A Loan Agreement was signed today in Dushanbe, between the Republic of Tajikistan and Kuwait Fund for Arab Economic Development, whereby the Fund will provide a Loan of K.D. 5.2 million to assist in the financing of the Rogun Hydropower Plant Project.

The Loan Agreement was signed on behalf of the Republic of Tajikistan by His Excellency Mr. Fayziddin Qahhorzoda, Minister of Finance, while the Loan Agreement were signed on behalf of the Kuwait Fund for Arab Economic Development by Mr. Waleed Al-Bahar, Acting Director General of the Fund.

The Project aims at providing clean, renewable, affordable, and reliable electricity supply to meet growing domestic electricity demand at affordable costs, enhance energy security, and trading it through Central Asian regional power electricity market, contributing to decarbonize the electricity grids and contribute to enhancing water security, not only for Tajikistan, but for the Central and South Asia Region. This will be achieved through constructing a hydro power plant with installed capacity of about 3780 MW with transmission facilities to supply electricity to the local and regional electricity market. The Project also includes institutional support and consultancy services. The Project is expected to be completed in December 2032.

 

The total cost of the Project is estimated at about USD 6.17 billion, equivalent to about K.D. 1.93 billion. The First Kuwait Fund Loan of K.D. 5.2 million will cover about 0.26% of the total cost of the Project, in addition to the contribution of the World Bank in an amount equivalent to about K.D. 203.125 million, the European Investment Bank in an amount equivalent to about K.D. 156.250 million, the Asian Development Bank in an amount equivalent to about K.D. 156.250 million, the Asian Infrastructure Investment Bank in an amount equivalent to about K.D. 156.250 million, the Arab Coordination Group (ACG) in an amount equivalent to about K.D. 140.625 million, and the Government of Tajikistan in an amount equivalent to about K.D. 715.625 million and the remaining costs or any other increase that may occur in the project costs.

The Loan is made for a term of 30 years, including a grace period of 8 years.  The Loan will be amortized in 44 semi-annual instalments, the first of which will be due on the first date on which interest or other charge on the Loan will fall due after the expiry of the said grace period.  The Loan bears interest at the rate of 1.5% per annum, in addition to 0.5% per annum to cover administrative charges and other expenses involved in the implementation of the Loan Agreement.

Upon signature of this Loan Agreement, the Fund will have provided 6 Loans to the Republic of Tajikistan, as the Kuwait Fund has previously extended 5 Loans, to finance several Projects in the Roads and Water sectors, with a total amount of K.D. 24.9 million, which has been totally utilized, and K.D. 12.7 million, have been reimbursed. Furthermore, the Fund has also provided the Republic of Tajikistan with 9 Grants with a total amount of K.D. 2.29 million, of which K.D. 1.87 million, have been disbursed, to finance the Preparation of technical and economic feasibility studies for various Projects in the Roads and Power sectors.

In addition, the project aligns with the objectives of the Paris Agreement on climate change, as well as Tajikistan's nationally determined contributions (NDCs) aimed at reducing greenhouse gas emissions by 40-50% by 2030 compared to 1990 levels. Given that the project is classified as a renewable energy initiative contributing to mitigating climate change by reducing greenhouse gas emissions into the atmosphere, and is also categorized as a climate adaptation project, the fund's loan is therefore fully accounted for within the framework of Climate Mitigation and Adaptation Finance.

The signed Loan Agreement achieves parts of the Sustainable Development Goals, including: the seventh (affordable and clean energy), the eighth (decent work and economic growth), the ninth (industry, innovation, and infrastructure), the eleventh (sustainable cities and communities), the thirteenth (climate action), and the seventeenth (partnerships for the goals).