The European Union is to become the largest investor in Tajikistan’s tallest dam, according to EU officials, in a move aimed at reducing Central Asia’s dependency on Russian energy and part of the EU’s response to China’s Belt and Road Initiative.

Tajikistan started building on the massive hydroelectric Rogun facility in 2016, which would provide the landlocked former Soviet Union country with complete energy independence.

The European Investment Bank (EIB), the EU’s investment arm, has so far not supported the project, whose major developer is the Italian construction business Webuild (WBD.MI).

However, an EIB official told Reuters this week that the European Commission has now urged the bank to become “the largest investor” in the initiative.

Rogun is estimated to cost roughly $8 billion, with $3 billion already invested, according to Tajik energy minister Dalyor Juma in June. Previously funded mostly by Tajik government bonds and private loans, the administration in Dushanbe has asked EU financial and technical assistance in finishing the project, according to an EU official familiar with the negotiations.

The EIB official refused to comment on the potential quantity of the investment or the grounds behind the new commitment.

Between 2014 and 2020, the bank spent around 182 million euros ($186.8 million) in Central Asia, a fraction of its multibillion-euro investments outside the EU’s 27-nation territory.

The EU official, who refused to be identified because he was not authorized to talk to the media, said that one of the main reasons the EU became a major investor in the hydroelectric project was to provide Tajikistan and its neighbors with energy independence from Russia.

According to the source, the EU is interested in attaining “Central Asia energy independence from Russia,”

In reaction to Russia’s invasion of Ukraine in February, Brussels and its Western allies have attempted to isolate it.

The Rogun hydropower facility, with its 335-metre-tall clay core rockfill dam, which the developers claim would be the highest in the world when finished, is supposed to alleviate Tajikistan’s chronic power shortages and enable it to export energy to Uzbekistan and Kazakhstan.

Tajikistan’s principal Russian import is oil, whereas Kazakhstan and Uzbekistan purchase Russian gas, relying on imported energy to feed regions well linked with Russian infrastructure, despite the fact that both are gas producers.

According to the EU source, the investment would be part of the EU’s “Global Gateway” policy. In December, Brussels announced a 300 billion euro global infrastructure development plan as a better, greener alternative to China’s Belt and Road Initiative. Beijing started its strategy in 2013 to strengthen its commercial relations with the rest of the globe, and Central Asia is one of the places in which China has subsequently invested extensively.

According to an EIB official, the bank is exploring a combined investment with the European Commission, which handles the EU’s multibillion-euro budget and, like the EIB, may raise funds via the markets. The EU executive announced that the EU was willing to fund the Rogun hydropower dam project.

The Tajik administration did not respond.

It is unclear when the EU’s proposals would be implemented, although an EU official said that decisions might be taken by the end of this year.

Source: Reuters


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