Tajikistan Approves Use of Central Bank Reserves to Fund Rogun Hydropower Plant

Tajikistan’s lower house of parliament on January 22 approved a draft law allowing funds from the reserve fund of the National Bank of Tajikistan to be used to finance construction of the Rogun Hydropower Plant, a project viewed as central to the country’s long-term energy strategy. The decision was reported by Sadoi Mardum, the official newspaper of the lower chamber. According to the publication, the bill was introduced at the initiative of President Emomali Rahmon. Speaking before lawmakers, Finance Minister Faiziddin Qahhorzoda said the legislation creates a legal mechanism for channeling reserve fund resources through the state budget toward completion of Rogun, which authorities describe as a strategically important facility. Qahhorzoda explained that the law provides for the transfer of 916 million Tajik somoni (approximately $100 million), representing the remaining balance of the National Bank’s reserve fund generated from its financial performance in 2024. He told deputies that the measure is intended to help Tajikistan achieve energy independence by 2027 and reduce reliance on external loans and grants. The minister also pointed to broader budgetary support for the energy sector. Under the state budget for 2026, around 15 billion somoni (more than $1.6 billion) has been allocated for fuel and energy projects, with the majority of those funds earmarked for completion of the Rogun dam. The parliamentary decision follows earlier reports highlighting financial oversight challenges surrounding the hydropower project. As previously reported by The Times of Central Asia, an independent audit of Rogun’s 2024 financial statements identified serious concerns related to financial reporting and internal controls. The audit was conducted by Baker Tilly Tajikistan, a member of the international Baker Tilly network, and resulted in a qualified opinion. Auditors said they were unable to fully confirm the accuracy of the company’s accounts and cited several material issues, including a possible understatement of share capital. They also noted that they did not participate in scheduled inventories of cash, fixed assets, or other holdings as of December 31, 2024, limiting their ability to verify parts of the company’s assets.

Independent Audit Raises Concerns Over Financial Reporting at Tajikistan’s Rogun Hydropower Plant

An independent audit of Tajikistan’s flagship Rogun Hydropower Plant (HPP) has flagged serious financial reporting concerns, including a possible understatement of the company’s share capital. The findings, cited by Asia-Plus from the auditor’s conclusion, point to broader risks in the management of one of Central Asia’s most ambitious infrastructure projects. The audit, covering Rogun’s 2024 financial statements, was conducted by Baker Tilly Tajikistan, a registered member of the international Baker Tilly network. The auditors issued a qualified opinion, meaning they were unable to fully confirm the accuracy of the company’s accounts and highlighted several material issues. The audited report has been published on the official Rogun HPP website. Among the key concerns, auditors stated they had not been involved in scheduled or annual inventories of cash, fixed assets, or other inventories as of December 31, 2024. This limited their ability to verify the existence and condition of parts of the company’s assets through alternative procedures, raising the risk of potential misstatements in the financial records. The audit also noted that Rogun’s fixed assets had not been revalued in recent years, despite signs that their book value may significantly differ from their fair market value. Under International Financial Reporting Standards (IFRS), such assets are required to be revalued periodically. The failure to do so may distort the company’s true financial position. A particularly striking finding involved discrepancies in the company’s reported share capital. Rogun’s financial statements list share capital at 40.03 billion somoni, while the Unified State Register of Legal Entities records it at 45 billion somoni. The difference, 4.97 billion somoni, or approximately $540 million, may indicate that the company has understated its equity. According to the audit, Rogun’s management did not provide adequate documentation to support the lower figure. As of the end of 2024, Rogun reported total assets of 49.48 billion somoni, up from the previous year. The bulk, 35.33 billion somoni, was classified as construction in progress, reflecting the plant’s ongoing development phase. The book value of fixed assets stood at 9.28 billion somoni, with most 2024 expenditures directed toward equipment and construction work. The company reported 2024 revenues of 258.4 million somoni, primarily from electricity sales. However, operating costs exceeded income, totaling 367.4 million somoni, resulting in a net loss of 277.3 million somoni. This marks a modest improvement over 2023, when the net loss was 332.8 million somoni. The auditors described these losses as systemic, emphasizing that the plant has not yet reached full operational capacity. Despite the loss, Rogun HPP generated a positive operating cash flow of more than 3.2 billion somoni in 2024. This was largely attributed to increased liabilities from founders and settlements with state institutions. Baker Tilly stressed that the company’s continued operation depends heavily on sustained government support, which is regularly allocated through Tajikistan’s state budget. The auditors also issued a warning over material uncertainty regarding the company’s ability to continue as a going concern. However, Rogun’s management maintains that the project is a strategic national asset, vital to Tajikistan’s...