On June 7, Tajikistani President Emomali Rahmon returned home from a week-long tour of China. The tour included a five-day state visit followed by Rahmon’s participation in the 12th summit of the Shanghai Cooperation Organization (SCO) in Beijing. Following the trip, the Tajik President’s office announced that ten new deals signed in Beijing would bring Tajikistan about $1 billion in new Chinese investment, loans and aid. Experts suggest that the new deals will increase China’s economic clout in Tajikistan, giving Rahmon more leverage in dealings with Moscow.
As part of the deals inked during the visit, Beijing has pledged to invest some $600 million to build a large cement plant in Tajikistan’s southern district of Shahritus, on the border with Uzbekistan. When completed, the plant is expected to produce three million metric tons of cement annually, using local limestone reserves. According to Rahmon’s press service, the plant will be a joint project between the Chinese government-run National Materials Group Corporation and the state-owned Tajik Aluminium Company (Talco) (president.tj, June 7). Eager to break its dependence on cement imports, Dushanbe previously negotiated similar deals with Tehran and Islamabad (news.tj, June 11, 2011; June 1). However, joint projects with Iran and Pakistan have taken too long to get off the ground, leading Tajikistan to seek Chinese investment instead.
Beijing has also pledged to build a coal-driven combined heat and power (CHP) plant in Tajikistan’s capital, Dushanbe. Although negotiated over a year ago, the $200 million project stalled because of disagreements over the plant’s technical specifications. Following Rahmon’s return from Beijing, it was announced that Chinese specialists will begin the construction of the plant “within the next several days” and will complete the project within a year. The CHP plant project is part of the Tajikistani government’s effort to use the country’s coal resources in tackling power shortages. China is also helping Tajikistan’s state-owned cement factory in Dushanbe and a number of other enterprises to switch from imported natural gas to local coal (president.tj, June 7; news.tj, April 28, 2011).
On February 23, Tajikistan’s Ministry of Economic Development and Trade (MEDT) announced that a group of Iranian companies had agreed to build an industrial town in the country. According to the ministry, the massive project will entail the construction of about 50 industrial enterprises including aluminum, cotton, and fruit processing plants, in Rudaki district near the Tajik capital Dushanbe. Experts suggest that the remaining enterprises might include plants producing construction materials, solar panels, power transformers, electricity usage meters, and light bulbs. The authorities expect that Tajikistan’s first industrial town will increase the country’s exports, while also reducing imports and creating about 20,000 new jobs.
The announcement made during a three-day investment forum in Dushanbe was very short on details and, therefore, raised a number of questions. First, there is no indication of when the construction of the industrial town is expected to begin. According to the MEDT, Iranian experts still have to complete a feasibility assessment and the technical documentation. Once these are finalized, the construction phase is expected to take about three years.
Second, the authorities have not indicated where the resources required to implement the large-scale project will come from. Tajik experts estimate that the project will cost over US$ 2 billion. The government of Tajikistan which struggles to find resources to build the giant Rogun dam and has to rely on the international financial institutions (IFIs) in financing a large part of its social sector needs is unlikely to take on a major co-investor role. The government’s role will most probably be limited to enacting favorable legislation to improve the economic feasibility of the project and building part of the related infrastructure. Other major donors in the country, including Russia, China, and the IFIs, are also unlikely to co-sponsor an Iranian-led investment project. Therefore, if Iranian companies are serious about the project, they would effectively have to provide all of the funding.
It has become something of a custom for authorities in Tajikistan to announce major investment deals which are unlikely to materialize. Apparently, the latest agreement with Iran announced this week by Tajikistan’s Ministry of Economic Development and Trade (MEDT) belongs to this category of deals.
On February 23, the Ministry told journalists that Iranian entrepreneurs have agreed to build the first specialized industrial town in Tajikistan. The industrial town will reportedly host about 50 industrial enterprises, including plants processing aluminium, cotton, and fruit. These enterprises will employ an estimated 20,000 people. The industrial town will occupy an area of 100 hectares (250 acres) in the Rudaki district, adjacent to Tajikistan’s capital city Dushanbe. According to the authorities, construction of the facilities will take about three years and will begin as soon as Iranian specialists complete all technical plans and feasibility assessments.
It is clear that a project involving the construction and equipment of so many enterprises, training thousands of people, and marketing of goods will require massive investment. It is equally clear that Iran whose economy is increasingly damaged by tougher international sanctions would not be able to provide this investment. What remains unclear, however, is what would happen to previous investment pledges made by Iran.
Pakistan looks set to become a major investor in Tajikistan’s cement industry, with plans to build a large cement plant in the Central Asian country. On June 10, Tajik ambassador to Islamabad, Zabaydullo Zubaydov, discussed the details of the deal with the head of the Pakistani investments board, Saleem Mandviwalla. According to the Tajik foreign ministry, Mandviwalla informed the Tajik ambassador that Pakistan’s president Asif Ali Zardari and prime-minister Yousuf Raza Gilani instructed the investments board to provide a loan to Dushanbe for building a joint cement plant in Tajikistan. A group of Pakistani experts will soon arrive in Tajikistan to discuss the location of the facility and its production capacity with their Tajik colleagues.
The principal agreement on building a joint cement plant was reached during the first business forum of Tajik and Pakistani entrepreneurs in Karachi in March 2011. The forum was attended by Tajik president Emomali Rahmon who was on a state visit to Pakistan. Pakistani experts have suggested that the joint plant might have a production capacity of 1 million metric tons of cement a year. Islamabad hopes that the joint production facility will help Pakistani cement producers to get a better access to markets in Central Asia and Eastern Europe.