Rogun dam money collected, but sits stagnant

DUSHANBE –The Tajik government has collected more money for building the Rogun hydropower station (Rogun GES) than it knows what to do with, critics warn.

“It was stupid to raise funds to build a facility that we do not even have (international) permission to build”, one economist said on condition of anonymity.

The state began deducting money from its citizens' paychecks January 6. The collected funds now total 819M TJS (US $187m), with the value of the shares issued at US $1.4 billion, the Finance Ministry said.

“They are still deducting Rogun share purchases from my salary. Every factory worker is required to buy shares totalling 3,000 TJS (US $700)”, said 34-year-old Hurshed, a TALCO employee. Hurshed still is paying 300 TJS (US $10) monthly, he said.

“They said that buying shares was a voluntary thing,” Dr Ravshana Kadyrova said. “But it is more like forced labour. … I had to spend two paychecks on shares totalling 500 TJS each (US $110)”.

The International Monetary Fund reported in April that the campaign to raise funds for Rogun was having negative consequences on the country’s macroeconomic situation and urged the government to suspend all share-buying campaigns.

“People simply started saving money for basic services and groceries because most of their earnings are redirected to Rogun GES’s accounts”, said another economist who requested anonymity. “For example, by April 1, US $182m in Rogun securities had been sold; by June 10 that number was (now only) US $187m”.

The government continues to search for a place to deposit the funds after Tajik banks offered low rates of return in two separate tenders.

The Finance Ministry barred foreign banks from bidding, since allowing them to hold the money would require converting it into foreign currency.

“Calls for bids went out to Tajik banks to receive US $80m in their deposit accounts so they could profit from lending the money", said Deputy Finance Minister Jamshed Norinov. "However, … the highest rate domestic banks offer is 0.6%".

Only three of Tajikistan’s 14 banks made offers, one of which included an interest rate of 0.03%, Norinov said. If the call for bids fails a third time he said, all the funds will revert to Rogun GES’s accounts.

The government was right to insist on higher rates of return, Centre for Strategic Studies chief specialist Firuz Saidov said, since yearly inflation is more than 1%. Distributing the Rogun principal among several banks could reduce the risk, he said.

One anonymous bank spokesperson agreed with Saidov.

“If they gave the money to several banks, then we would probably raise the interest rates we're offering”, the spokesperson said.

The banks are being greedy and unpatriotic, former bank employee Abdullo Mirazizov said. “If domestic banks do not provide help in increasing Rogun’s funds, then who should”? he asked.

Several economists and analysts accused the government of cornering itself by collecting so much money and refusing to allow foreign banks to hold it.

Banks that make a third bid will likely offer unacceptably low interest rates again since Tajikistan has no demand for such huge amounts of somoni, economist Georgii Koshlakov said.

The only remedy is to attract foreign banks into the bidding process or to invest in stock markets, political analyst Parviz Mullojanov said.

Koshlakov agreed, but explained why the government is hesitant to do so.

“If this sum were in dollars, then there would be companies that would take it”, he said. “(But) you need to have (foreign currency on hand) that you can buy for somoni. The Finance Ministry and the National Bank have no such possibilities”.

Koshlakov said the government’s strategy was good in theory, but not in practice.

“The idea of corporatising Rogun GES and involving the population in it is correct”, he said. “But it went overboard. We should have collected the money over time, not all at once”.

Authorities have not announced the results of the third call for bids. Unofficial sources, however, report that no Tajik banks have submitted tenders.