The government will use part of money intended for the distressed banks for completion of the Roghun hydroelectric power plant (HPP).

Tajikistan’s lower house (Majlisi Namoyandagon) on April 21 endorsed the government’s regulation on issuing bonds to the tune of 530 million somoni to support endorsement of the country’s energy sector.   

Deputy Finance Minister, Jamshed Nourmahmadiyon, noted that the bonds will go to financing construction of the Roghun HPP.  

According to him, the Ministry of Finance will issue the bonds after signing of a trilateral agreement between the Finance Ministry, OSJC NBP Roghun and the National Bank of Tajikistan.  

Recall, the regulation excludes Tajprombank and Fononbank from the government’s regulation of December 12, 2016, which provides for issuing bonds to recapitalize the four distressed banks, namely Tojik Sodirot Bonk (TSB), Agroinvestbonk, Tajprombank and Fononbank.

As it had been reported earlier, the distressed banks last year experienced severe problems in providing account-holders with their own savings.  The shortage of hard cash also meant that banks servicing salaries — often for government departments — were unable to pay the intended recipients.

The government on December 21 issued bonds to the tune of 3.850 billion somoni (equivalent to around $490 million at the exchange rate as of December 21, 2016), which then were supposed to go toward covering the more than $500 million cost of recapitalizing the distressed banks.

TSB was supposed to get 2.25 billion somoni (284 million USD at exchange rate as of December 21) and Agroinvestbonk was supposed to get 1.7 billion somoni (215 million USD)

Tajprombank and Fononbank were supposed to get 450 million somoni (56 million USD) and 80 million somoni (10 million USD) respectively – totaling 530 million somoni.

But by Tajik central bank’s decision licenses of Tajprombank and Fononbank for carrying out banking activities were withdrawn on February 24, 2017.  

The Roghun HPP was first proposed in 1959 and a technical scheme was developed by 1965.  Construction began in 1976; however the project was frozen after the collapse of the Soviet Union.  

An agreement on finishing the construction was signed between Tajikistan and Russia in 1994; however, as the agreement was not implemented, it was denounced by Tajikistan parliament.

In October 2004, Tajikistan signed an agreement with Russia’s RusAl aluminum company, according to which RusAl agreed to complete the Roghun facility and rebuild the Tursunzoda aluminum smelter.  In August 2007, Tajikistan formally revoked a contract with RusAl, accusing it of failing to fulfill the contract.

In April 2008, Tajikistan founded OJSC NBO Roghun with an authorized capital of 116 million somoni for completing the construction of the Roghun HPP.  Current authorized capital of OJSC NBO Roghun reportedly amounts to more than 12 billion somoni.

To raise funds to complete construction of the Roghun HPP the government started to sell shares in Roghun to people on January 6, 2010.  Tajikistan has reportedly issued 6 billion somoni worth of Roghun shares.  To-date, the sale of Roghun shares has reportedly earned the government 830 million somoni.

In 2016, construction duties on Roghun were assigned to Italian company Salini Impregilo.  Salini Impregilo plans to complete construction of the Roghun hydroelectric power plant (HPP) in thirteen years.

Once completed, the Roghun Hydropower Project will include six turbines and produce 3,600MW – as much as three medium-size nuclear power stations – in so doubling Tajikistan’s energy production.

Tajikistan's Vakhsh River is already home to the largest earth-filled embankment dam, the Nurek Dam, which was completed in 1980 when Tajikistan was still a republic of the Soviet Union.