Although S&P Global Ratings has once again affirmed its B/B rating of Tajikistan, both in the long- and short-term – stating the outlook remains stable – its analysts pointed to delays in unlocking funding for the massive Rogun Hydopower Project, especially from the World Bank, “pending completion of remaining effectiveness conditions.”
In addition, S&P noted that while the country’s highly centralized system has provided “a certain degree of political stability” it’s “untested power succession could undermine the predictability of policymaking.”
Forty years after the first time construction began at the site, Tajikistan began work once more on Rogun in 2016. If completed to specifications, the dam will have six turbines and be the world’s tallest at 335 meters. In the summer of 2016, an Italian company, Salini Impregilo (rebranded in 2020 as Webuild), won a $3.9 billion contract to build the dam. At the time, hopes were for two of the six turbines to be in operation by 2018.
In a lavish November 2018 event, replete with a red carpet, Tajik President Emomali Rahmon was joined by his son and presumed successor, Rustam, to launch operations of the first turbine at Rogun. The second went into operation in 2019.
A third turbine is slated for completion this, though some sources state that it will be ready in 2026.
Each of the six turbines planned for Rogun should generate at least 600 MW of electricity. The total 3,600 MW output will more than double Tajikistan’s electrical production and is intended to not only solve the country’s problem with winter electricity shortages, but provide enough for export to South Asia via the CASA-1000 project.
But, as S&P pointed out, “it remains a costly project crowding out other domestic capital expenditure of the government.”
S&P states that more than $3 billion has been disbursed so far; and the “remaining cost to complete the Rogun HPP by 2035 is estimated at $6.4 billion.”
And that’s where the funding delays come in. Project costs tend to only grow with time. Dushanbe has negotiated a set of financing packages with a number of multilateral and bilateral partners, including the World Bank. S&P characterized the external funding – expected to cover about 50 percent of the project’s costs with the remaining coming from the government’s budget and the project’s revenue – as including “$1.5 billion in nonconcessional loans, $850 million in grant funding, and $550 million in concessional loans.”
Some of that grant funding, S&P says, is “contingent on Tajikistan’s status as a ‘least-developed’ country, a status likely to be revised in 2026.” That could further complicate the country’s financial outlook.
In December 2024, the World Bank approved a $350 million International Development Association grant for the project. And this week, Tajikistan and Qatar signed an agreement in which the latter’s development fund will provide a $50 million concessional loan to held finance Rogun.
S&P pointed to “remaining effectiveness conditions” as the source of delays in unlocking funding. Asia Plus, a Tajik news outlet, listed some of the World Bank’s conditions, including “preparation and adoption of a macroeconomically sustainable financing plan that does not create an excessive debt burden on the state budget,” the strengthening of institutional capacity, “the introduction of mechanisms for distributing benefits to the population,” and the “introduction of transparency measures – public disclosure of contracts and financing plans.”
Some of these requirements run right up against the nature of Tajikistan’s autocratic government.
Naturally, none of the concerns and risks outlined by S&P made it into a press release about the company’s credit rating of Tajikistan that was released by the National Bank of Tajikistan.
Back in 2018, when the first turbine was switched on at Rogun, Dushanbe planned for the project to be completed by 2028. That deadline has been pushed back to 2035, and could slide further.