PamirEnergy

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Pamir Energy Company (PamirEnergy) was created in 2002 with the support of the government of Tajikistan, as a new energy company endowed with a 25 year concession to generate and supply electricity in the Gorno-Badakhshan region. The area spanned the Pamir Mountains of eastern Tajikistan and had some 250,000 residents in 2002. PamirEnergy was created through a joint investment from the International Finance Corporation (IFC) and the Aga Khan Fund for Economic Development (AKFED). The company was to complete a partly constructed Soviet-era power plant, increasing its generation capacity from 14 MW to 28MW, and to operate another 8MW hydroelectric plant in the city of Khorog, the main town of the region. Several other smaller plants totaling 30 MW of installed capacity would also be operated by PamirEnergy. Additionally, the company was going to install a regulating structure to an area lake to ensure adequate flow in the winter months when energy demand was highest and water flow was at its lowest due to freezing. Electricity transmission and distribution facilities in the region were also going to be improved, as PamirEnergy was to receive the assets formerly controlled by the state utility Bark-i-Tajik, a distribution company that had some 30,000 electricity customers in 2002. Financial closure for the project was reached in October 2002. The total cost of the project was estimated at US$ 26 million, of which AKFED invested $8.2 million as equity in the new company. The IFC invested $8 million, of which $3.5 million in equity and $4.5 million in debt. This equity structure meant that PamirEnergy was 70% owned by AKFED and 30% by the IFC. The World Bank’s International Development Association (IDA) was also involved with the project, participating through a key concessional loan of $10 million to the government of Tajikistan. The IDA loan was intended to support the project by helping to keep tariff rates on the new electricity within the narrow limits of what people in the region can afford. In addition to the participation by AKFED, the IFC and the IDA, the government of Switzerland provided a grant of approximately $5 million to maintain the tariff increase required in the early years in line with national tariffs and to support a minimum “Lifeline” consumption amount at a very low tariff. The Swiss government also provided critical support to the project at its early stages with $620,000 in grants that helped pay for technical assistance and legal fees. None None