Identifier
Created
Classification
Origin
07DUSHANBE1460
2007-10-16 09:23:00
UNCLASSIFIED
Embassy Dushanbe
Cable title:  

PRIVATE POWER STATION IN EASTERN TAJIKISTAN RECOVERS FROM

Tags:  ENRG ECON ETRD PGOV PREL EAID TI 
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UNCLAS SECTION 01 OF 02 DUSHANBE 001460 

SIPDIS

SIPDIS

STATE FOR SCA/CEN

E.O. 12958: N/A
TAGS: ENRG ECON ETRD PGOV PREL EAID TI
SUBJECT: PRIVATE POWER STATION IN EASTERN TAJIKISTAN RECOVERS FROM
DAMAGING ACCIDENT, AND PLANS TO SUPPLY TO AFGHANISTAN


DUSHANBE 00001460 001.2 OF 002


UNCLAS SECTION 01 OF 02 DUSHANBE 001460

SIPDIS

SIPDIS

STATE FOR SCA/CEN

E.O. 12958: N/A
TAGS: ENRG ECON ETRD PGOV PREL EAID TI
SUBJECT: PRIVATE POWER STATION IN EASTERN TAJIKISTAN RECOVERS FROM
DAMAGING ACCIDENT, AND PLANS TO SUPPLY TO AFGHANISTAN


DUSHANBE 00001460 001.2 OF 002



1. Summary: Pamir Energy, the private energy company serving all
of Gorno-Badakhshan in eastern Tajikistan, has largely bounced
back from its catastrophic accident in February 2007 when its
main hydropower station Pamir 1 flooded, but continues to face
cash flow problems due to inefficient distribution and billing.
The company's Soviet-era grid continues to deteriorate, and the
company is seeking new investment to sustain power supplies to
the region and to develop new hydropower projects. The
company's parent organization, the Aga Khan Fund for Economic
Development, signed a Memorandum of Understanding with the
governments of Tajikistan and Afghanistan in August to supply up
to 11MW of electricity across the border into Afghanistan during
the summer months beginning next year. U.S. funding could help
the region by supporting feasibility studies of hydropower
plants at Rushan and Sarez. End Summary.


2. Pamir 1 generates up to 28MW of Pamir Energy's overall 42MW
capacity during summer months. Demand for electricity increases
during the winter, and on average each resident uses 1,500 kWh
-- one of the highest usage rates in the world according to
Pamir Energy officials. The winter shortfall of electricity to
on-grid customers is 14MW, while off-grid customers require 10MW
more energy. The company plans to begin construction this month
of a transmission line across the border to Afghanistan from
Khorog, and complete a contract to sell 0.5MW of wholesale
electricity to Afghanistan to supply five Afghan villages during
the seven summer months, with the intent to expand the exports
up to 11MW in coming years.


3. Pamir Energy continues to struggle with profitability, and
relies on continued contributions from its investors, who
according to General Director Daler Jumaev, are growing
impatient. Pamir Energy currently charges 1.97 cents per kWh on
average for electricity, higher than much of Tajikistan, but

still loses $1 million per year. Next year the company expects
to become profitable on a cash flow basis, but without repayment
to its investors. Pamir Energy plans to increase tariffs 15%
each year through 2010 according to its concession agreement.


4. The company is also seeking to stem its losses from theft and
nonpayment, up to 39% of the company's output. City
non-commercial residents are the biggest non-payers - 73% of
debts come from Khorog. Rather than individual meters, the
company relies on a Soviet-era feeder system that controls
electricity supply to housing blocks, making cutting off
electricity to debtors difficult. Crafty residents readily tap
into the wires when cut off, and string electricity to their
homes.


5. The regions outside Khorog on the grid receive less
electricity than the city. Khaillakum receives 16 hours a day
during the summer but as little as one hour during the winter,
and Pamir Energy buys power from state-owned Barqi Tojik to help
supply this western region. Some villages have sought credit to
install 1-2kWh micro-hydro plants to help supplement unreliable
electricity in remote areas.


6. Off the grid, the 7,000 residents of Murghab are supplied by
a 300kW hydropower plant that USAID helped repair in 2002. The
weak 150-volt wattage the power plant supplies to the 220-volt
system provides homes with a dim yellowish glow. Pamir Energy
estimates that $6 million is needed to rehabilitate its nine
off-grid mini hydro plants that serve thousands of the region's
more isolated residents. China is considering building a
hydropower plant on its side of the border at the Kulma Pass
which would serve residents 90km-away in Murghab. Pamir Energy
hopes that other donors, particularly Aga Khan's Mountain
Society Development Support Program, will take over its
money-losing regional power stations. The Mountain Society
Development Support Program already runs 38 micro-hydro plants
in Gorno-Badakhshan.


DUSHANBE 00001460 002.2 OF 002



7. Although Pamir Energy provides the residents of
Gorno-Badakhshan a more reliable supply than most of the country
receives from state-owned Barqi Tojik, its residents demand yet
lower tariffs, and the local government harps on the company to
reduce its rates. [Comment: This experience counters the
argument that if the population is provided steady electricity
they won't mind paying more for it. End Comment.] The February
flooding accident helped improve Pamir Energy's image, as
residents chipped in to help bring the first of the power
plant's generators back online in 45 days.


8. Pamir Energy discussed two potential hydropower projects with
EconOffs October 5 -- Rushan and Sarez Lake -- that could serve
Tajik and Afghan areas. The Rushan dam would provide up to
300MW in the summer and 60-80MW in the winter, with Faisabad in
Afghanistan as the main customer, using 20-40MW. A hydropower
plant at the natural dam at Sarez Lake could provide up to 200MW
and would connect to the Nurek dam grid, potentially sending
electricity to Afghanistan and Pakistan. Installing a
hydropower station at Sarez would also address a regional safety
issue. Sarez Lake is contained by a "natural dam" created when
a powerful earthquake caused a landslide which blocked the
Murghab River in 1911. This barrier is believed to be unstable
and the area below the lake vulnerable to catastrophic flooding
if another earthquake were to break the dam. A hydropower
station would mitigate the risk of a catastrophic flood by
reducing the water level in the reservoir and would be less
problematic to Uzbekistan than other hydro projects. A recent
study by the Swiss consulting firm "Stucky" assessed that the
natural dam can be used for hydropower purposes. Both projects
require feasibility studies to assess market and technical
issues.


9. Pamir Energy also faces a shortage in newly trained
specialists to help run its hydropower operations. Talent must
be developed locally through the Khorog State University
engineering program, or the developing Central Asia University
in Khorog, also funded by the Aga Khan network. Company
officials suggested that a university exchange program with a
U.S. hydrological program could help develop new expertise from
the area.


10. General Director Daler Jumaev took the reins of Pamir Energy
last year after several unsuccessful predecessors lasted, on
average, six months each. Originally from Khorog and trained in
hydrological engineering, the English-speaking Jumaev (a USG
exchange program alumnus) brings the company increased local
credibility to further the company's agenda.


11. Comment: The United States could help develop Tajikistan's
massive hydropower resources and strengthen its capacity to send
energy to South Asia by funding feasibility studies for the
Rushan and Sarez projects. While U.S. programs struggle to help
reform the government-owned energy company Barqi Tojik,
privately-owned Pamir Energy leads the sector financially and in
providing services. End Comment.
JACOBSON