REPORT ON COOPERATION BETWEEN THE EUROPEAN INVESTMENT BANK AND TAJIKISTAN
The European Investment Bank, the European Union’s bank founded in 1958 under the Treaty of Rome establishing the European Community, contributes to the integration, balanced development and economic and social cohesion of the EU Member States by financing sound investment.
In Central Asia, the EIB supports the EU policy objectives of diversification of energy resources, by focusing its financing on energy supply and transmission projects and on the protection of the environment. The EIB started its operations in the Republic of Tajikistan in February 2009.
On 11 February 2009 President of the Republic of Tajikistan H.E. Mr. Emomali Rahmon and President of the European Investment Bank (EIB) H.E.Mr. Philippe Maystadt signed in Brussels the Framework Agreement providing the basis for governing EIB’s future lending in Tajikistan. The Republic of Tajikistan was the first among the countries of Central Asia with whom EIB has signed the Framework Agreement. It should also be noted that EIB cooperates with Tajikistan, Kazakhstan and Kyrgyzstan in Central Asia.
EIB President Philippe Maystadt commented: “The Framework Agreement between the Republic of Tajikistan and the EIB opens the way for EIB financing of projects in Tajikistan. The focus will be on the financing of major energy projects of common interest both to Tajikistan and the European Union. We look forward to developing EIB’s activities in the country in a close cooperation with the European Commission, the EBRD and other IFIs operating in Tajikistan”.
The EU Council of Ministers decided in December 2006 to grant the EIB a new external Mandate until 2013 which foresaw, inter alia, financing for projects in Central Asia subject to a further Council Decision. In November 2008 the EU Council of Ministers decided that indeed Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan shall be eligible for EIB financing under the Mandate. The signature of this Framework Agreement follows this EU Council Decision.
During an official visit of the President of the Republic of Tajikistan H.E. Mr. Emomali Rahmon to the EIB headquarters in Luxembourg on 10 June 2011 the first loan agreement was signed between EIB President Philippe Maystadt and Tajikistan’s Minister of Finance Mr. Safarali Najmuddinov. This first ever EIB loan provided in the Republic of Tajikistan envisaged financing the installation of electricity meters, with ancillary equipment to enable demand-side management and grid energy balance control and reduce distribution network losses and increase energy efficiency in Sugd Region of the country. This project is a good example of cooperation between partner international financial institutions as it was being co-financed by the EIB and the European Bank for Reconstruction and Development (EUR 7 million each) and also supported by a EUR 7 million grant from Investment Facility for Central Asia.
EIB President Philippe Maystadt, who signed the loan together with Tajikistan’s Minister of Finance Mr. Safarali Najmuddinov, stated: “I welcome the fact that EIB funds will be supporting this flagship project that will contribute to the renovation of the electricity network, the reduction of distribution losses and the promotion of the economically sustainable development of the energy sector in the Republic of Tajikistan.”
On 11 April 2013, in the margins of official visit of the President of the Republic of Tajikistan H.E.Mr. Emomali Rahmon to the European Union institutions in Brussels, the Vice President of the European Investment Bank (EIB), Wilhelm Molterer and the Chairman of State Committee on Investments and State Property Management, Davlatali Saidov, in the presence of President Emomali Rahmon, signed a Memorandum of Understanding, representing a significant step in deepening the cooperation between the Republic of Tajikistan and the EIB.
EIB Vice-President Molterer stated: “This Memorandum of Understanding will help to promote the cooperation between the EIB and the Republic of Tajikistan focused on project financing, so benefiting both the EU and Tajikistan. Priority sectors for EIB financing are renewable energy sources including hydropower generation, energy efficiency and agricultural infrastructure in the context of the broader objective of climate change mitigation and the adaptation and development of social and economic infrastructure.”
In the context of MoU, the EIB is in the process of conducting the due diligence for the Kairakkum Hydro-Power Plant Rehabilitation Project in close cooperation with the EBRD.
Regular discussions between the EIB and Tajikistan are being held to explore and identify priority projects for EIB involvement in line with its mandate and objectives.
In December 2013 the Tajikistan’s Finance Minister Mr. Abdusalom Kurbonov officially addressed the EIB President H.E.Mr. Werner Hoyer with a request of financial support of the European Investment Bank to Tajikistan for implementation of CASA-1000 (Central Asia South Asia) Electricity Trade development project. Numerous meetings have been held on diplomatic, political and expert levels between EIB and Tajikistan representatives during the first half of 2014. In May 2014 a delegation of high-level EIB experts led by Managerial Adviser on Lending Operation in Eastern Neighbors and Central Asia Mr. Umberto Del Panta visited Tajikistan to meet with relevant authorities concerning the assessment of CASA-1000 project feasibility. Following negotiation, fruitful discussions and reached agreements, on 16 September 2014 the EIB Board of Directors approved the allocation of 70 mln. EUR of long-term loan (for a term of 29 years) to Tajikistan for the implementation of CASA-1000 project. Financial contract should be signed after its drafting by the EIB and approval by the Tajik authorities.
On 20 October 2014 in Luxembourg the Minister of Foreign Affairs of the Republic of Tajikistan Sirodjidin Aslov met with the Vice-President of the European Investment Bank Wilhelm Molterer. Having discussed the current state and prospects of the development of bilateral cooperation between Tajikistan and the European Investment Bank, the sides agreed to continue cooperation with the aim to develop and implement joint projects in the priority fields of the economy of Tajikistan.
The EIB is also considering two new operations for the coming years as follows: 1) the rehabilitation of Kairakkum Hydro Power Plant – Phase II; and 2) an agriculture and value chain framework loan for rural development, subject to available funds for Central Asia, during its financial mandate of 2014-2020.