With the prevalence of mountains and the abundance of water resources creating good conditions for hydropower generation, this type of power source duly dominates the energy sector, accounting for over 98 percent of the total annual electricity generation in the country. The energy sector has been affected by dramatic changes over the last few decades. Regional energy cooperation was disrupted after the break-up of the Soviet Union, gas imports were interrupted, and the state has been unable to invest adequately in the maintenance of the national energy infrastructure (most hydropower plants were built in the Soviet era for instance). The Tajikistan power system was disconnected from the Central Asian power system in 2009.
Unlike many other low income countries, access to electricity in Tajikistan is nearly universal and the tariffs are very low. The supply of uninterrupted low cost services is expected by citizens’ as a Government obligation. Large cities are provided with district heating systems, which due to lack of maintenance are nearly dysfunctional, putting even more pressure on the electric grid, which has now taken the predominant role in energy services.
Imports of piped natural gas from neighboring Uzbekistan, which had been shrinking over the last five years against regular stiff increase in import prices, stopped in 2012 after the two countries could not reach an agreement on the price. Households as a consequence started to use electricity for heating purposes, where available in the winter. In view of the high cost and shortages of gas supply in recent years, electricity, followed by coal and agro fuels/wood, are the prime sources of energy for consumers.
In terms of prices, electricity is the cheapest alternative for heating and cooking. Coupled with low water inflow and limited storage, electricity supply is in short supply during the winter months. As a consequence, severe load-shedding occurs in winter and customers in most of the country receive electricity only around six hours per day, except in the capital Dushanbe and in Gorno-Badakhshan where the supply is somewhat more reliable. Other large cities can expect reliable electricity somewhere between that enjoyed by Dushanbe and that of rural areas. The regional imbalance of energy supply is reflected in the fact that while only about 10 percent of the population lives in Dushanbe, they consume almost 40 percent of total residential electricity.
Tajikistan’s electricity tariffs are the second lowest in Europe and Central Asia. Implicit electricity subsidies, resulting from supplying electricity to households at a price that does not recover its cost, are regressive and benefit richer households more than the poorest groups. A recent World Bank report on the winter energy crisis in Tajikistan emphasized the need to raise tariffs in order to better recover costs and improve services. At the same time, there are important concerns about the affordability of electricity price increases in an environment where alternatives such as gas and district heating are no longer available. Incomes are low, and consumer trust in the integrity and transparency of the electricity utility company is limited. However, energy subsidies from charging below-market-price for electricity are not effective. Poor households tend to consume less energy, and hence benefit less from the subsidy. The subsidy to more well off households, who are not in need of the subsidy use up the fiscal space and crowd out other more targeted pro-poor subsidies.