TAJIKISTAN AND AES FINALLY SIGN MOU

C O N F I D E N T I A L SECTION 01 OF 02 DUSHANBE 000978

SIPDIS

SIPDIS

STATE FOR E, P, SCA/FO, SCA/CEN, EUR/RUS
NSC FOR MILLARD, MERKEL

E.O. 12958: DECL: 5/25/2016
TAGS: PGOV PREL ECON EINV ENRG RS TI
SUBJECT: TAJIKISTAN AND AES FINALLY SIGN MOU


CLASSIFIED BY: Richard E. Hoagland, Ambassador, EXEC, Embassy
Dushanbe.
REASON: 1.4 (b),(d)

1. (C) AES Corporation President and CEO Paul Hanrahan and his
team met with President Rahmonov for an hour on May 24. With
the president were Deputy Prime Minister Ghulomov, Minister of
Energy Yorov, Minister of Economy Soliyev, Chairman of Barqi
Tojik (state electricity company Samiyev, Presidential Economic
Adviser Davlatov, and Chairman of the National Bank Alimardonov.


2. (C) Toward the end of the meeting, President Rahmonov
authorized his government to sign the Memorandum of
Understanding (MOU) that establishes a new joint venture that in
the first phase will rehabilitate or build new 220 kV lines to
the Afghan border and concurrently conduct feasibility studies
for further work. Phase Two would study Tajikistan and
Afghanistan building a 500 kV line from the Tajik-Kyrgyz border
to Pakistan. Phase Three would indentify the two most likely
sites in Tajikistan to construct hydroelectric stations for a
maximum total of 1,000 MW capacity.


3. (SBU) Rather than list the details of the MOU, the purpose
of this cable is to capture the key atmospherics and geopolitics
of the meeting.

"OK, GUYS, HERE'S WHAT I WANT"


4. (C) Rahmonov opened the meeting by declaring he'd made a
political decision that Tajikistan was going to work with AES.
All that remained was to work out the details. Although the
details had been worked out over months and months, and it was
clear Rahmonov's team had well briefed him, he started riffing
on what he thought should really be done. For example, rather
than an AES-Barqi Tojik joint venture with AES holding no fewer
than 55 percent of the shares over a 15-year period, Rahmonov
said he wanted the venture to be tri-partite - AES, Barqi Tojik,
and the Government of Tajikistan, with AES holding 49 percent of
the shares - and that 12 years should be long enough. Rahmonov
said, "I don't think we need to bargain. I'm making a political
decision. We're ready to work with you, especially since
Ambassador Boucher told me the U.S. Government supports AES.
Isn't that true?" he asked the Ambassador, without waiting for a
reply.


5. (C) Rahmonov made a pitch for AES to take a careful look at
Dashti Zhum, but didn't run through his detailed talking points,
as he usually does on this subject. Instead, he focused on the
steady year-round availability of water.

RUSAL -- NYET


6. (C) He then asked, with a twinkle in his eye, "Are you ready
to participate in Rogun?" A bit non-plussed, Hanrahan replied,
"I thought that was RusAl's." After the laughter died down,
Rahmonov said, "Seriously, if they [RusAl] want to operate here,
they have to be transparent. They aren't at all transparent,
and I'll tell that to Putin in Sochi in a few days. We are
Tajikistan. We may be the poorest state in the region, but we
ARE Tajikistan!"


7. (C) COMMENT: Although it was clear what he meant, this
echoed a bit close to "l'etat, c'est moi," especially as his
senior advisors - except Ghulomov and Davlatov - all played
jack-in-the-box, jumping up and staring straight ahead to answer
Rahmonov's questions, even if only with, "Yes, sir!" END
COMMENT.

RAO UES -- DA

DUSHANBE 00000978 002 OF 002




8. (C) By contrast, Rahmonov praised Anatoliy Chubais and RAO
UES, a company he described as orderly and trustworthy, meeting

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international standards. AES Central Asia Vice President Dale
Perry said AES would still like to work with RAO UES on
Sangtuda-I. Rahmonov responded, "I know, but~." He then added
encouragingly, "Maybe you can get together on a later phase of
your project. I'd like that."

A GIFT FOR 'THEM'


9. (C) After a lot of technical back and forth, Rahmonov said,
"OK. Let's sign today. It will be a good gift for 'them' this
evening. It's no secret Russia is watching this closely, but we
make our own decisions." [NOTE: "Them" clearly referred to the
CIS heads of state arriving in Dushanbe the same evening, and
probably specifically to Russian Prime Minister Fradkov. END
NOTE.]


10. (C) In conclusion, Rahmonov told Hanrahan, "OK, now get to
work. I want results, concrete results, and I want them fast."


11. (C) The agreement was signed at 8:00 pm, after five hours
hammering out the finer points of the seven-page MOU. DPM
Ghulomov himself read the final draft line by line, and invited
the press to the signing with Hanrahan. [NOTE: AES VP Perry
was originally designated as the signator, but the Tajiks
insisted if the DPM signed the MOU, then the AES president
should as well. END NOTE.]


12. (C) COMMENT: This MOU represents the first step for the
Tajiks and for AES. RusAl and RAO UES are rumored to work from
loose two-page MOUs, which lead to multiple disputes and lengthy
negotiations for contracts. This is the Tajik government's
first taste of a transparent negotiation process, and we hope
the benefits increase their appetite. END COMMENT.
HOAGLAND