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Eurasian Business Briefing Uzbekistan

Russia and Uzbekistan sign $3.5bn in deals as Mirziyoyev heads to Moscow

Uzbek President Shavkat MirziyoyevWith Uzbekistan’s new President Shavkat Mirziyoyev due to arrive in Moscow tomorrow, the Uzbek foreign ministry has announced that the two countries have signed off on $3.5bn of bilateral deals covering project finance, the joint manufacturing of agricultural machinery and a number of agreements relating to the supply of Uzbek fruit and vegetables to Russia with oil set to flow in the opposite direction. The announcement (more…)

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South Korea agrees to build $350m terminal for Tashkent airport

Tashkent airport: The South Korean government yesterday agreed to invest $250m in the construction of a new terminal (more…)

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Uzbek succession speculation begins with Islam Karimov in intensive care

Uzbek President Islam KarimovUzbekistan’s President Islam Karimov is in intensive care after suffering a brain haemorrhage, according to his daughter Lola Karimova-Tillyaeva. “His condition is considered stable, ” she wrote on her Instagram account yesterday, apparently seeking to counter claims that her father had in fact died. (more…)

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Italy’s Salini Impregilo wins $5bn 13kWH Rogun HPP and dam contract

Vakhsh River TajikistanItaly’s Salini Impregilo has won the contract to design and build the  Rogun Dam hydro power plant in Tajikistan, it was announced last week. The new plant will be the largest of its kind in Central Asia, with an annual generation capacity of 13 kWh. The cost of the project (more…)

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Chinese Silk Road investment up 20% to $15bn, claims President Xi

Xi addresses Uzbek parliament 22 06 16Silk Road investment: Chinese companies invested nearly US$15bn in countries along the new Silk Road last year, 20% more than in 2014, President Xi Jinping told a special session of Uzbekistan’s parliament yesterday. Trade between China and participating countries topped the $1trn mark in 2015, he added, and (more…)

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Presidents Xi and Karimov bless opening of 19km Qamchiq rail tunnel

Qamchig rail tunnelChinese President Xi Jinping and Uzbek President Islam Karimov this week used a video link to watch the official opening of the Qamchiq railway tunnel, a key link in the Angre-Pap line connecting the Uzbek capital of Tashkent with Namangan. The tunnel, which runs (more…)

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South Korean investors announce plans to buy into Uzbek banking sector

Uzbek banksUzbek banking sector: Investors from South Korea are planning to buy 15% stakes in two Uzbek banks over the course of the next 18 months, according to reports in the  Novosti Uzbekistana news agency this week. The banks in question (more…)

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Uzbek GDP grows 7.5% in Q1

TashkentUzbek GDP grew by 7.5% between January and March compared to the same quarter in 2015, the government’s press service is reporting. It put the rise down to the ‘effective measures’ taken by Tashkent to (more…)

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Uzbek food industry gets $596m cash injection

Uzbek farmerUzbek food industry: Uzbekistan is planning to invest $595.9 m in the development of its food industry over the next five years, according to the website of its Ministry for the Economy. The plan provides for the development, redevelopment (more…)

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Angren-Pap rail line gives Tashkent ammunition in Tajik ‘water wars’

Fergana ValleyConstruction of the new $1.9bn Angren-Pap electrified railway line connecting Uzkbekistan’s territories in the Fergana Valley with the capital Tashkent has been completed, it was announced this week. The new line means (more…)

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Uzbekistan Railways unveils plans for $800m upgrade programme

Bukhara railway station UzbekistanUzbekistan Railways plans to spend $800m on the implementation of 28 projects this year, it announced this weekend. The projects include the completion of the Angren-Pap line; the upgrade of the Samarkand-Bukhara line to accommodate high-speed trains; the construction of a new line between Navoi and Misken via Kanimekhand; the (more…)

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Uzbek economy to grow by 7.8%, predicts President

President Islam Karimov Uzbekistan

President Islam Karimov Uzbekistan

Uzbek economy: Uzbekistan is expecting to receive an equivalent of $17.3bn in capital investment in the coming year, 23.5% of which will be from FDI, Uzbek President Islam Karimov said in his New Year address to the nation. The country’s economy would grow by 7.8% and real per capita income by 9.5%, he predicted, (more…)

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Gazprom breaks with Turkmengaz and ups gas imports from Uzbekistan

GazpromGazprom has announced that it will be increasing the volume of gas it imports from Uzbekistan this year after terminating its contract with Turkmengaz. The move comes after a long-running dispute with Turkmenistan’s state-run gas supplier over pricing that culminated in the Russian energy giant filing a lawsuit with the arbitration courts in Stockholm earlier in the year. 
TurkmengazRussia and Turkmenistan (more…)

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Karimov orders Uzbek companies ordered to hold 15% foreign capital

President Islam Karimov Uzbekistan

President Islam Karimov

Uzbek companies must ensure that at least 15% of their authorised foreign capital belongs to overseas investors, President Islam Karimov decreed last week. The move is aimed at attracting more overseas investors and managers and to create more favourable conditions for their active participation in corporate management, the modernisation and technological re-equipment of the country’s production base and to help make domestically manufactured goods more competitive in export markets. It is also (more…)

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Cotton, electricity and the Aral Sea: The troubled waters of Central Asia

Tian Shan glacier

Tian Shan glacier

Fed by the melting glaciers of the Tian Shan and Pamir Mountain ranges on Kyrgyzstan’s and Tajikistan’s borders with China, the Amur Darya and Syr Daria rivers meander westward for over 2,000 kilometres through Uzbekistan, Kazakhstan and Turkmenistan to what remains of the Aral Sea. Their waters bind the five states of Central Asia together in a frequently uneasy interdependence, with the downstream demands of the Kazakh, Uzbek and Turkmen agricultural sectors at constant odds with their upstream neighbours’ ambitions to boost their hydroelectric power production.
Before the Soviet era, the combined volumes of the two rivers flowing into the Aral Sea equaled those of the Nile, but central economic planning put paid to that as Moscow went all out to increase Uzbek cotton production. The amount of water diverted from the Amur Darya and Syr Daria for irrigation purposes doubled between 1960 and 2000, with disastrous consequences for the Aral Sea and its surrounding eco systems. Over the past four decades, the water levels of what was once the fourth largest lake in the world have dropped by 23 metres.
aral seaThe problem did not disappear with the collapse of the Soviet Union. Cotton remains Uzbekistan’s main cash crop to this day, with raw cotton and non-retail pure cotton yarns accounting for around 20% of all exports making it the world’s fifth largest cotton exporters. Tashkent’s dependence on its “white gold” is not going to go away any time soon.
Chronically short of their own hydrocarbon reserves, both Tajikistan and Kyrgyzstan see the development of their hydroelectric power industries as a means of simultaneously meeting their domestic power requirements and of generating additional income through exports to South Asia. Both are urgently needed. As a result, water discharges for power generation are already taking precedence over the agricultural demands of their downstream neighbours.
On the upside – at least from their point of view – neither Tajikistan nor Kyrgyzstan are currently producing hydroelectric power at anything like their full capacity. Recent estimates suggest that Tajikistan has the potential to exponentially increase its annual hydropower capacity from 17.09bn kWh in 2013 to 300bn kWh a year, and Kyrgyzstan from 14.9bn kWh in 2011 to 142bn kWh.

Naryn River, site of proposed Kambar-Ata Dam

Naryn River, site of proposed Kambar-Ata Dam

David Trilling

If Tajikistan is going to get anywhere near to achieving this dream, then a good starting point would be to find the $6bn or so that it needs to complete the immense 13bn kWh Rogun dam across the Amu Darya Vakhsh River subsidiary. With the World Bank remaining non-committal on the question of funding, there has been speculation that Russia could finance the project as a means of luring Tajikistan into the Eurasian Economic Union; Moscow has already sunk $2bn into Kyrgyzstan’s Kambar-Ata Dam, one of six planned across the Naryn subsidiary of the Syr Daria. As for the AIIB, exactly how it deals with project that pitches two of its founder members against each other remains to be seen. It may be the first such dilemma faces, and it is very unlikely to be the last.
The fact remains, however, that if Central Asia is going to live up to Beijing’s expectations of a thriving economic zone, then something will have to be done about its power grid – and fast.
While the ADB estimates that combined electricity production in Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan has been increasing in recent years, it is not keeping pace with rising demand across the region, a state of affairs exacerbated by chronic underinvestment in its infrastructure. Most of Central Asia’s generation and transmission equipment was installed during the Soviet and many power plants are rapidly approaching the end of their working lives.
Tajik energy crisisThe results are predictable with Tajikistan’s Consumers Union Barknest recently reporting that many rural communities only had access to electricity nine hours a day and as little as 7.5 in some of the more remote districts. It is a situation made worse by the fact that, due to a lack of gas supplies, residents also have to use electricity for heating and cooking purposes. Again according to the ADB, some $36bn needs to be invested in Central Asia’s power sector by 2022 principally in the upgrading of existing and construction of new power plants, transmission lines and substations; and, of course, to strengthen power exchange between the countries of the New Silk Road.
In the meantime, the Aral Sea continues to die with the Uzbek authorities facing accusations that it would rather watch it dry out as this would make it easier extract the oil and gas deposits that lie beneath its seabed. In May 2015 its President Islma Karimov announced that $300m had been put aside for initial exploration to be carried out by an international consortium consisting of the Uzbekneftegaz National Holding Company (NHC), Russian’s Lukoil and China’s CNPC.
For whatever reason, the government in Tashkent is now focussing on plans to help improve the living conditions for people living on the perimeter of the Aral desert rather than bringing the sea back.; but creating a few lakes for fish farming or planting some saxaul trees on the seabed to reduce the spread of toxic salts are not going to reverse one of the world’s worst man-made environmental catastrophes.

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Uzbekistan privatisation programme kicks off with $12.4bn in FDI

Ferghana Azot fertilizer plant, Uzbekistan

Ferghana Azot fertilizer plant, Uzbekistan

Trend D.Azizov/

Uzbekistan privatisation: Over 100 deals worth a total of $12.4bn were set up at last week’s International Investment forum in Tashkent, according to Uzbekistan’s Deputy Prime Minister Rustam Azimov, after the country announced plans (more…)

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Uzbekistan’s GDP grows 8% in first half of year

Uzbek cotton pickersUzbekistan’s GDP grew by 8% in the first half of this year, according to official statistics presented to the Cabinet of Ministers in Tashkent this week, with retail trade (15%) consumer goods (10.1%) and services (12.95) all enjoying double-digit growth. Agricultural production was up by 6.6% while over 9,000 private homes were commissioned and nearly 750,000 new created, 451,000 of them in rural areas. 

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Shandong-Uzbekistan freight train service opens for business

Train leaving Binzhou railway stationShandong-Uzbekistan freight train service A new cargo rail service linking Binzhou City in China’s eastern Shandong Province and Uzbekistan began on Friday when the first train left Binzhou on a 7-day, 5,630-km journey that will take it through Kazakhstan. Two further (more…)

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ADB downgrades Central Asian growth forecast

Asian Development BankCentral Asian growth: The Asian Development Bank (ADB) has revised its growth forecast for Central Asia down from 3.5% to 3.3% for 2015 and from 4.5% to 4.2% for 2016, as the region’s economies come to terms with lower global commodity prices and the Russian recession.
The ADB’s Asian Development Outlook 2015 (ADO 2015) (more…)

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$4.3bn earmarked to save Aral Sea

Aral SeaUzbekistan’s government has announced that $4.3bn is to be spent over the next three years to counter the depletion of water in the Aral Sea and to boost the region’s economy,
The program provides for $1.09bn to rationalise use of the region’s water resources; $321.2m for projects aimed at increasing employment; $433.7 million to the population’s health; and $158m towards the restoration of the region’s ecological system and biological diversity. The remaining $2.29bn will go towards the modernisation of production and the improvement of infrastructure and will be financed through foreign loans ($3.5 billion), international grants ($200 million), and funds from the Uzbek government.
Located in the desert between Kazakhstan and Uzbekistan, the Aral Sea was the world’s fourth-largest lake before 1960, but has almost halved in size in the ensuing 50 years, largely because of the Soviet government’s decision to divert the water from the Amu Darya and Syr Darya rivers that run into it to boost agricultural production in the region, particularly the water-intensive cotton industry.
In 1993, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan set up the International Fund for Saving the Aral Sea.

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