Power for the rich or for the poor?

Power for the rich or for the poor?

26th August 2006

Last week, Russia's two major aluminim companies, Rusal and Sual, told the rest of the world that they were aiming to merge, thus creating the world's biggest integrated producer of the metal - with the world's largest private commodities trader, Glencore, somewhere in the heady corporate mix.

Rusal meanwhile wants to acquire hydro power from Tajikistan. If the Tajik government gets its way the Russian giant would build the world's highest-ever dam - up to a staggering 335 metres (only 82 metres lower than the former World Trade Centre), thus generating surplus electricity for Central Asia's smallest and most impoverished state.. But Rusal and president Putin seem keen on grabbing less hydro power, simply for their own interests.

It promises a potential lose-lose game: on the one hand, expanding electricity provision, ostensibly for the poor - but with the prospect of a massive dam disaster looming in the wings; on the other hand, a vast construction project imposed on a small nation, simply to serve a powerful corporate/state oligarchy.

UNBLOCKING TAJIKISTAN'S GIANT DAM PROJECT

IWPR Central Asia Report no.462

26th August 2006

Tajik officials complain Russia's RUSAL firm is not moving ahead fast enough on a major hydropower project.

By Ramzan Sharipov in Dushanbe

The Tajik government is trying to recruit the Russian government to help speed up construction of a giant hydroelectric power scheme, but analysts say the tactic could backfire.

At a July 21 press conference in Dushanbe, Tajik energy minister Abdullo Yerov reported that a phone conversation between presidents Imomali Rahmonov and Vladimir Putin had resulted in a verbal agreement that the Russian government would provide direct funding for the work needed to complete the dam, which if it reaches a planned 335 metres will be the world's highest.

If this report is confirmed and Moscow goes ahead with the funding, it could unblock a process that appears to have run into trouble following the initial optimism that surrounded a deal with Russian aluminium giant RUSAL. A two billion US dollar package agreed by RUSAL in 2004, covering the Rogun dam and aluminium production, gave rise to hopes that the troubled construction project would be resurrected at last.

RUSAL's main interest is in generating electricity for its investment in the giant Tajik aluminium plant at Tursunzade, with a possibility that it will also build a new smelter close to the dam. Aluminium production is notoriously energy-hungry, and a mountainous country like Tajikistan is ideally placed to power the industry. The dam turbines could generate sufficient electricity to run the smelters, meet much of Tajikistan's domestic needs, and sell power to neighbouring countries.

Work on the Rogun hydroelectric scheme, on the Vakhsh river in southern Tajikistan, began back in the Seventies, but remained incomplete by the time the Soviet Union broke up in 1991. Tajikistan, the smallest and poorest Central Asian republic, quickly descended into civil war and economic collapse, and for the next decade there was no prospect of the project resuming.

But nearly two years on, officials in Tajikistan are complaining that the Russian company has not started practical work.

First Deputy Energy Minister Pulod Muhiddinov reported on July 24 that the Russian firm was still assessing the state of the structure left at Rogun, which has been battered by years of neglect and flooding. This should be completed by the end of August, but Muhiddinov complained that his ministry was unsure how matters would proceed after that.

"Perhaps RUSAL will wake up and start construction," he said.

RUSAL counters that the Tajik position is a complete misreading of the facts, and an unhelpful one at that. Its office in Dushanbe was quick to respond, rejecting suggestions that it was deliberately holding up the work. It said part of the problem was that many of the enquiries on technical matters it had addressed to the Tajik government were simply ignored.

"Tajik officials have put words into Vladimir Putin's mouth which he did not say," said Konstantin Zagrebelny, RUSAL's man in Dushanbe. "The irresponsible interpretations that Tajik officials have made of phrases or words used by the Russian president cause only bewilderment among Russian members of the intergovernmental commission and the Russian [government] departments involved in this project."

Apart from the slow start-up, Tajik officials are also unhappy about the technical plans RUSAL has come up with. The Russian firm wants to build the dam up in stages, eventually reaching a height of 280 metres, while the Tajiks are insisting on the original specifications laid down in 1978 which would make the structure 55 metres higher. There is also disagreement about the materials to be used.

According to Rasul Sattarov, an independent economist, the dispute is also due to the diverging interests of RUSAL, which wants to power its aluminium projects, and the Tajik government, which needs to satisfy a growing demand for electricity in the rest of the economy as well.

The suspicion is that RUSAL would be happy with a lower and thus cheaper dam which would be adequate for its own needs, but Sattorov said this would not be in Tajikistan's interests.

"That is why the government is trying to put pressure on RUSAL via the Russian government," he said.

However, Sattorov cautioned that this could be a miscalculation - RUSAL is a major player by any standards, and is also seen as close to the Kremlin.

"Given the friendly relations between Putin and [RUSAL chairman Oleg] Deripaska, the Russian government may not react in Tajikistan's favour," he said.

Meanwhile, the Tajiks appear to believe government-to-government contacts are the right way to proceed. "Tajikistan and Russia intend to resolve the dispute surrounding the construction of this major Central Asian hydroelectric station at state level," an anonymous source in the Tajik government told IWPR.

The next opportunity for this will come when an intergovernmental economic commission meets in September.

Ramzan Sharipov is the pseudonym of an independent journalist in Dushanbe.