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News: September 2010

TURKMENISTAN, AFGHANISTAN AGREE TO BUILD GAS PIPELINE

Source: The Times of Central Asia, 6.09.2010

Turkmenistan and Afghanistan have signed an intergovernmental framework agreement concerning the construction of the Turkmenistan-Afghanistan- Pakistan-India (TAPI) gas pipeline the Asian Development Bank is looking to develop.

Turkmen television reported Monday evening that the document was accepted in Kabul during the second meeting of the Turkmen-Afghan intergovernmental trade and economic cooperation commission.

The country's media reported that several documents were discussed and signed during the meeting, documents that deal with mutual efforts in fuel and energy, transportation, trade, and in social issues.

The TAPI pipeline is expected to originate at the Dovleta- bad field in east Turkmenistan and run to the Indian town of Fazilk on the border with Pakistan. Potential customers have already received the results of an audit of gas reserves at the Dovletabad field done by De-Golyer & MacNaughton.

The Turkmen media reported that the gas pipeline's throughput capacity will be 33 billion cubic meters (bcm) of gas per year. Plans call for building six compression stations along the pipeline that would run for nearly 2,000 km (1,250 miles), including 735 km across Afghanistan and another 800 km through Pakistan.

Estimates have put the pipeline price tag at $3.3 billion.

Turkmenistan, holder of the world's fourth-largest natural gas reserves, is keen to revive plans to build the TAPI pipeline through Afghanistan to the markets of Pakistan and India. The project has been stalled by war in Afghanistan.

The former Soviet state is looking to diversify energy sales from its traditional market, Russia, and is courting investors from the West, China and other Asian countries.

Turkmen President Gurban-guly Berdymukhammedov is pushing his government to conclude gas supply agreements with Pakistan and India, which have expressed interest in buying up to 70 billion cubic meters annually, by the end of this year.

A Turkmen government source, speaking on condition of anonymity, told Reuters that Berdymukhammedov and Afghan President Hamid Karzai would hold "detailed discussions" about the project during the U.N. General Assembly session in mid-September.

KYRGYZSTAN TO CONTINUE BUILDING NEW POWER PLANTS ON NARYN RIVER

Source: The Times of Central Asia, 6.09.2010

Kyrgyzstan launched a US $200 million hydroelectric power plant on August 30, the first significant industrial project in the country since it gained independence.

President Roza Otunbayeva pressed a symbolic red button to start the first generating unit of the Kambarata-2 hydroelectric power plant. The project, funded partly by Russia, will allow Kyrgyzstan to generate more electricity but could divert water from its neighbors.

Budgetary funds and a 2009 loan from Russia built the first unit of the plant.

Speaking to the plant's workers, Otunbayeva said, "In such a difficult time as Kyrgyzstan is going through, the launch of the first generating unit at Kambarata-2 HPP is a historic event for the country."

"The construction and launch of this HPP shows the power of our country and we do not intend to turn away from projects for further building of Kambarata-2 and Kambarata- 1 HPPs," she said.

Generating capacity at Kambarata-2 HPP is 120 MWt. The plant will eventually have three generating units, with combined capacity of 360 MWt.

"The energy generated by the first hydropower unit will be enough to cover the needs of one Kyrgyz region," the president said. "The building of Kambarata strengthens the country's energy security, ensures the uninterrupted work of the hydropower system, and will completely cover all the republic's demand, and make it possible to develop its export potential, carrying out the export of electrical energy to Afghanistan and Pakistan in the future," she said.

Kyrgyzstan resumed construction of the Kambarata-2 HPP, abandoned in the 1990s, three years ago. The project was later able to draw a $300 million loan from Russia.

"Electricity and gold mining are the two wings of our economy," Otunbayeva said. Each contributes around 10 percent of Kyrgyzstan's gross domestic product.

"We will be able to live well in both winter and summer, and are increasing our export potential," she said. "The wasteful discharge of water in summer will be stopped."

Kyrgyzstan's ambitions to control the flow of its rivers in order to generate more hydroelectric power are of particular concern to Uzbekistan, its immediate neighbor to the west and the most populous post- Soviet republic in Central Asia. Uzbekistan relies on rivers that originate or pass through Kyrgyzstan and another mountainous neighbor, Tajikistan, to irrigate its arid cotton fields and farmland. It has opposed plans for large hydroelectric projects in both countries. The first unit of the Kambarata-2 HPP will allow Kyrgyzstan to produce an additional 500 million to 700 million kilowatt hours per year of electricity. The country currently generates about 14 billion kilowatt hours annually.

It is only the first of several projects planned along the Naryn river, which rises in the Tien Shan mountains and is dammed at Toktogul, the largest reservoir in Kyrgyzstan, before running on to merge with another river to become the Syr Darya.

Otunbayeva said a second unit, also costing $200 million, was planned for Kambarata-2. This would be followed by a third unit and simultaneous construction of the larger Kambarata-1 HPP.

The Kyrgyz government is now talking with Russia on the construction of Kambarata-1 HPP, Otunbayeva said. Kyrgyzstan does not intend to turn down international inspection of the building of that facility, she said.

"Of course, we will cooperate on this plan with Uzbekistan," she told reporters.

She also said a delegation from Russian power firm Inter RAO would visit Kyrgyzstan to discuss future projects.

KAZAKHSTAN TO ALLOCATE $12 BILLION TO 2011-2013 INDUSTRIALIZATION PROGRAM

Source: The Times of Central Asia, 6.09.2010

Financing for the state program to accelerate Kazakhstan's industrial development will top 1.7 trillion tenge (about $12 billion) in 2011-2013.

"The draft three-year budget provides 1.745 trillion tenge to implement measures under the state program for accelerated industrial-innovational development," Finance Minister Bolat Zhamishev said at a government meeting in Astana on Tuesday.

Spending under the transportation strategy, including reconstruction of the Western Europe-Western China transit corridor, will total 707.7 billion tenge, Zhamishev said.

Measures to develop the electricity sector will receive 171.1 billion tenge, the Business Roadmap 2020 project - 203.9 billion tenge, and space industry development - 82.2 billion tenge.

The budget will also provide 205.6 billion tenge in charter capital increases and lending to the Samruk-Kazyna state fund to finance implementation of promising infrastructure projects.

Spending on agricultural development will total 586.2 billion tenge (roughly $4 billion) in 2011- 2013, including 304.9 billion tenge in support for the KazAgro state holding, over 13.7 billion tenge a year for grain purchases, and 82 billion tenge to subsidize agriculture.

ADB TO ASSESS CASA-1000 PROJECT AFTER COMPLETION 1 OF ITS FEASIBILITY STUDY

Source: The Times of Central Asia, R. Nazarov, 6.09.2010

The Asian Development Bank (ADB) supports Tajikistan's policy to improve its energy security, energy efficiency and energy trade, which corresponds to the Central Asia Regional Economic Cooperation (CAREC) Program. ADB is currently waiting for results of a feasibility study (FS) of the Central Asia-South Asia (CASA-1000) project. The bank's position regarding this project will be determined basing on the FS results.

Lately, the project has been a highly debated issue. At a recent meeting of leaders of Russia, Afghanistan, Pakistan and Tajikistan in the Russian city of Sochi, the Russian side expressed its interest in the project. However, some experts believe that countries that are willing to invest in the project may turn this economic project into a political tool. Initially, the project was approved by the World Bank and later got support from the United States and United Arab Emirates.

According to Georgy Petrov, a Tajik expert, implementation of CASA-1000 project, providing for the export of electricity from Central Asia to South Asia, will become effective only after completion of Tajikistan's Rogun hydroelectric power plant (HPP). Petrov believes that Tajikistan and Kyrgyzstan, countries that are supposed to export electricity to Afghanistan and Pakistan within the project, should consider all the issues related to the project's implementation in order to protect their national interests.

"Our interests should be considered on a par with the interests of the project's investors, that is, we should sell only surplus electricity, and never take any commitment to ensure the export transmission line work at full transit capacity," he explained.

In his view, electricity generated in Tajikistan must be used first of all to develop the national economy. And there is no sense to implement CASA- 1000 project prior to completion of the Rogun HPP.

"Tajikistan would be in e winning position if all the issues on the CASA-1000 project implementation will be discussed after the launch of the Rogun HPP. The project's investors, which may include, both Russia and the United States, will defend their interests and 'pull the blanket over themselves'."

Some analysts in Tajikistan say that it is better to star implementation of the project now, as in summer Tajikistan is ready to export about fou billion kilowatt hours of electricity. In a year, after com missioning of several small and medium-sized hydroelectric power plants, including the Sangtuda-2 HPP, this total will reach five billion kilowatt hours. Neighboring Kyrgyzstan will also be able to start exporting electricity through this line to Afghanistan and Pakistan where the need for electricity is great.

It is important that the importing countries need electricity mostly in summer when both Tajikistan and Kyrgyzstan have it in excess.

In mid-August, Makoto Ojiro, the then ADB Country D rector for Tajikistan, welcome Russia's possible participate in the CASA-1000 project, noting that the project require large investments - approximately $1 billion.

Tajik experts suggest that both exporting and importing countries in the project build their sections of the transmission line at their own expense or through loan. In this case there will be no political an economic disagreements with regard to future electricity exports.

UZBEKISTAN LAUNCHES SMALL HYDROPOWER PLANT IN THE SOUTH

Source: The Times of Central Asia, D. Ashurmatov, 6.09.2010

A small hydropower plant, Gissarak, worth about $30 million has been commissioned in the Kashkadarya oblast in southern Uzbekistan, according to the Uzvodenergo association (part of the Ministry of Agriculture and Water Resources of Uzbekistan), the project's contractor.

Gissarak HPP with capacity of 45 M W on the Aksu river, which flows into the Gissar reservoir, will generate up to 86.5 million kWh annually.

Financing of the construction was carried out through Uzvodenergo's own funds.

Under the program of development of small hydropower plants, 15 hydropower plants with total capacity of 423 MW and annual electricity generation of 1.36 billion kWh were planned to be built in Uzbekistan until 2010. To date, six plants with total capacity of 152.2 MW have been put into operation.

Uzbekistan produces about 50 billion kWh of electricity a year. The share of hydropower plants in total generation is about 10%.