Renegotiations in public-private partnerships have the potential to negatively impact the actors involved. These types of renegotiations are removed from the competitive environment and limit the decision making process to the government and operator. Often the 'winner' is not the most efficient operator, but the most skilled in renegotiations. In the case of Tajikistan, negotiations and renegotiations were addressed before the start of the project.
The primary agreement which was negotiated was the concession agreement. The Concession Agreement details the policy, regulatory, operational, and financial and the legal framework necessary for the project to commence and function. The IFC had a primary role in providing international legal counsel to draft the agreement.
The Government established a high-level working group including senior representatives from all relevant ministries and agencies to discuss and negotiate the Concession Agreement. Renegotiations had to occur due to the fact that originally, the venture was designed as an independent power producer (IPP) project. In this model, the private investor would only be responsible for the generation of electricity and the power would then be sold to the state-owned national electricity utility, Barki Tajik.
However, problems were noticed immediately. Such an arrangement would require the private venture to depend on revenues from a bankrupt state. The first change made was to the structure of the project, enabling the private investor to take over all operational functions. The second change ensured affordability by the customer base. The Government, as well as international institutions, mobilized additional funding to implement a social protection plan.