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IFC Increases Investments in Central Asia

The International Finance Corporation (IFC), a member of the World Bank Group, says it committed $1.04 billion in Central Asia in the fiscal year 2024, which started on July 1, 2023, and ended on June 30, 2024. The funds comprised over $400 million in long-term financing from IFC’s account, $600 million in mobilization, and $35 million in short-term trade and supply-chain finance to facilitate trade flows. The funds, coupled with advisory support, aimed to increase private sector participation, create jobs, boost financial inclusion, bolster infrastructure, and support the region’s green transition. Priority sectors included finance, capital markets, renewable energy, agriculture, and infrastructure. Over the last fiscal year, IFC-supported projects in the Central Asian region created about 35,000 jobs, including more than 13,000 for women. Strengthening local financial markets is among its key objectives. To that end, the IFC invested $228 million in 10 financial institutions in Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan, with up to half earmarked for women entrepreneurs and rural enterprises. The IFC also supported local financial institutions in growing their micro, small, and medium enterprises (MSME) businesses, advancing climate finance and digital transformation, and issuing the first-ever sustainability, social, and green bonds. The IFC and the World Bank financed a new solar plant with the country’s first battery energy storage system to support Uzbekistan's green transition and climate action. The plant is expected to provide electricity access to approximately 75,000 households in the Bukhara region. In Tajikistan, the IFC invested in the country’s first green bond, issued by Eskhata Bank. The bond will support climate-smart projects and MSMEs undertaking environmental projects. In Kazakhstan and Kyrgyzstan, in addition to investments to increase financial inclusion, the IFC has been evaluating new advisory and investment opportunities, including PPPs in areas such as drinking water supply, renewable energy (including geothermal solutions for heating and cooling), railway projects as part of the Middle Corridor, and the first municipal green bonds in Central Asia. The IFC also supports Kazakhstan's accelerated methane mitigation efforts, which align with the Global Methane Pledge. Wiebke Schloemer, the IFC’s Director for Türkiye and Central Asia, reiterated its commitment to the region: “Over the past 20 years, the region has seen substantial development, with an average annual growth rate of 6.2 percent. Central Asia must leverage the green transition to boost private investment, strengthen connectivity, and reduce resource dependency to continue this growth. The IFC aims to address these goals and continue to deliver solutions where we are needed most — from increasing access to finance for farmers and women entrepreneurs to creating jobs to continue to help countries transition to net zero.”

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IFC Provides $240 Million Loan to Boost Uzbekistan’s Renewable Energy

The IFC has announced a $240 million Islamic Equity Bridge Loan for ACWA Power to boost Uzbekistan’s renewable energy sector. The announcement was made at the 8th Future Investment Initiative conference in Riyadh, Saudi Arabia. The financing will cover a 1-gigawatt solar PV plant, a 668-megawatt Battery Energy Storage System (BESS), and around 500 kilometers of high-voltage transmission lines. These projects aim to advance Uzbekistan’s clean energy goals, potentially cutting greenhouse gas emissions by 1.3 million tons of CO2 annually and generating around 2,400 gigawatt hours of electricity per year. Al Muhaidib, ACWA Power's Chief Financial Officer, stated that “we are honored to collaborate with IFC on this transformative project in Uzbekistan, which embodies our shared vision of advancing sustainable energy solutions. This initiative will establish a new standard for cross-border ACWA Power recourse funding support, effectively addressing energy demands while championing environmental sustainability.” The $240 million financing, structured as an Islamic Finance Murabaha, includes an A-Loan of up to $227.75 million and a $12.25 million trust loan through IFC’s Managed Co-Lending Portfolio Program. This funding will support ACWA Power’s equity contributions to the project’s development over the next four years. By optimizing equity returns, this structure helps project developers offer competitive tariffs and attract private investors, advancing Uzbekistan’s goal of reaching 40% renewable energy by 2030. “This project reflects IFC’s commitment to tackling climate change, accelerating the clean energy transition in emerging markets, and supporting public and private sector entities in Saudi Arabia with innovative investments in the region and beyond,” said Laura Vecvagare, IFC’s Regional Head of Industry for Infrastructure and Natural Resources in the Middle East, Central Asia, Türkiye, Afghanistan, and Pakistan. Saudi company ACWA Power’s investment portfolio in Uzbekistan now includes eight projects worth over $6.8 billion, with a more than 5.5 GW design capacity. The company’s success highlights Uzbekistan as an attractive investment hub and a leader in renewable energy in Central Asia.

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Report Addresses Air Pollution in Almaty

On October 30, the United Nations Development Programme (UNDP) in Kazakhstan, together with the Urban Center of Almaty Management University, presented the results of their joint efforts within the Green and Safe Streets Initiative, which aims to address air pollution in Kazakhstan’s largest city, Almaty. This initiative is part of the regional City Experiment Fund program funded by the Ministry of Finance of Slovakia. The Green and Safe Streets Initiative included three interrelated clusters of activities: a social impact campaign, tactical urban actions on Berezovsky, Turgut Ozal, and Kazybek bi streets in Almaty, and the installation of air pollution measuring devices, which resulted in the development of methodological recommendations. These actions helped identify further steps to address the complex challenge of improving air quality in Almaty. The actions and approaches implemented within the City Experiment Fund framework are expected to help reduce air pollution by increasing green spaces, introducing energy-efficient technologies in the housing sector, improving infrastructure for pedestrians and cyclists, and prioritizing public transport. According to IQAir, Almaty, along with the industrial city of Karaganda, has the highest level of air pollution in Kazakhstan and is among the 25 most polluted cities in the world. The primary sources of air pollution in Almaty are motor vehicles and private-sector and municipal heating that burns coal. During the winter, Almaty is covered by a deep smog that causes severe health problems and a high prevalence of respiratory diseases in the local population. According to an Asian Development Bank report, the decline in Almaty’s air quality is attributable to the city’s population growth, rapid urbanization, inefficient public transportation, and heavy reliance on coal for power generation and residential heating. The city’s valley setting exacerbates these factors, creating ideal conditions for solid temperature inversions during the late fall and winter that trap pollutants in the lower atmosphere. Additionally, the ADB report concludes that the city’s low wind speeds cause pollutants to accumulate and recirculate at the city's surface level.

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Only Half of Kazakhstan’s CO2 Emissions are Subject to State Regulation

Environmentalists say that Kazakhstan's quota system for greenhouse gas emissions covers only half of the country's emissions. This means that the state only has real leverage over large industrial polluters. Experts say that the state needs to pay further attention in the near future to emissions in three sectors: agriculture, forestry, and waste management systems. These sectors currently remain virtually uncontrolled in terms of environmental emissions. Kazakhstan ratified the UN Framework Convention on Climate Change in 1995 and, in 2016, presented its plan to the world community for transitioning to a green economy and achieving carbon neutrality. The carbon neutrality strategy envisages a 15% reduction in the 1990 level of emissions by 2030 (from 386.3 to 328.4 million tons of CO2) and achieving a net zero balance of greenhouse gases by 2060. The country has implemented a quota system for greenhouse gas emissions, and any industrial facility with emissions exceeding 20,000 tons of carbon dioxide per year is subject to quotas. However, those “polluters” whose activities result in emissions of 10 to 20 thousand tons of CO2 are subject to regulation and must report to the state for their emissions, but they are not subject to quotas. Finally, economic entities that do not even reach 10,000 tons of emissions are not obliged to notify the state about the environmental damage they cause. As a result, the state can regulate only half of emissions. Aigul Malikova, coordinator of the Central Asia Regional Environmental Network in Kazakhstan, explained to The Times of Central Asia: “In 2021, according to the national inventory, the actual volume of emissions across Kazakhstan amounted to 340 million tons, and quotas, including even additional ones, were issued for only 176 million, which means that only half of all greenhouse gas emissions fall under regulation, and in fact, we can affect only half of all emissions now. The situation is aggravated by the fact that in 2021, Kazakhstan produced one-third more emissions than the quotas granted; in 2022, this excess was 3%; that is, even regulated enterprises emit more than they are allowed under the quotas.” Malikova also noted there is no data for 2023. Still, it is already clear that the government needs to control not only major industrial polluters but also other sectors of the economy that need to be more accountable in terms of emissions regulation to achieve carbon neutrality. However, assessing their contribution to total emissions is difficult since they are not even legally required to submit reports. Paradoxically, such sectors include agriculture and forestry, which by definition should be environmentally “clean,” as well as the waste management system and housing and communal services. “For these three sectors - agriculture and forestry, waste management and housing, and communal services - data on greenhouse gas emissions could not be assessed at all. In the national reporting, this data is absent in the context of regions. In the reporting of the carbon cadastre, this data is also absent, and because they are not subject to quotas, no...

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New Era of Mining Starts in Kyrgyzstan

Kyrgyzstan will soon be issuing licenses for mining critical raw materials (CRM), which would have been almost unthinkable five years ago. However, a lot has changed in Kyrgyzstan, where a new president came to power in late 2020 and has since radically changed the form of leadership and is seeking new sources of revenue. A lot has changed in the world also, as governments are realizing the importance of CRMs for their economies and are scrambling to find supplies. Past Experiences Kyrgyzstan does not have significant reserves of natural gas or oil as most of the other Central Asian countries do. It was clear from the first days of independence that Kyrgyzstan’s main source of export revenue would come from mining, and Kyrgyzstan has significant deposits of CRMs. The Kumtor gold mine, 4,000-meters high in the mountains on the south part of the massive Lake Issyk-Kul, quickly became the economic savior for a country where most exports were agricultural products. Initial estimates put gold reserves at Kumtor at some 514 tons, but subsequent exploration revealed more gold at the site. Kumtor was a joint venture with Canadian company Cameco, but over time Cameco acquired nearly 75% of the project. There was environmental damage at the site that almost completely destroyed two nearby glaciers - Davidov and Lysiy. The most infamous incident involving Kumtor occurred in May 1998, when a Kumtor truck overturned into the Barskoon River, dumping nearly two tons of sodium cyanide into the water. Thousands of people were evacuated from area, several died, and business at Issyk-Kul, Kyrgyzstan’s premier tourst attraction, plummetted. The example of environmental problems at Kumtor turned public opinion in Kyrgyzstan against mining projects. Some 20 year later, the issue again came to the fore over the Kyzyl-Ompol uranium site in the Tong district of Issyl-Kul Province. In April 2019, nearly 30,000 people signed a petition to halt work at Kyzyl-Ompol. Anti-mining sentiment grew and by October 31, 2019, Kyrgyzstan’s parliament approved a moratorium on exploration and extraction of uranium and thorium that was signed into law in December that year. Something Everyone Wants The European Commission wrote that CRMs are crucial for “producing a broad range of goods and applications used in everyday life and modern technologies,” and noted, “Reliable and unhindered access to certain raw materials is a growing concern within the EU and across the globe.” Additionally, the attempts by many nations to wean themselves off fossil fuels have led to a surge in countries seeking to construct nuclear power plants (NPP) to meet their energy needs. There are currently some 440 operating NPPs in the world, 60 new reactors are under construction, and another 110 are planned to be built. Current President Sadyr Japarov rose to power after Kyrgyzstan’s revolution in 2020. Japarov, who is from the Issyk-Kul area, was an opponent of foreign ownership of the Kumtor gold mine, and in 2021 his government forced out Canadian company Centerra (which took over from Cameco in 2004). Kumtor was...

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Storm Washes Dead Seals Ashore on Kazakhstan’s Caspian Coast

Seals have died in mass numbers on the coast of the Caspian Sea in the Mangistau region, according to Azamat Sarsenbayev, a blogger from Aktau. “In the area of Bautino, in Tupkaragan district, after recent storms, hundreds of red-listed seal carcasses were brought ashore; scientists have now counted 151 seal carcasses. According to scientists who are now studying seals in this area (who found the carcasses), some of the dead seals have mechanical injuries on their bodies,” he said. The Akimat of Mangistau region noted that the dead seals were thrown ashore due to north-western and western winds, which caused them to be carried to the coast. The bodies of the animals are in a stage of significant decomposition. Local authorities said the carcasses will be sent for examination to determine the possible causes of the animals' deaths. Samples taken from the 151 seals have been sent to the Institute of Hydrobiology and Ecology, where specialists will conduct toxicological, histological, and virological analyses to determine the exact causes of death. According to the Akimat, the first 51 carcasses were found on October 24, and on October 25 and 26, another 100 bodies of dead seals were found on the same coast. Mass deaths of seals have been repeatedly recorded on the Caspian Sea coast. In December 2022, more than 2,500 carcasses were found in Russia's Dagestan. Studies have shown that the cause of death could be methane emissions, forming gassy areas of air above the water in doldrums, which causes suffocation in animals. In December 2023, similar incidents were recorded on the coast of Dagestan, where waves carried away about 130 seal carcasses, some of which may have been brought by currents from other regions of the Caspian Sea. Regular incidents, including the death of animals in fishing nets and water pollution, hurt the numbers of the Caspian seal, which is listed in the Red Book of endangered species.