Eastern Europe April 5, 2010, 8:09AM EST

Controversy Dogs Huge Dam in Tajikistan

The massive Rogun hydroelectric project, including the world's tallest dam, could make Tajikistan an energy exporter. But paying for it is costing Tajiks dearly

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Most Tajiks welcome the construction of a massive new dam, but some say they are being strong-armed into paying for it.

At a recent wedding party in Dushanbe, an elderly man peered intently at a piece of paper he had taken from his pocket. Some people around him noticed, and another guest asked, "Neighbor, I guess you bought a share, too?"

That share was his stake in the massive Rogun hydroelectric project, which the government of Tajikistan sees as the solution to a chronic electricity shortage that has hampered development and left Tajiks shivering in the cold and dark each winter.

Slipping the paper back into his pocket, the man replied, "Well, not buying is not an option. This share is like a passport now." Every time he needed anything official, from medical care to his pension check, he complained, he was told to buy a share.

The Rogun plant, in the works since 1974, will include the world's tallest dam, at 335 meters high. If all goes according to plan, it will generate 13.1 billion kilowatts of electricity per year, on average – enough to make Tajikistan, the relative loser in Central Asia's generous energy resources lottery, a net exporter of electricity. Its construction is opposed by neighboring Uzbekistan, which says the dam will stem the flow of the Vakhsh River and threaten Uzbek cotton crops.

But it will cost $1.4 billion, which well exceeds the country's annual budget of under $900 million, just to get two units working at the plant, according to the government. In 2004, Dushanbe struck a deal with the Russian aluminum company Rusal (486:HK) to build the dam, but that fell through before construction started due to disagreements over the scale of the dam and the structure of its ownership.

Since then, the government has been reluctant to bring foreign investors into the project. Firuz Saidov, an economist at the Center for Strategic Studies, a think tank run at the behest of the Tajik president, said, "Tajikistan's government has issued a special decree about Rogun emphasizing the strategic importance of the project for the nation. It doesn't want Rogun to be privatized…and remain the monopoly of foreign investors or companies. If the state lost Rogun, it would be as though Tajikistan lost everything."

Saidov said Dushanbe has not ruled out foreign investment but is resolute that "it should maintain the controlling stake, a 'golden share' in this crucial project."

So the government has turned to the country's 7.3 million people, the poorest of the former Soviet Union, to help fund the construction. In early January, the government started selling stock in the company building the dam.

In a national televised address, President Imomali Rahmon urged his countrymen to buy the shares. "It is a great project that should have been completed during the Soviet period, but today it is our national goal to accomplish this important task," he said. "It will be not only our main source of light and power but our national pride and the bulwark of our statehood."

The price of a share ranges from 100 to 5,000 somoni ($23 to $1,150). The average monthly GDP per capita in Tajikistan is about $146. Although the sales are meant to be voluntary, Rahmon has said that every Tajik family that is not poor should spend at least 3,000 somoni in the offering.

Like Rahmon, Mahmadsaid Ubaydulloev, the mayor of Dushanbe and speaker of parliament, used high-flown rhetoric after buying shares for 5,000 somoni on the first day they went on sale. "Our parents and grandparents fought in world wars and came through victorious," he said. "Today we can participate actively in construction of the Rogun power plant and leave it as a victory for future generations."