The Energy Charter has completed its in-depth review of the investment climate and market structure (ICMS) in the energy sector of Tajikistan. The review provides an objective evaluation of the country's legal, regulatory and institutional frameworks for foreign direct investment (FDI) along with a description of the energy market structure and development plans. The review was conducted by investment experts from the Energy Charter Secretariat, in close cooperation with the Tajik authorities, and peer review examiners from Switzerland and Kazakhstan. The review process included a visit by the Secretariat staff to Dushanbe in May 2009, as well as discussions of the draft report at the Energy Charter Investment Group meeting in November 2009. The policy conclusions of the review were adopted by the Energy Charter Conference in December 2009.
The review confirms that Tajikistan continues to experience severe power shortages but the government puts a lot of effort into attracting foreign direct investment to develop new generation capacity, with several significant projects underway. At the same time, there remain concerns about the implementation of existing legislation and establishing a record of good governance, setting up a comprehensive body of investment-related legislation is crucial.
Since 2007, the Tajik authorities have embarked upon a vast reform programme to ease the constraints on private sector development, reduce the role of the state in the economy and bring in FDI. The ICMS review finds that the reforms are heading in the right direction but more efforts are required to deliver a transparent, predictable and competitive business environment which is indispensable for attracting reliable investment.
The review also identifies a number of areas where further regulatory reforms and policy measures are needed to enhance Tajikistan's competitiveness and increase its attractiveness as an investment location. These include the introduction of cost-recovery tariffs, establishment of an independent regulator in the energy sector, policy measures regarding energy saving and efficiency at the national level and intensifying energy trade and cooperation at the regional level.