Energy Central-News Article

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Tajikistan Power Key View

Key View: The gradual ramp-up in power generation at the Rogun dam will provide substantial surge in Tajikistan power generation over the coming decade, and help reduce the country's power generation deficit during parts of the year. However, the ongoing reliance on hydropower leaves the market vulnerable to supply disruption in periods of drought, an issue exacerbated by significant losses from the transmission and distribution grid. While the country's is trying to generate much needed revenues by exporting surplus of energy to its neighbouring country, the lack of cost-reflective electricity tariffs domestically and high barriers to foreign investment will limit power sector growth.

Headline Power Forecasts (Tajikistan 2021-2026)
Indicator	2021e	2022f	2023f	2024f	2025f	2026f
Generation, Total, TWh	19.9	21.8	23.2	24.8	25.1	25.3
Consumption, Net Consumption, TWh	15.3	15.7	16.0	16.6	17.2	17.7
Capacity, Net, MW	7,693.0	8,267.5	8,839.4	9,454.3	9,481.6	9,509.8
e/f = Fitch Solutions estimate/forecast. Source: EIA, Fitch Solutions

Latest Updates And Structural Trends

While Tajikistan’s power market is relatively small, electricity generation and capacity is expected to grow rapidly over the coming years, driven by the development of the Rogun Dam project by Italy-based Webuild (formerly Salini Impregilo).
The government will however remain committed to boosting coal-fired power generation in the country, given its role as a baseload source of electricity which can help offset the supply volatility associated with hydropower output. That said, investment into thermal capacity will remain hindered by low domestic electricity tariffs on offer in the market, undermining the economic viability of new facilities.
As a result, hydropower will maintain the lion share of the country energy mix, accounting for almost 94% of electricity generated with the remainder made up of coal-fired thermal power.
Despite its monopoly, Barqi Tojik held a TJS12.5bn (~USD1.2bn) debt in 2019, which constitutes 80% of total state-owned enterprise debt to the Ministry of Finance. The company has significant revenue problems, which lie in low electricity tariffs, poor collection rates, and significant transmission losses. As the government is reluctant to increase energy tariff, the company has started to rely heavily on exporting surplus power generation to neighbouring countries to generate more revenues.
The gradual commissioning of the Rogun dam is the cornerstone of this strategy. Tajikistan already generates significantly more electricity than domestic consumption demands, leaving a surplus for exports and we expect this trends to continue until the end of our forecasts period.
We at Fitch Solutions forecast that the Tajik economy will contract by at least 3.1% in 2022, compared to estimated growth of 5.7% in 2021. Our forecast accounts for the fall-out on the Tajik economy from the invasion of Ukraine by Russia and the sanctions against Russia that have ensued thereafter. Given that Russia is Tajikistan’s largest trading partner and a major source for remittances inflows, the economy is especially vulnerable to the forecast recession of the Russian economy.

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