BAKU, Azerbaijan, December 20. Trend News Agency presents an overview of the most important cooperation points between Uzbekistan and International Financial Institutions (IFIs) in 2023.
The World Bank
In March of 2023, the WB allocated $12 million for the construction of two solar power plants with a total capacity of 440 MW in Uzbekistan’s Samarkand and Jizzakh regions (to $6 million for each of the plants).
According to the WB, the financing of the solar power plants is carried out within the framework of the “Scaling Solar 2 Project for Uzbekistan” program.
The WB notes that the solar power plants will generate 1.1 Terawatt-hours (TWh) of renewable electricity per year. The plants will also prevent over 100,000 tons of carbon emissions per year.
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In April of 2023, WB expressed its readiness to allocate $296 million for Uzbekistan to support the country’s projects for improving energy efficiency in social facilities and the project of restoring degraded forested lands.
According to Prime Minister of Uzbekistan Jamshid Kuchkarov, from the total amount of money, some $143 million in Uzbekistan will improve energy efficiency in social facilities, while some $142 million will make it possible to restore degraded forested lands in the country.
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In July, The World Bank has provided a $46.25 million grant to Uzbekistan for reducing greenhouse gas (GHG) emissions.
The project, called Innovative Carbon Resource Application for Energy Transition (iCRAFT) in Uzbekistan, marks the World Bank's first "policy crediting" initiative.
The grant specifically aims to generate carbon emission reduction credits that can be traded in international carbon markets. iCRAFT will be the first international carbon market initiative in Uzbekistan and Central Asia under the Paris Agreement, an international treaty focused on limiting global temperature increases by lowering global GHG emissions.
Over the duration of iCRAFT until 2028, the grant will be disbursed annually to reward energy subsidy reforms that achieve specific emissions reductions. It is projected that Uzbekistan could reduce approximately 60 million metric tons of CO2 throughout iCRAFT's life cycle, with the project providing payment for around 2-2.5 million metric tons of CO2. The remaining emissions reductions can be sold in international carbon markets using the systems and processes developed and tested under the project.
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In September 7, the World Bank revealed its plans to start implementation of Development Policy Operation (DPO-6) in Uzbekistan.
DPO is a low-interest concessional loan provided by the World Bank to support the implementation of important economic and social reforms that accelerate the country's transition to an inclusive and competitive market economy.
Issues of developing urbanization and land reform programs, elimination of problems in areas with shortage of water and repair of malfunctioning channels were also considered during the meeting.
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In December, the WB has provided funds for the construction of a power plant (PP) with a capacity of 500 kW in Uzbekistan.The plant will be established in the Chirchik district of the Uzbek Tashkent region.
The substation is said to have a receiving capacity of 1602 MVA, which will significantly reduce the load on the Keles substation in the Tashkent region. Construction and installation work is expected to be completed by the end of 2024.
Meanwhile, in June of 2023, Antonella Bassani, WB Vice President for Europe and Central Asia said that Uzbekistan is one of the largest beneficiaries of the World Bank with the project portfolio tripling and currently exceeding $11 billion.
The VP highly appreciated the modern level of fruitful cooperation and confirmed the World Bank's commitment to consistent and comprehensive support for the program of irreversible reforms in our country.
The World Bank's program in Uzbekistan is one of the largest in the Europe and Central Asia region, consisting of 29 projects with net commitments totaling around $6 billion. These initiatives support reforms and modernization in key sectors, enhance people's well-being, and contribute to the country's economic growth.
Asian Development Bank
In February of 2023, the Asian Development Bank (ADB) has approved a $150 million loan and a $400,000 grant to improve Uzbekistan’s economic management. The allocated grant is said to help the Uzbek government reform the legal, regulatory, and institutional framework of the country, as well as to strengthen the effectiveness and transparency of fiscal management.
Furthermore, the development program also supports Uzbekistan’s transition to green economy, while a clear national plan will help the government meet its commitments under the Paris Agreement, upgrade infrastructure, and train its labor force to obtain the necessary skills required for green jobs.
The loan will also help to expand the coverage of social protection and raise the effectiveness of anticorruption and audit systems.
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In April, the ADB and Uzbekistan revealed their plan to implement two new projects worth $130 million for the development of the country’s agriculture sector.
Besides the agricultural sector of Uzbekistan, the bank also supports the country’s energy sector, in particular, increasing the deployment of renewables.
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Moreover, in the same month, Saudi Arabia's ACWA Power and the ADB signed a loan agreement worth $174 million for the construction of wind power plants in Uzbekistan’s Bukhara region.
To finance this ACWA Power's construction project, a special consortium of international creditors was created. It is expected that each plant will consist of 79 wind turbines and both of them will generate more than 3,200 GWh of electricity, thus reducing about 2 million tons of carbon dioxide equivalent a year.
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In May, the ADB and Uzbekistan signed a Memorandum of Understanding worth $352.2 million on the digitalization of the country’s energy sector.
Owing to the sum of money allocated by the ADB, Uzbekistan will be able to restore and modernize distribution energy substations, as well as strengthen the activities of the state-owned energy distribution companies.
As a result, will be improved the reliability and quality of energy services, as well as facilitated the transition to clean energy by reducing losses in the distribution system and greenhouse gas emissions.
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Moreover, in May of 2023, ADB and Indorama Agro LLC, a fully owned subsidiary of Indorama Corporation (IRC) and a largest cotton enterprise in Uzbekistan signed a $15 million loan to support farmers in Uzbekistan.
The loan will be used to finance advances to 3,600 farmers and other agricultural workers engaged in cotton and wheat production, as well as to prove direct agronomic support to enhance their resilience to climate change and promote sustainable agricultural practices.
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In July of 2023, the ADB allocated $125 million for a new project of "Digitization for Decarbonization - Upgrading the Power Transmission Network", which aims to support the Uzbekistan government's program in transitioning to low-carbon technologies and developing a green economy.
The ADB emphasized that since the mid-2010s, the demand for electricity in Uzbekistan has been increasing by approximately 4-5 percent annually, with the government projecting a growth rate of around 6-7 percent per year until 2030.
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In September, the ADB allocated $93 million for the "Skills development for the modern economy" project in Uzbekistan.
The "Skills development for the modern economy" project is aimed at increasing the competitiveness of Uzbekistan's industries, promoting inclusive growth through vocational training of young people and the unemployed, as well as contributing to the development of human resources as a skilled workforce in such sectors as construction, textile and clothing industry, information and communication technologies, agribusiness and food industry, machinery and equipment service.
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In October, the ADB expressed its readiness to allocate $170 million for Green Electric Vehicle Program in Uzbekistan and six other countries.
Among this total amount, $65 million will be provided as grants, while the remaining $105 million will be extended as a loan. The allocated funds will be used to eliminate barriers to the popularization of commercial electric vehicles. Additionally, the allocation will support the deployment of electric buses and related infrastructure, aiming to enhance the public transportation system.
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In November of 2023, Uzbekistan’s Uzpromstroybank and the ABD signed a loan agreement in the amount of $50 million. The signed agreement is said to contribute to achieving the goal of diversifying the resource base of Uzpromstroybank and expanding the financing of micro, small and medium-sized businesses (MSMEs).
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In December, the ADB approved a $100 million loan to support small and medium-sized enterprises (SMEs) in Uzbekistan. The Bank’s Development Program is aimed at strengthening the business environment, stimulating private sector growth and increasing the resilience of enterprises to future economic challenges.
The ADB program will support Uzbekistan in addressing key challenges faced by SMEs, in particular, access to finance and will provide financial support, simplify regulatory processes and reduce administrative barriers, which will increase trade competitiveness and improve employment opportunities, especially for women and youth.
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Moreover, in December, the ADB approved a $240 million loan to Uzbekistan for the reconstruction of 700 kilometers of rural roads. The new investment project is aimed to make the rural road infrastructure safer and more resilient to climate change, as well as improve transport links and promote rural development.
The main focus of the investment project will be on local and inter-farm rural roads in 12 regions and the Uzbek Republic of Karakalpakstan. Uzbekistan accounts for 17 percent of the ADB projects in the Central and Western Asia areas, placing it second in the region based on this criterion.
As of 10 months of 2023, Uzbekistan has entered into agreements with the ADB for 25 projects totaling approximately $3.5 billion.
Overall, since having become a member of the ADB in 1995, Uzbekistan has received loans, grants and technical assistance totaling $10.8 billion.
European Bank for Reconstruction and Development
In February of 2023, the European Bank for Reconstruction and Development (EBRD) published data on the loan portfolio in Uzbekistan's projects. According to the EBRD, the current loan portfolio of the bank projects in Uzbekistan is estimated at 2.2 billion euros.
The major part of the investment portfolio (72 percent or 1.6 billion euros) focuses on sustainable infrastructure, 19 percent (428 million euros) – on financial institutions, and 9 percent (199 million euros) – on industry, commerce, and agribusiness, the EBRD said.
In total, the bank has invested some 3.8 billion euros in Uzbekistan's 128 projects.
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In March, the EBRD allocated a $199.96 million sovereign loan to improve irrigation systems in Uzbekistan’s Fergana Valley. According to the statement of the EBRD, owing to the sum of Uzbekistan will be able to modernize 118 obsolete pumping stations installed during the Soviet Union.
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In April, the EBRD announced readiness to offer financial support of $205 million for the development of three major solar power facilities by Masdar in Uzbekistan's Sherabad, Samarkand, and Jizzakh regions. These projects collectively aim for a total capacity of 900 MW. The EBRD will complement its loans with three revolving facilities of up to $78 million.
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In May, the EBRD extended a $25 million loan to Uzbekistan's Sanoat Qurilish Bank (SQB) to support the SQB funding base and allow the bank to expand lending to small and medium-sized businesses in Uzbekistan in local currency, including in underserved regions, further improving access to financial services for entrepreneurs in hard-to-reach areas.
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Moreover, in May, the EBRD revealed that it will provide a long-term financing of up to 28 million euros to Uzbekistan Airports JSC for equipment modernization at international airports in the country.
Furthermore, agreements have been reached between the EBRD and Uzbekistan Airports for the allocation of grant funds totaling over 1 million euros. The bank plans to engage an international consulting company to help optimize key business processes and thereby enhance the operational efficiency of Uzbekistan Airports and its subsidiaries.
This is the first example of such cooperation with a state-owned company in Uzbekistan where financing occurs directly without government guarantees.
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Additionally, in May, the EBRD allocated a $75 million grant for the construction of 15 schools in Uzbekistan's Namangan and Fergana regions.
Under this partnership, the newly established state general education schools in different regions of the country will operate based on a public-private partnership model. The maintenance and repairs of these schools will be carried out by private partners. Additionally, there are plans to renovate existing schools and construct additional buildings to accommodate the growing student population.
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In June of 2023, the EBRD provided financing for the implementation of a wind power plant project with a capacity of 100 MW, which will be developed, constructed, and operated in the Karatau mountain region of the Qorao'zak District in Karakalpakstan (Uzbekistan).
The total project costs are estimated at $118.1 million, covering expenses related to engineering, procurement, construction, non-EPC elements, and financing. Apart from the EBRD, several other international financial institutions are expected to provide support for the project.
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In November of 2023 it was revealed that the number of active projects in the portfolio of the EBRD in Uzbekistan has decreased to 82. The EBRD's loan portfolio in Uzbekistan as of November is worth 2.57 billion euros.
Investments in sustainable infrastructure projects account for 77 percent of the whole portfolio (1.972 billion euros), according to the bank.
The EBRD's active initiatives in the sphere of financial institutions accounted for 16 percent (416 million euros). Furthermore, projects in the fields of industry, trade, and agro have the smallest share of the portfolio. Their stake in the portfolio is seven percent (182 million euros).
It is worth noting that the private sector contributes for around 54 percent of the total EBRD portfolio in the country. The bank has invested over 4.47 billion euros in 146 projects in Uzbekistan.
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In December, the EBRD allocated a grant of $1.5 million for the development of the Tashkent — Samarkand toll highway construction project. The Tashkent—Samarkand toll road project entails the construction of a 305-kilometer-long six-lane highway. It is also intended to construct new bridges and overpasses over interchanges and structures, as well as to implement an intelligent transportation system.
The track's load capacity will be 13 tons and its service life will be 25 years, both of which are worldwide norms.
Meanwhile, in 2018, the EBRD adopted its five-year country plan in Uzbekistan, identifying priority areas for the Bank's operations. According to the EBRD office in Uzbekistan, these priorities include increasing competitiveness by strengthening the role of the private sector in the economy, as well as promoting green energy and resource solutions across sectors. The office said the support for increased regional and international cooperation and integration has also been one of the pillars of the Bank's cooperation with Uzbekistan.
International Finance Corporation
In May of 2023, the IFC expressed its desire to provide financial and advisory services in the amount of $300 million within the power distribution project in Uzbekistan's Tashkent. According to the program, 20 panel sessions, institutional events of the Bank and other events will be held today in the Congress Hall of the Samarkand Tourist Center.
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In September it was revealed that the volume of IFC’s investments in Uzbekistan has reached its maximum in 30 years.
Thus, the IFC allocated more than $1.6 billion to projects in Central Asia in the past financial year. The bulk of the annual funding—$1.568 billion (90 percent)—was received by Uzbekistan, which is the largest investment from the IFC since the beginning of its activity in the country in 1993.
The received investments were used to support economic growth, expand intraregional ties, and increase resilience to climate change.
The main area of work for the organization in Uzbekistan is the electric power industry. Thus, the IFC provided $150 million and assisted in attracting private financing of more than $1 billion for the construction of a thermal power plant in the Syrdarya region. Another $49 million from the corporation was allocated to create a wind power plant in Zarafshan, which is planned to be launched in 2025.
Overall, Uzbekistan received a total of 139.1 trillion Uzbek soums ($11.4 billion) in the first six months of 2023. A significant share of these investments, 59 trillion soums ($4.8 billion), or 42.4 percent, account for foreign investment and loans directed to fixed capital.
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Moreover, in September of 2023, the IFC expressed its readiness to provide a loan in the amount of $10 million to Uzbekistan’s Ipak Yuli Bank to support lending to small scale business enterprises.
The IFC investments will allow Ipak Yuli Bank to increase its loan portfolio and provide much-needed financing to the country’s small enterprises. Small scale businesses play an important role in economic development and job creation in Uzbekistan. Moreover, supporting women-owned enterprises will promote gender equality and economic empowerment of Uzbek women.
This project is a continuation of IFC's cooperation with Ipak Yuli Bank, which began in 2018. Since then, IFC has provided the bank with financing in the amount of $25 million to support small and medium scale enterprises in hopes to increase labor productivity and reduce poverty in the country. The financing provided by the corporation is in line with its project of promoting sustainable and inclusive economic development in Uzbekistan.
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In December, the IFC agreed to allocate $25 million to Uzbekistan’s 'Korzinka' local supermarket chain for the expansion of its infrastructure. The chain's representative said the funds will be used to build a new distribution center for present demands as well as future supply chain network development goals.
The new hub will provide new job possibilities as well as assistance to local farmers and suppliers. The IFC will also help 'Korzinka' develop green building and gender equality practices as part of the project.
The company's representative said the new hub's construction will begin in 2024, with the first phase of the project projected to be completed in 2025.
European Investment Bank
In January of 2023, the European Investment Bank (EIB) revealed that the list of EIB operations in Uzbekistan includes a water framework loan in the amount of 100 million euros aimed at support improvements in water supply, as well as wastewater collection and treatment.
Another loan in the amount of 100 million euros includes the support for energy efficiency designed as a credit line, aimed at the implementation of energy-efficiency investments of small and medium-sized enterprises, mid-cap companies and private sector entities in Uzbekistan.
Moreover, the EIB has provided a loan in the amount of 43.7 million euros for 100 MW solar photovoltaic (PV) plant located in Samarkand region promoted by French Total Eren.
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In April, the EIB provided $83.6 million for Uzbekistan’s solar program to develop photovoltaic plants with the region’s largest total output.
The EIB financing in Uzbekistan focuses on multiple infrastructure and economic sectors such as energy efficiency and renewable energy, as well as water management and access to finance for SMEs in the aftermath of the COVID-19 pandemic.
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In October of 2023, EIB revealed its plans to open a representative office in Uzbekistan’s Tashkent.
The remark was made during a meeting between Uzbekistan’s Foreign Minister Bakhtiyor Saidov and Vice President of EIB Teresa Czerwińska in Luxembourg. Uzbekistan’s foreign minister noted that the parties discussed further cooperation in many promising areas, including macroeconomic development and green energy.
The overall volume of EIB's investments in Uzbekistan's projects amounts to 410 million euros. The bank continues to explore opportunities for engaging in access to finance support for the private sector in this region while supporting, as much as possible, their link to more green activities and practices.
Asian Infrastructure Investment Bank
In August of 2023, The Asian Infrastructure Investment Bank (AIIB) allocated funds amounting to $248.4 million to Uzbekistan for the implementation of the second phase of a project for developing water supply and sanitation systems in the Uzbek Bukhara region. In 2020, $385 million was allocated for the implementation of the first phase. This time, the AIIB is providing a loan of for a period of 25 years.
The total cost of the second phase of the project is $281.25 million. Uzbekistan's contribution to the project's implementation in terms of value-added tax coverage and customs benefits is estimated at $32.85 million.
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In September, the AIIB invested $25 million in Uzbekistan’s Uzpromstroybank sustainability bonds. The proceeds will be used to finance green projects, including ones to improve energy efficiency, reduce greenhouse gas emissions, ensure water security, support women-led initiatives, and finance small and medium-sized businesses.
These are the first green bonds issued as part of the sustainable financing program of the JSCB "Uzpromstroybank". The bonds are issued in accordance with the principles of green and social bonds of the International Capital Markets Association.
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In November, Uzbekistan and the AIIB discussed the progress of the bank’s current investment program in Uzbekistan and the three-year plan of promising projects on the AIIB's sovereign financing for 2024-2026.
Members of the AIIB commended the reform advancements in Uzbekistan and indicated their eagerness to engage in the holistic enhancement of the country’s infrastructure and the improvement of its citizens' standard of living. Following the meeting, both sides agreed on taking action to put the proposed initiatives and agreements into practice.
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Moreover, in September it was announced that the ninth annual meeting of the AIIB Board of Governors in 2024 will be held in Uzbekistan’s Samarkand.
As of today, the AIIB investment portfolio in Uzbekistan includes 13 projects worth more than $2.4 billion in the fields of energy, infrastructure development, transport, and medicine, including $394 million to finance the development of solar panels in the Uzbek regions of Samarkand, Jizzakh, and Surkhandarya.
