Restructuring of Barqi Tojik may lead to appearance of two more monopolists

“Restructuring of Barqi Tojik has been completed and heads of the newly established companies have been appointed and the process of dividing fixed assets between them is under way,” Abdulmajid Muminzoda, the head of the Antimonopoly Agency under the Government of Tajikistan, told reporters in Dushanbe on February 4.  

Fixed assets are long-term assets that a company has purchased and is using for the production of its goods and services. ... Fixed assets include property, plant, and equipment (PP&E) and are recorded on the balance sheet.  Fixed assets are also referred to as tangible assets, meaning they are physical.

Muminzoda noted that after completion of that process and approval of balance sheets of all three companies, the Antimonopoly Agency will conduct analysis and decide which companies to enter into the Register of Natural Monopoly Entities, which are regulated and controlled by the Government. 

The Register of Natural Monopoly Entities currently includes 30 enterprises operating in sectors and markets, which are under state monopoly (power and water supply systems, air and railway services, post services and others).   

Recall, the process of restructuring of Barqi Tojik began in 2012 and Barqi Tojik was expected to be divided into three independent companies in late 2018: (i) generation; (ii) transmission business; and (iii) distribution.  

The main objective of the restructuring of Barqi Tojik is in ensuring transparency in the country’s energy system.

Tajikistan’s power sector is comprised of the vertically integrated energy company, Barqi Tojik, three independent power producers (IPPs), and a concession in Gorno-Badakhshan Autonomous Region (GBAO) combining power generation and distribution.

Barqi Tojik is fully owned by the Government.  It owns and operates most of the electricity generating plants and is also responsible for electricity transmission, dispatch, and distribution services to around 8 million people in all regions of the country except for GBAO.

Two of the IPPs – Sangtuda-1 and Sangtuda-2 hydropower plants (HPPs) – were constructed with investments from Russian and Iranian state-owned companies, and supply electricity to Barqi Tojik under 20-year power purchase agreements (PPAs).  Third IPP – Roghun HPP – is under construction.

PamirEnergy generates and supplies electricity to more than 200,000 people in GBAO under 25-year concession agreement.

Tajikistan desperately needs to reform its energy sector.  An article “Tajikistan’s Energy Sector Reforms: Is Energy Export the Only Way Out of the Revenue Dilemma?” posted on CABAR’s website, in particular, says that in 2013, over 10 percent of Tajikistan’s enterprises considered unreliable electricity supply as a major constraint to doing business in the country.  These enterprises reported 6 electrical outages per month lasting 4 hours on average and resulting in losses equal to 4.4 percent of annual sales.  In 2019, the share of local enterprises who considered unreliable electricity supply as a major constraint to doing business fell down to 8.4 percent, still significantly above the average of 3.8 percent across Europe and Central Asia.  Tajikistan currently ranks 163rd among 190 countries in terms of ease of getting electricity and 107th among 141 countries for the quality of electricity supply.  In 2014, the economic losses associated with unreliable electricity supply equaled to USD 200 million or 3 percent of the country’s GDP.