World Bank approves $350mn as Tajikistan bids to fund completion of $6.3bn Rogun mega hydro project

The World Bank on December 17 said in a press release that it has approved a $350mn International Development Association (IDA) grant as part of the first phase of a programme to help Tajikistan finance the completion of the Rogun Hydropower Plant (HPP) Project.

Ahead of the vote that agreed the finance for the mega infrastructure, the international financial institution (IFI) faced pressure from environmentalists who contend that the Rogun “dream of the biggest dam [in the world] will turn into a nightmare for the people and nature in Tajikistan and beyond”. They argued that the World Bank still had “an opportunity to pause the proposed investments and demand a new impact assessment, including for alternative proposals” for energy generation, including solar.

According to the latest assessment of the World Bank, the Rogun HPP will require $6.29bn to complete, which is to be financed by project revenues, domestic resources and development partners.

With a projected installed capacity of 3,780 megawatts, the hydro plant will provide Tajikistan’s 10mn people with better access to electricity and help alleviate power shortages that have become persistent during the winter months, the World Bank said. In addition, it noted, about 70% of the electricity generated by the Rogun HPP will be exported to Kazakhstan and Uzbekistan to replace fossil fuel generation at an affordable price, thus reducing greenhouse gas emissions. 

“The Rogun Hydropower Project can help Tajikistan and countries in Central Asia to accelerate their path to adopting clean energy, boost economic growth, and enhance climate resilience,” said Antonella Bassani, the World Bank vice-president for Europe and Central Asia. “Once the project is completed, households and businesses will be able to rely on much needed uninterrupted, affordable, and clean energy supply. The World Bank brings substantial knowledge and experience to a project of this scale, from economic reforms to implementing large infrastructure under robust environmental and social standards.”

The government of Tajikistan has committed to allocating 3% from electricity sales to a nationwide benefit sharing program (BSP) to finance pro-poor social support and augment social safety nets during the Rogun construction period, which will increase to 5% after the end of construction, the World Bank said. The proceeds are expected to address various priority social needs of vulnerable populations through existing safety net programs, it added.

The World Bank investment in the Rogun HPP is to help facilitate $2.97bn in grants and concessional funds from a group of development partners and investors, including the World Bank, the Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB), European Bank for Reconstruction and Development (EBRD), European Investment Bank (EIB), European Union (EU), Islamic Development Bank (IsDB), OPEC Fund for International Development, Saudi Fund, Abu Dhabi Fund, Kuwait Fund, and potentially other partners.

“Rogun HPP is an important regional project,” said Charles Cormier, World Bank director for infrastructure in Europe and Central Asia. “In addition to alleviating energy shortages in Tajikistan and helping decarbonize grids in fossil-dependent Kazakhstan and Uzbekistan, Rogun HPP can help balance services for intermittent sources like solar and wind to accelerate the clean energy transition in the region. Once completed, it will promote the development of a regional electricity market and enhance regional cooperation on energy.”

In a final note, the World Bank said that using the storage capacity available in its reservoir, Rogun HPP will help protect downstream hydropower projects and areas from extreme flooding.