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The Hydropower Solution in Central Asia: yes but"

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The project cost could range from $1.3 billion to up to $6 billion. Cost overruns can be factored in because of the harsh winters in this 93% mountainous country that could bring construction to a standstill for several months. Furthermore, delivery of construction materials and equipment will be a major challenge because of the poor state of the local infrastructure and of the unpredictable state of future relationships with neighboring countries through which everything will have to transit. Being a landlocked country renders Tajikistan heavily dependent on the good mood of its neighbors, notably Uzbekistan, which is a logical transit route.

Tajikistan has also been relentless at pushing this expensive project through when multilateral development banks like the World Bank, the European Bank for Reconstruction and Development and the Asian Development Bank have regularly suggested less grandiose plans in order to build much smaller hydropower plants for 100 times less money. Many potential locations to place these plants had already been identified in Soviet days. Such plants could be financed more easily, be built and come online much faster, and could allow for multi-stages in the construction process with the installation of one or two turbines at the initial stage with the possibility to install more in facilities conceived to host several turbines.

This said, the World Bank did agree to finance a techno-economic assessment and an environmental impact and social assessment that will help assess the potential impact of the dam across the region. At a time where water is scarce and as a result becoming more valuable than gold (see related article on Oilprice.com: Central Asia's Most Precious Resource - Water, Not Oil), any project than impacts water flows can create an explosive situation - thus the importance of conducting such assessments to address concerns and lower tensions.

Tajikistan's decision can be seen as a desperate move but it can be understood. In 2004, the aluminum giant RusAl, owned by Russian oligarch Oleg Deripaska, signed a deal to spend about $2 billion to finish the dam, modernize TadAZ (now Talco) and to even build another aluminum smelter. Time passed and nothing happened. The world financial crisis that severely impacted Russia and the collapse of commodity prices did not help as cash itself became a rare commodity.

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