TAJIK DEPUTY PM OUTLINES VISION FOR HYDROPOWER SECTOR

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SUBJECT: TAJIK DEPUTY PM OUTLINES VISION FOR HYDROPOWER SECTOR

REF: A) DUSHANBE 0326 B) DUSHANBE 0327 C) DUSHANBE 0748 D) DUSHANBE 0802

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2. (SBU) SUMMARY: Although the Chinese have made the Tajiks an
offer too good to refuse on a South-North transmission line
project, according to Deputy Prime Minister Asadullo Ghulomov,
many energy projects remain for U.S. and other investors. AES's
proposed project to build 220 kV transmission lines to the
Afghan border remains on track, but the Asian Development Bank
(ADB) has yet to finalize the funding - which appears to be the
key sticking point. Ghulomov prefers that Tajik presentations
at the June Istanbul conference focus on mid-sized generation
and transmission projects and not rehabilitation of existing
facilities that will bring only small increases in output.
Dasti Zhum represents the first of three significant hydropower
projects he says will "tame the River Pyanzh" and bring energy
security to future generations in the region. He hinted that
the United States could take the lead on regional transmission
projects. END SUMMARY


3. (SBU) An exceptionally animated Ghulomov spent more than 75
minutes May 5 explaining his vision for Tajikistan's hydropower
sector. He confirmed press reports that the Chinese would
finance and construct South-North (Dushanbe-Khujand) high
voltage lines, offering 95% financing through a 20-year loan
with a seven-year grace period. A second high-voltage line
between Lolazor and Obi Mazor, west of Dushanbe, was included in
the package. Ghulomov noted the Chinese deal was part of a
regional $900 million assistance package through the Shanghai
Cooperation Organization. Reluctant to call it absolutely
final, he reported the Chinese and Tajiks would sign the
agreement on June 15, and noted that while they welcomed any
investment in that project, no other donors or investors came
close to matching the Chinese terms.

AES ON TRACK


4. (SBU) Financing was the last hurdle delaying the
government's signing a memorandum of understanding (MOU) with
AES to construct 220 kV transmission lines, but Ghulomov
dismissed this as a technicality. "Signing an MOU, an agreement
or a contract, what does it matter? We've agreed to do it and
are waiting for the ADB or another donor to figure out the
funding. " (NOTE: AES has been waiting for the Tajiks to sign an
MOU that would establish a joint venture to build the lines.
END NOTE.) Ghulomov looks forward to meeting the AES CEO when
he visits Dushanbe at the end of May. He also proposed AES
consider medium sized-generation projects.

TDA ISTANBUL CONFERENCE


5. (SBU) Ghulomov accepted the invitation to the U.S.-sponsored
"Energy Without Borders" conference in June in Istanbul, but
observed the presentations the Trade and Development Agency
requested did not entirely match Tajikistan's energy priorities.
Ghulomov saw no point inpresenting the South-North transmission
lines project days before they would sign the agreement with the
Chinese. According to Ghulomov, the Kairakkum rehabilitation
project would only bring a net gain of 12 MW to Tajikistan's
energy supply. He stated that rehabilitation projects were a
low priority.


6. (SBU) Instead, Ghulomov proposed that after his overview
presentation, Energy Minister Yurov could outline projects in

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the upper Vakhsh, including Enurskaya hydropower station and
Garmskaya hydropower station, a 400 MW project. (NOTE: This is
the first time anyone in the Tajik government suggested
developing the upper Vakhsh river. Most talk focuses on Rogun
and below, and Enurskaya does not appear in any of the previous
Ministry of Energy materials. END NOTE.) Ghulomov suggested
state-run electric utility Barqi Tojik's presentation focus on
high voltage lines, namely Rogun-Sangtuda to the Afghan border.
REGIONAL TRANSMISSION LINES NEEDED

7. (SBU) Changing topics, Ghulomov explained that new
transmission lines to Kyrgyzstan and Kazakhstan would help
Dushanbe break its dependence on Uzbekistan to transmit power to
northern Tajikistan, but noted it was a sensitive topic and not
yet a matter for public discussion. He drew a map to show how a
transmission line from Kazakhstan to Datka, Kyrgyzstan, to
Khujand could supply Tajikistan's Sughd region with 6.5 billion
kilowatts per hour per year.


8. (SBU) This power transmission would supply reliable
electricity to Sughd, freeing Tajikistan to export electricity
from its southern grid. Currently the Sughd electricity grid is
connected to the southern grid through 1500 km of 500KV
transmission line running through Uzbekistan. They would save
money on transit fees, he noted. "And we would prevent
Uzbekistan from controlling us!" he added with a smile. He
commented on how a 220KV power transmission line exists between
Konibodom, Tajikistan, and Batken, Kyrgyzstan, but 22 km of this
line runs through Uzbekistan. Uzbekistan finds various reasons
to interrupt power transmission. "We have good relations with
the Kyrgyz and the Kazakhs, but we need a catalyst to start this
(high voltage transmission line) project," he commented.
However, he suggested several times that the United States could
play a regional role in establishing a transmission network.
DASTI ZHUM

9. (SBU) Ghulomov was pleased that his trip with PolOff to the
Dasti Zhum site April 17 had made such an impression on the
visiting advisors from Embassy Kabul (reftel C). The 4000 MW
Dasti Zhum was the first of three large projects. Hydropower
stations at Roshan (3,000 MW) and Granite Gates (2,100 MW) would
also help tame River Pyanzh, he said. PolOff emphasized that to
attract donors, Tajikistan and Afghanistan would need to take
some concrete steps to prove their cooperation before anyone
would consider funding even a feasibility study.


10. (SBU) Ghulomov could offer no clarification on the status
of agreements between Tajikistan and Afghanistan. "The
Cooperative Agreement has been signed," he argued. When posed
the question whether there were any outstanding agreements that
need to be signed before Tajikistan could export electricity
south, he paused and noted that a seven-member Afghan delegation
led by the deputy minister of power would be in Dushanbe May
21-22 to discuss further cooperation in the power transmission
and electricity issues. (COMMENT: We are concerned that
Tajikistan and Afghanistan left on their own, without
international advisers present, will not necessarily do the
right things to move forward. We suggest Embassy Kabul consider
the possibility of adding U.S. advisers to this Afghan
delegation. We will help on the Tajik side to the fullest
extent possible. END COMMENT.)



11. (SBU) COMMENT: Ghulomov was unusually expansive, and kept
an Avian Flu assessment team from the WHO, UNICEF, FAO, and
World Bank waiting 45 minutes while he carefully explained his
vision to us. He seemed enthusiastic about the Istanbul

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conference, but wanted to be sure the requested presentations
were in line with what Tajikistan needed and wanted to do.
Fortunately, he did not push mega-project Dasti Zhum as a topic
for Istanbul, but understood the need for concrete projects that
would attract U.S. investors and suppliers. He ran out of time
before talking about the goals of the Islamabad regional energy
meeting May 8-9, or the latest on RAO UES and Sangtuda, but
promised to meet again at the end of the month. END COMMENT.
HOAGLAND