parties and a great deal of optimism
about the future.
3. (C) Nordsletten indicated that Norsk Hydro was already
considering investing in Tajikistan's hydro-energy sector, and
mentioned the 3600 megawatt power station Rogun as a possible
project, with potential long term plans for a second aluminum
smelter. "In 1905, Norway was one of the poorest countries in
Europe. We developed our hydropower and were able to create a
thriving economy," Nordsletten said. He saw similarities
between the two mountainous countries, and reported he was
pushing Oslo to issue an invitation to Tajik President Rahmonov
for a state visit.
WHAT ABOUT RUSAL?
4. (C) During the meeting with Norsk Hydro executives,
Nordsletten said President Rahmonov sharply criticized Russian
aluminum giant RusAl for its tactics over the Rogun hydropower
station and aluminum. Nordsletten acknowledged that Norsk Hydro
may present a threat to RusAl, particularly since Norsk Hydro is
now the world's third largest aluminum company, but felt
confident that Norsk Hydro's transparent dealings would make it
a more attractive partner for Tajikistan.
5. (C) COMMENT: At the risk of seeming overly optimistic,
this could represent a significant shift in Tajikistan's
investment climate and geopolitical alliances. Several
multimillion dollar cases against TadAZ have marked Tajikistan
as a bad investment risk, and this settlement suggests the Tajik
government understands a) that it takes more than lip service to
attract foreign companies and b) that they must honor their
obligations and contracts. Norsk Hydro's approach of a
constructive resolution through arbitration appears to have
proven more successful that the U.S. company Gerald Metals'
tactic of pressuring and threatening the Tajik government.
6. (C) Norsk Hydro could give Tajikistan an alternative to
RusAl on key infrastructure projects. RusAl's development of
Rogun and a second aluminum smelter was one of the key
deliverables during Russian President Putin's October 2004 visit
to Tajikistan. However, in recent months, the Tajiks and RusAl
have engaged in a war of the words over the projects (reftel),
and Tajik government officials, including President Rahmonov,
have openly stated they will develop the project on their own.
Norsk Hydro may present Rahmonov with a new partner, and one who
does not assume the domineering big brother role that has so
rankled Tajik officials. END COMMENT.
HUSHEK