AKIPRESS.COM - In its largest project in Tajikistan to date, and one of the largest in the country’s energy sector, the European Bank for Reconstruction and Development (EBRD) is providing a $50 million loan to fund the first phase of the modernization of the Qairokkum hydropower plant. Built in 1957, the plant is the only electricity generating facility in northern Tajikistan and supplies energy to over 500,000 homes in the Sughd region.

The total cost of the project is approximately $75.7 million. The EBRD loan will be complemented by $21 million in donor funds – a $10 million loan and a $11 million grant – from the Pilot Program for Climate Resilience (PPCR) under the Climate Investment Funds (CIF). The remaining $4.7 million includes additional donor financing provided by the governments of Austria and the United Kingdom, and the EBRD’s Shareholder Special Fund for consultancy services.

The modernization of the Qairokkum HPP will help reduce electricity shortages and improve power distribution in Sughd, the country’s second largest industrial region.

The first phase of the upgrade program will increase the plant’s current capacity from 126MW to 142MW with the installation of two new and larger turbines. This will prevent wasteful water spills and generate more electricity with the same flow of water, increasing the plant’s efficiency. The investment will also finance the installation of upgraded equipment that will raise safety levels and strengthen the plant’s resilience against the impacts of climate change.

In addition, financing will be used for the ongoing restructuring of Barki Tojik, a state-owned power company responsible for generation, transmission and distribution of electricity. The funds will help to improve the operational and financial performance of the company.

The project will not only address institutional barriers to electricity tariff reform by adopting and implementing new tariff methodologies in line with international standards, but will also assist with introducing relevant legislation, a key priority for the development of the Tajik energy sector. Tariff reform is essential to improve this sector’s commercial appeal.