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Central Asia's Era Of Cheap Gas Comes To A Close

Tajikistan is turning its attention to hydroelectricity, like the Nurek hydropower station
Tajikistan is turning its attention to hydroelectricity, like the Nurek hydropower station
Starting on January 1, Uzbekistan increased the gas price it charges neighboring Kyrgyzstan and Tajikistan for natural gas to $240 per 1,000 cubic meters, saying last year's price of $145 was far below real market prices.

The two impoverished Central Asian countries protested that the increase was excessive and unaffordable for their domestic customers. Sulosyn Toktosunova, a Bishkek-based expert, tells RFE/RL's Kyrgyz Service that many Kyrgyz households will no longer be able to afford their gas bills.

"The new gas price will have a very bad impact on people's living standards," Toktosunova said. "Possibly, we are going to have a serious crisis in this regard in 2009. Last year, many people were not able to pay their gas bills even with earlier, cheaper prices. They were in debt. How will they cope with new tariffs?"

Tajikistan has already found itself on the verge of a severe energy crisis. From the beginning of the year, Tashkent has also cut gas deliveries to its neighbor by half due to Dushanbe's failure to pay some $12 million it owes for gas for 2008.

But as Uzbekistan courts more affluent customers, like Russia and China, both Kyrgyzstan and Tajikistan acknowledge that there is no going back to the days of cheap gas.

Beyond protesting Tashkent's decision to raise its gas price, there seems to be little either Bishkek or Dushanbe can do. Both realize that Uzbekistan is determined to get more for its gas, both from its two neighbors and by developing contacts with new -- and richer -- markets.

With estimated gas reserves of 1.87 trillion cubic meters, Uzbekistan is one of the largest natural-gas producers among the former Soviet countries. And both Russia and China appear ready to step up their imports of Uzbek gas.

Russia, already the main gas-export destination for Uzbekistan, is particularly interested. Its state-owned energy giant Gazprom has reportedly agreed to pay over $300 per 1,000 cubic meters of Uzbek gas.

Another major Russian energy company, LUKoil, has said it would invest $5.5 billion in gas projects in Uzbekistan by 2015.

At the same time, Tashkent has agreed to build a pipeline to China.

Seeking Domestic Sources

In Kyrgyzstan and Tajikistan, politicians and experts say it is now time to explore domestic energy sources as the only way to escape the rising gas prices from their neighbor.

"Now we have to explore our own energy sources," says Shodi Shabdolov, a Tajik legislator. "Tajikistan has great capabilities to produce electricity. Speaking approximately, it has up to 5 billion tons of top-quality coal. We have enough natural-gas resources to meet our country's needs. The government should have been trying to attract foreign investment to these sectors."

Shabdolov adds, "There is nothing wrong with Uzbekistan's decision to raise its gas price, because that is how the market economy works, and the era of 'Soviet brotherhood' is long gone."

Unlike their other Central Asian neighbors, Tajikistan and Kyrgyzstan do not have abundant oil and gas resources. However, with numerous rivers in their mountainous terrain, both have the capacity to become major hydroelectric energy producers and exporters in the region.

Tajikistan alone has the estimated potential to produce over 300 billion kilowatt-hours of electricity a year -- the largest hydroelectric capacity in Central Asia.

Ironically, both countries face crippling power shortages that leave households with only a few hours of electricity during the winter months.

Tajikistan has long been straggling to complete construction of a number of hydropower stations, including the Roghun and Sangtuda plants in its eastern regions.

The urgency for Tajikistan is compounded by problems with getting electricity from its current source, Turkmenistan.

Tajikistan's contract with Uzbekistan to forward electricity from Turkmenistan expired at the end of last year. Turkmenistan has now suspended its supply of electricity to Tajikistan, pending the transit contract's renewal.

Tajik officials say they will discuss extending the contract with Uzbek authorities in the coming weeks.

But Tajikistan does not consider Uzbekistan to be a reliable route for energy transit. Tashkent in the past has repeatedly delayed the delivery of Turkmen and Kyrgyz electricity to Tajikistan, citing problems in its delivery networks.

Meanwhile, Kyrgyzstan hopes to solve its electricity problems by completing its Kambarata-1 and Kambarata-2 power stations on the Naryn River.

Kyrgyz President Kurmanbek Bakiev is traveling to Moscow later this month, and his office said a previously promised $2 billion Russian credit to Kyrgyzstan is high on agenda in bilateral talks.

Bishkek reportedly intends to allocate most of the money to hydropower projects.

RFE/RL's Kyrgyz and Tajik services contributed to this report
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    Farangis Najibullah

    Farangis Najibullah is a senior correspondent for RFE/RL who has reported on a wide range of topics from Central Asia, including the impact of Russia’s invasion of Ukraine on the region. She has extensively covered efforts by Central Asian states to repatriate and reintegrate their citizens who joined Islamic State in Syria and Iraq.

RFE/RL has been declared an "undesirable organization" by the Russian government.

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