$300 Million for Rogun: Tajikistan Secures Second World Bank Tranche
Central Asia Column “Steppe Ahead”
On October 1, Tajikistan’s parliament ratified a World Bank grant of $300 million for the Rogun hydroelectric power plant. This brings the total approved World Bank financing for the project to $650 million. In total, up to $3 billion in preferential financing is expected to be raised for the project. With a capacity of 3,780 MW, Rogun is set to become the largest hydroelectric power plant in Central Asia.
Grant Instead of a Loan: What the Second Tranche Funds
The funds come from the IDA, the World Bank’s development arm for low-income countries. It is a grant, not a loan. The World Bank had approved the second tranche on July 1. The lower house in Dushanbe has now made the agreement legally binding. This is reported by the English-language regional newspaper *Times of Central Asia*. The funds will go toward construction work, electromechanical equipment, safety measures, and the resettlement of affected communities. In addition, systems for monitoring the future reservoir will be installed. The first tranche, totaling $350 million, has been in effect since December 2024. The World Bank also leads a coordination group for Rogun. Its members include multilateral donors and development funds from Europe, the Middle East, and Asia.
The plans for Rogun date back to the Soviet era. The power plant was never completed, and construction was suspended for decades. Now the dam is rising in the Vakhsh River valley. In August, the dam reached a height of about 190 meters; the planned height is 335 meters. Rogun would thus be the tallest dam in the world. Completion is scheduled for 2033. The main contractor is the Italian construction group Webuild. According to the World Bank, the project is expected to create more than 30,000 jobs, both directly and indirectly. Italy pledged $150 million in July. According to the Times of Central Asia, the Asian Development Bank, the AIIB, and the European Investment Bank have also expressed interest. “Better access to reliable electricity will accelerate economic transformation and create jobs,” said Najy Benhassine, the World Bank’s Regional Director for Central Asia. The trade magazine International Water Power quoted this statement from the Bank’s press release. “This transformative project is a significant milestone for the region’s electricity supply,” added Charles Cormier, the World Bank’s Director of Infrastructure for Europe and Central Asia.
Electricity Remains the Bottleneck for Industry
Rogun is expected to supply approximately 14.4 billion kWh annually. According to International Water Power, this corresponds to about 60% of the country’s current electricity production. The demand is there. Tajikistan has been rationing electricity during the winter months for years. During a meeting with the IMF this week, Industry Minister Sherali Kabir cited three factors holding back industry: high energy rates, fuel shortages, and logistics problems. This was reported by the Tajik news agency Asia-Plus. Nevertheless, the economy is growing strongly. According to the statistics agency, GDP rose by 8.2% year-over-year in the first half of the year. Capital investments increased by 18.4%. The Eurasian Development Bank forecasts growth of 8.3% for the full year 2026, following 8.4% in 2025.
The country is also gaining influence regionally. Trade with its four Central Asian neighbors totaled $1.67 billion from January through August. This accounts for about 18% of total foreign trade, with Kazakhstan remaining the most important partner, according to Asia-Plus. Total foreign trade grew by nearly 40% year-over-year during the same period. The deficit exceeded $5.3 billion.
World Bank Continues to Rate Debt Risk as High
The downside of the boom is the financial burden. The World Bank continues to see a high risk of a debt crisis for Tajikistan. In a guest column for Al Jazeera, Central Asia expert Ali Abu Issam points to high debt repayments through 2027 relative to export revenues. Remittances from migrant workers accounted for about 46% of GDP in 2025, primarily from Russia. The trade deficit stood at 35% of GDP. Nevertheless, the boom is having a positive impact at the grassroots level: According to Abu Issam, the poverty rate fell from 55% in 2010 to 14.8% in 2025. Added to this are risks outside the budget: an arbitration case involving the aluminum company Talco for more than $300 million and payment arrears by the electricity provider Barqi Tojik. Foreign exchange reserves of $5.6 billion cover just over eight months of imports. The Eurasian Stabilization Fund also granted a budget loan of $200 million. The interest rate is 1%, and repayment does not begin until after ten years.
Whether Rogun will break even depends on two questions. Will the preferential financing of up to $3 billion actually materialize? And will the electricity find solvent buyers in the region starting in 2033? Until then, Dushanbe will bear a large portion of the construction costs itself.
Source: Times of Central Asia, International Water Power, Asia-Plus, Asia-Plus, Al Jazeera (all in English)