Power Politics: Uzbeks Hold up Critical Winter Energy

UNCLAS SECTION 01 OF 02 DUSHANBE 000021

SENSITIVE
SIPDIS

DEPT FOR SCA/CEN

E.O. 12958: N/A
TAGS: ENRG EPET EAID PGOV PREL TI
SUBJECT: Power Politics: Uzbeks Hold up Critical Winter Energy
Supplies

Ref A: 2008 Dushanbe 1572


1. (SBU) Summary: Tajikistan concluded an agreement to buy a
critical 1.2 billion Kilowatt-hours (KWh) of electricity from
Turkmenistan from November 2008 through April 2009. Although
Uzbekistan agreed to transmit the first 400 million KWh through its
grid in November and December, it has so far refused to allow the
rest of the energy to pass to Tajikistan. The Uzbeks also have
failed to begin delivering an additional 600 million KWh as part of
a separate multi-year agreement. Without this energy, Tajikistan
has cut back power to the population outside the capital, and even
supplies to Dushanbe will dry up in February at current consumption
rates. The two countries have agreed on a 65% price hike for
deliveries of Uzbek natural gas. Uzbekistan would like to see
Tajikistan's domestic power generation capacity dry up before it
turns the taps back on, according to local contacts. End summary.


2. (SBU) Most of Tajikistan's energy problems stem from the fact
that its electrical system was never intended to be independent.
The Central Asian electrical grid, built during the Soviet era, took
for granted that low seasonal production levels in one area would be
offset by increased generation elsewhere. With independence,
Tajikistan remains highly dependent for its energy needs on a
neighboring country with which its relations have soured.

Nurek Levels: Low and Lowering


3. (U) Three-quarters of Tajikistan's domestic power supply is
generated at the Nurek Hydroelectric Station on the Vakhsh River.
More than adequate in summer, reduced winter water flows mean that
Tajikistan faces an annual energy deficit. Capable of operating at
3 Megawatts, Nurek has been operating at a fraction of that capacity
to husband the limited supply of water in the reservoir behind it.
The water level is currently 879 meters above sea level, several
meters below its level at this time last year, and only 22 meters
above the "dead point" at which Nurek can no longer generate
electricity. The power station is consuming about a half-meter a
day, which is partly replenished by inflow of 176 cubic meters per
second from the Vakhsh. A contact at Nurek says that at current
consumption rates the dam can provide electricity to Dushanbe and
the Talco aluminum plant through mid-February before running out of
water. This leaves out the rest of the country.

Uzbekistan Turns Off Tap on Turkmen Transit


4. (U) In 2007 Turkmenistan signed an agreement to provide
Tajikistan with 1.2 billion Kilowatt-hours (KWh) of electricity
every winter through 2012, at a cost of 3 cents per KWh. Every
year, however, Dushanbe must negotiate with Tashkent to arrange the
transmission of the energy through Uzbekistan's power lines. The
two countries concluded an agreement in October providing for the
transmission of the first 400 million KWh, at a transit cost to
Uzbekistan of 0.3 cents per KWh, for November and December, but
negotiations to transmit the remaining 800 million KWh have
foundered. A delegation from Dushanbe is due to depart soon for
Tashkent; at the moment, Tajikistan is receiving no Turkmen energy.



5. (U) Uzbekistan also has failed to begin transmitting an
additional 600 KWh it agreed to provide Tajikistan this winter from
its own sources as part of a multi-year arrangement in exchange for
900 KWh from Tajikistan in the summer.


6. (U) Officially, Tashkent is telling the Tajiks that the energy
from Turkmenistan is being held up by technical problems in High
Voltage Line number 512 between Sirdarya, Turkmenistan and Karakul,
QVoltage Line number 512 between Sirdarya, Turkmenistan and Karakul,
Uzbekistan. According to a source at the Tajik Ministry of Energy
and Industry, the Ministry has already expressed to its counterparts
in Tashkent and Ashgabat that it is willing to send specialists to
help fix the problems, but the Turkmen and Uzbeks have declined the
assistance. In the meantime, the Ministry has reduced electricity
supplies to the regions outside of Dushanbe from 6-8 hours a day to
1-3 hours per day.

Power Politics


7. (SBU) Almost no one here believes the official explanation for
the energy holdup. An Embassy contact at Barki Tojik, the company
that managed Tajikistan's electrical grid, said Uzbekistan's goal
this year was to bleed the Nurek reservoir dry before releasing any
electricity. Uzbekistan intended to use the expanded outflow from
Nurek -- which would be forced to run at higher capacity to make up
for the deficits in Uzbek and Turkmen energy -- to feed its own
reservoirs downstream. More broadly speaking, he repeated an
oft-heard view here that Uzbekistan wants Tajikistan to be entirely
dependent for its energy on Tashkent. Another widely believed
assumption is that the energy will flow only if Tajik President
Rahmon prostrates himself before Uzbek President Karimov.

DUSHANBE 00000021 002 OF 002



Uzbeks Agree to Pass Gas


8. (U) Tajikistan has reportedly reached an agreement on increased
prices for natural gas imports from Uzbekistan. According to the
new arrangement, Tajikistan will pay $240 per 1,000 cubic meters
(tcm) of natural gas, a 65.5% increase over this year's price of
$145. The Uzbek state gas producer Uztransgaz initially had
demanded $300 per tcm, agreeing only on January 1 to lower the
tariff by $60. Some reports suggested that the Uzbeks had intended
all along to fix the price at $240, and had only mooted the $300
figure so they could appear to be compromising. Analysts noted
that, since Tajikistan has access to only one potential seller,
Uzbekistan held all of the cards in the negotiation and could
dictate its price.



9. (U) Although the new figure is reported to be under world market
prices, Tajikistan nevertheless still will have difficulty paying
it. Even with the $145 per tcm price, Tajikistan accumulated
massive debts to Uzbekistan. In late December, Uztransgaz reduced
supplies from 70 tcm to 35 tcm per hour due to payment delays.
Tajikistan responded by remitting $3 million, but acknowledged that
it still owed an additional $8 million in arrears. The Tajik gas
company Tojikgaz reportedly cut delivery to its biggest non-payers,
including the Dushanbe cement plant and the Tojikazot company.
Supplies continued to the Talco aluminum plant and the Dushanbe
central heating facility. There are concerns that the latter, upon
which many Dushanbe residents depend for winter heat, might not be
able to afford the higher prices set by Uztransgaz. The facility is
said to be examining the possibility of converting to coal or
low-grade mazut oil.


10. (SBU) Comment: While it is difficult to verify the claims that
Uzbekistan is waiting for Nurek to run dry, it is certainly
plausible. Uzbekistan has made no secret of its desire to have a
greater say in Tajikistan's exploitation of its energy and water
resources, and ensuring Tajik energy dependence is one way of
achieving this. To escape its seasonal energy dependence,
Tajikistan needs to develop more production and other transmission
options to the north, south, and east. A project underwritten by
the Asian Development Bank to build a north-south transmission line
to Afghanistan is one step in this direction. End comment.

JACOBSON