The European Bank for Reconstruction and Development has offered a loan of $110m to Tajikistan in order to support construction of a power converter station and related infrastructure.
Financial assistance for the national power utility of Tajikistan, Barki Tojik, is a part of the Central Asia South Asia (CASA) Electricity Transmission and Trade project.
Also known as CASA-1000, the project involves setting up a high-voltage transmission line and is expected to cost more than $1bn.
The project is expected to help Tajikistan and the Kyrgyz Republic sell their surplus summer electricity to Afghanistan and Pakistan, which will benefit from having reliable power supplies.
This trade is expected to enable full utilisation of the untapped hydropower potential in Central Asia, while reducing carbon emissions in the region.
CASA-1000 project is supported by a number of international financial institutions and donors, including the World Bank and the European Investment Bank.
EBRD will offer conditional financing to Barki Tojik, which intends to set out third-party access rules for the cross-border transmission line and establish an energy regulator as a part of its reform strategy.
EBRD president Suma Chakrabarti said: "We are proud to support this programme that will benefit the whole of Tajikistan.
"Importantly, it enables a strategic cross-border project, which has the potential to become a ‘game-changer’ in this troubled region.
"CASA-1000 demonstrates the crucial importance of cooperation of international financial institutions for global development.
"This cooperation is especially important in Central Asia, where markets do not offer funds for strategic cross-border projects."
Image: Tajikistan to benefit from selling surplus summer electricity to Afghanistan and Pakistan. Photo: courtesy of European Bank for Reconstruction and Development.