1. Introduction
2. Energy Resources in Tajikistan
3. Tariff Policy and its Role in Increasing Energy Efficiency


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Introduction

In order to facilitate the country's integration into the world economy, Tajikistan should establish an efficient national energy system capable of providing greater national energy independence and sufficient affordable energy supplies for all sectors of the economy. The main constraints of energy sector development in Tajikistan can be described by two main aspects: lack of supply side efficiency and difficulties with transition towards market economy.

Tajikistan is largely independent in energy supply but its energy supply has been highly monopolized. The transition of the national economy to greater resource efficiency is one of the most important factors for economic stabilization. New financial and administrative measures and regulations are required to achieve greater energy efficiency.

The vitality and development of the national economy depends on reliability and quality of energy supply, which in turn depends on the existence of an effective energy sector. The national reforms and energy sector development efforts currently under way in Tajikistan aim at building more and more efficient use of the accessible resources.

Since Tajikistan is facing a transition of its economy, there is a need for stringent policy reforms in the energy sector. The following are the envisaged goals of the reform process:

-	greater national energy security;
-	sufficient production of energy for domestic use;
-	sustainable development of energy sector with growing use of renewable sources of energy.

These goals can only be achieved by improving efficiency of the entire sector. This includes a reconstruction and development of the existing energy systems in Central Asia and their extension to the other ECO countries. A restructuring and privatization of the energy sector is also an essential precondition.


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Energy Resources in Tajikistan

Oil: Tajikistan has only limited reserves of hydrocarbon resources. Most of the country's hydrocarbon resources are located deep underground. In addition it is difficult to evaluate these resources due to complicated geological conditions, deep location and ambiguous geophysical interpretation. It has been estimated that oil exploration would cost about US$ 330 million but the risks of such investments not being feasible are too high.

Coal: Coal reserves in Tajikistan surpass those of oil and gas. Proven deposits of coal are estimated to hold 5-6 billion tons of coal. Most coal mining sites are located in hard-to-reach mountainous areas where there is no railroad, which makes industrial development not feasible.

Renewable Energy: Tajikistan accounts for 10 per cent of hydropower resources of the CIS countries and more than 50 per cent of the hydropower potential of Central Asia. This is a good precondition to make this country an energy exporter to the CIS countries and other neighbouring countries. Consequently, hydropower is a strategic resource and it is expedient to investigate strategies of further development of hydropower energy systems in Tajikistan.


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Tariff Policy and its Role in Increasing Energy Efficiency

One of the priority tasks at present is to improve the tariff policy. Tariffs create the basic income to cover the expenses of energy production as well as profits necessary to set up public funds to invest in modernizing and development of energy supply facilities. In Tajikistan, market competition in energy supply is not yet possible. Hence all tariffs are required to be determined by Government. Tariff policy should also protect interests of consumers.

For Tajikistan, attraction of private sector investors into energy sector development is a great challenge. Privatization of large energy supply facilities may be not feasible, at least for the time being. Instead, it may be an option to offer separate subsystems of the energy complex and the water economy to private sector interests if favorable conditions for exporting hydro-energy resources can be established. As part of energy sector reforms, a new system of management should be introduced including a series of normative-legal and financial means to regulate energy supplies.

The Government of Tajikistan has formulated a plan for energy sector rehabilitation. The first priority is given to the rehabilitation of existing energy facilities. Development Fund of Kuwait has allocated a grant of US$487,000 for the renovation of electric networks in Dushanbe for the years 2001-2002. Other important projects that need investment include the construction of large electric power plants such as Rogunskaya GES and Sangtydinskaya GES. At the same time minor hydroelectric power plants should also be built. Islamic Bank of Development allocated a credit of US$9.0 million for the Minor GES Development Fund for the years 2000-2001.

There is, however, still a need of large investments in order to improve technical conditions of the energy sector of Tajikistan. The construction of a number of large hydroelectric power plants, including Rogunskaya GES, has been halted due to lack of financing. Since 1991 the energy sector in Tajikistan has been in a difficult financial situation, as both consumers and state financing organs are insolvent.

Tajikistan is now providing favourable conditions for foreign investments through the "Act on Foreign Investments in the Republic of Tajikistan". This new law states that legal conditions for foreign investments cannot be less favourable than those for local institutions, organizations, and citizens. With the fore mentioned development efforts it is expected that the energy sector development prospects may improve significantly in the near future.


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* Deputy Principal Engineer, Tadjik Power Company, Tadjikistan