Auditors have identified risks in the financial report of the Rogun Dam
Independent analysts have assessed the financial statements of JSC Rogun Dam for 2024, prepared in accordance with international standards. The document, verified by the auditing company Baker Tilly Tajikistan, contains a qualified opinion of specialists, but is accompanied by a number of significant reservations. Experts point to sufficient completeness of data for a general analysis, but note factors that reduce the reliability of the financial picture, including the lack of revaluation of assets in the face of inflation and the inability of auditors to personally attend the inventory of property. The company continues to be in the stage of active construction of the Rogun Dam, operating only two units out of six planned, which determines the specifics of its economy: the focus is shifted to capital investments with low operating income and critical dependence on government funding.
The net book value of JSC “Rogun Dam” for the reporting period formally increased by almost 11%, reaching more than 38 billion somoni. However, this growth is not due to commercial efficiency, but to direct injections from the state, which has increased the share capital by almost 4 billion somoni. These funds made it possible to compensate for the net loss of the year, which amounted to 277 million somoni, and to support the financial stability of the enterprise on paper. At the same time, the loss accumulated over the past years has approached the mark of 2 billion somoni. The analysis shows that the operating activities of the Rogun Dam remain unprofitable: the cost of electricity production increased by 18%, while revenue fell by 23%. This led to the formation of a gross loss and calls into question the current operational efficiency without taking into account capital investments.
The decline in the company’s revenues is attributed to a drop in electricity production. In 2024, production at the Rogun Dam decreased by 424 million kWh compared to the previous year, which may be due to low water levels in the Vakhsh River or repairs. The sale of energy is carried out through the monopoly operator JSC “Barki Tojik” at regulated tariffs, which are significantly lower than consumer prices. Despite the fact that tariffs for the population have increased, the wholesale price for the Rogun Dam remained at the level of 20.5 diram per kWh.
Against the background of falling revenues, there is a noticeable increase in expenses. The increase in depreciation charges by 16% is due to the commissioning of new assets, and personnel costs jumped by 76%, due to the expansion of staff to accelerate the construction of Dams. Maintenance costs and social taxes have also increased. Foreign currency liabilities remain an important risk factor: about 70% of the company’s debts are denominated in US dollars, which in conditions of somoni volatility creates a threat of significant exchange rate losses. In 2024 alone, losses from exchange differences amounted to almost 74 million somoni.
The auditors drew attention to a number of inconsistencies that raise questions about the transparency of reporting. In particular, there was a discrepancy between the data on the share capital of Rogun Dam OJSC in the report and the state register in the amount of almost 5 billion somoni (this is 25% of the declared cost of capital). In addition, the lack of regular revaluation of fixed assets can distort the real value of assets, and the non-participation of auditors in the inventory of cash and inventory creates risks of overestimation. Experts also note the presence of significant accounts receivable from the founders and the main buyer of electricity, which can lead to a shortage of funds and delays in settlements with contractors.
The long-term prospects of the Rogun Dam project are inextricably linked with the support of the Government of Tajikistan and the attraction of external financing. According to estimates by international rating agencies such as S&P, the completion of the Rogun Dam may require more than $ 6 billion, and the full design output will be reached no earlier than 2038, when the reservoir is filled. The business continuity risk is assessed as high: without annual budget injections and preferential loans, the company may face the inability to service debts. Additional pressure factors are environmental and social obligations, including the relocation of thousands of residents from the flood zone of the Rogun Dam, which requires strict compliance with the standards of international financial institutions such as the World Bank and the Asian Infrastructure Investment Bank (AIIB).
Igor Grokovsky (Rivers.Help!)
Original (in Russian): Аудиторы выявили риски в финансовом отчете Рогунской ГЭС
