The hydropower issue has been in the economic forefront of Tajikistan for quite a while. The government of Tajikistan has been actively seeking funding for its power projects. So far only Sangtuda-I and Sangtuda-II projects have been realized (through Iranian and Russian funding).

Bigger projects (such as Roghun) are still left on the table because of lack of creditworthy demand. Talks are underway (between WB, Afghanistan, Tajikistan and Pakistan) to construct an transmission line from Tajikistan to Pakistan, which needs electricity badly and is willing to pay for it. The problem is that the line would have to cross through Afghanistan to get to Pakistan. This decreases the reliability of power supply (given unstable security situation in Afghanistan).

So all in all we have a situation whereby the generating country (in this case TJ) wants to get paid for the electricity dispatched from its generating plants while the purchaser (in this case Pakistan) wants to pay only for electricity that actually got delivered to Pakistan. The logic dictates that it is in transiting country’s best interest to ensure the security of the line, but the fledging government in Afghanistan may not be able to provide full financial and military backing for possible downside scenarios. Therefore IFIs and the US government should play a role here.

If the transmission line is built, Tajikistan would have a good market for its excess electricity. Once the problem of market is solved, I am sure money will flow easily to finance other hydropower projects because the economics (apart from Afghanistan’s security risk) are far too attractive to be ignored.