Need for More Transparency in Kyrgyz and Tajik Energy Sectors to Avoid Future Crises

Publication: Eurasia Daily Monitor Volume: 5 Issue: 242

Kyrgyzstan and Tajikistan, both upstream countries with abundant water resources, face the same problem: their water resources are benefiting the ruling regimes while the public is deprived of basic services. In Kyrgyzstan President Kurmanbek Bakiyev’s regime has allegedly been secretly selling electricity to neighboring Kazakhstan and Uzbekistan. In Tajikistan, President Emomali Rakhmon’s family reportedly enjoys the revenue from the TALCO aluminum production site, which consumes roughly half of the country’s electricity.

Tajikistan’s hydro-energy sector is in a far worse condition than Kyrgyzstan’s, with rural areas simply lacking the necessary infrastructure to receive electricity. For years most rural residents had to rely on coal and other alternative fuels to cook and heat their homes during cold periods. The attention of the international community turned to the corrupt and incompetent management of hydroelectric resources in the country during last winter’s energy calamity, when even central Dushanbe had no electricity for weeks and the government was forced to declare a humanitarian crisis,

In January Tajikistan completed construction of the Sangtuda-1 hydro-energy station; but with prolonged sub-zero temperatures, Sangtuda-1 can supply only 1/12 of the needed volume. Since this winter is likely to be warmer, Tajikistan might escape a full crisis; but if all citizens are to receive equal access to electricity, TALCO must cut its energy consumption. "It would be patriotic of Rakhmon to reduce the activity of TALCO and distribute more electricity among the populace," a Tajik expert told Jamestown. Revenue from TALCO’s aluminum on the international market is, however, the main source of illegal enrichment for the Rakhmon family; and the site will therefore continue to function at full capacity as long as Dushanbe remains lit.

Today most local experts and the international community recognize the damage being done by corruption in the hydro-energy sectors in both Kyrgyzstan and Tajikistan. According to the International Monetary Fund’s September report, for instance, TALCO declares only 17 percent of its revenue, while the rest remains hidden from local and international experts. Meanwhile, it is claimed that tens of millions of dollars are pocketed by the Bakiyev family every year.

According to estimates, “$1.145 billion…[has been] generated by TALCO inside Tajikistan, but diverted tax-free abroad into other, private hands” in the past few years (http://www.atimes.com/atimes/Central_Asia/JI17Ag01.html). The extent of TALCO’s income could be seen by its spending over $100 million in a controversial lawsuit against Abdukodir Ermatov and Avaz Nazarov, who led Tajikistan’s aluminum industry from 1996 to 2004 and were sacked by Rakhmon in 2004 (www.asiaplus.tj, December 3). The case lasted for three years and was recently settled with a compromise.

In Kyrgyzstan the risk still remains that the hydro-energy infrastructure will collapse because of the low levels of water in the Toktogul reservoir, but the danger was reduced in December thanks to the government’s rationing of electricity. Shortages of electric power have led to a decline in business activity, inflation in food prices, and frustration among the people about everyday living. "My wife always has to stay home and heat the house with coal to keep the pipes from freezing and bursting," complained one Bishkek resident.

A few Kyrgyz NGO and opposition leaders argue that the local public currently expects a regime change in the coming spring (www.akipress.kg, December 16). An opposition movement “For Justice” has announced that it will organize mass demonstrations next March, if Bakiyev fails to follow its suggestions about improving democratic processes in the country.

The governments of both countries portray new hydroelectric plants as a matter of national pride achieved thanks to the political leaders’ policies and vision. Yet, both the Kyrgyz and Tajik presidents and their families control the water resources, thereby increasing the obscurity of the hydro-energy sector management.

In Tajikistan, Rakhmon, his son-in-law Hasan Sadulloyev, and chairman of the Barki Tochik energy company Sharifkhon Samiyev are allegedly the leading masterminds in embezzling money from hydro-energy. In Kyrgyzstan, Bakiyev, his son Maksim, and Saparbek Balkibekov, together with Aleksey Shirshov, the directors of Elektricheskie Stantsii, the power station monopoly, manage the sector. Both countries’ hydroelectricity barons thus rely on their family connections and close subordinates.

Both the Kyrgyz and Tajik cases demonstrate that it is necessary to increase the level of transparency in hydro-power management. More public discussions and media coverage of the sector should be encouraged to expose the ruling regimes’ uncontrolled corruption. Opinions by professionals capable of analyzing the sector, such as engineers, economists, and lawyers, must be more widely publicized.

As one Kyrgyz NGO leader told Jamestown, “Indeed, it would be naive to hope that increased attention to the hydro-power sector would automatically lead to less corruption. But some steps in raising public awareness about the issue will contribute to a long-term process of changing the mentality that management of water and natural resources are entirely the government’s responsibility.” Such perceptions might further influence the electoral process or the work of the international community. For now, reports such as those of the IMF have already helped to underpin the scope of corruption in the aluminum and energy sectors.