Uzbekistan Business & Economy - The Times Of Central Asia

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Central Asia Seeks Increase in Trade with China

On September 12, the Central Asia-Jiangsu Trade Center, a multifunctional platform showcasing exports from Kazakhstan, Uzbekistan, Tajikistan, and Turkmenistan, opened in Nanjing, the main city of Jiangsu Province in eastern China. According to the Kazakh Ministry of Trade and Integration, the operation of the Center in Jiangsu Province, known for its developed infrastructure, will facilitate access to the huge Chinese market for all five Central Asian countries. Plans are now in place to launch a similar multifunctional center in Kazakhstan’s capital, Astana, to showcase Chinese and Kazakh goods. Official statistics show continued growth of trade turnover between Kazakhstan and China. During the first seven months of this year, bilateral trade increased by 2.8% compared to the same period in 2023, and amounted to $16.8 billion. Between January and July 2024, trade between Kazakhstan and Jiangsu Province grew by over $1 billion, from $723.3 million to $1.758 billion. As reported by Kazakh Minister of Trade Arman Shakkaliyev, Jiangsu Province currently imports products, mainly from the industrial and agricultural sectors, worth more than $266 billion annually.

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Kara-Suu Crossing Reopens on Kyrgyz-Uzbek Border

On September 12, the Kara-Suu checkpoint was reopened at the border between Kyrgyzstan and Uzbekistan. Located near the town of Kara-Suu in Kyrgyzstan’s southern Osh region, on the border with Uzbekistan’s Andijan region, the Kara-Suu crossing was closed 14 years ago. It has reopened amid the two neighboring states' improved political and economic relations. Speaking at the checkpoint's opening ceremony, Bakyt Torobaev, the Deputy Chairman of Kyrgyzstan’s Cabinet of Ministers, emphasized that its reopening will be beneficial to citizens of both countries. "Previously, many Kyrgyz and Uzbek citizens had to stand in lines at the Dostuk checkpoint to cross the border. The opening of Kara-Suu will solve the problem of queues when crossing the border. The opening of this checkpoint is an important step towards strengthening economic, social, and cultural ties between our countries and increasing tourist flows," Torobaev said. On the same day, the renovated Ken-Sai and Uch-Kurgan border checkpoints were opened between the Jalal-Abad region in Kyrgyzstan and the Namangan region of Uzbekistan. According to official statistics, more than 14 million people crossed the Kyrgyz-Uzbek border in 2023, and in the first eight months of 2024, this figure reached 11 million, 1.5 million more than in the same period last year. In 2023, trade between Kyrgyzstan and Uzbekistan amounted to $693.6 million. In the first seven months of 2024, it reached $428 million, a 6.7% increase compared to the same period in 2023. During a state visit to Uzbekistan back in July, Kyrgyzstan’s President Sadyr Japarov and Uzbek President Shavkat Mirziyoyev focused on measures to increase bilateral trade to $2 billion in the coming years and launch a “green-light corridor” for the transportation of agricultural produce between the two countries.

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Uzbekistan Begins Processing Afghan Crude to Alleviate Energy Shortages

Uzbekistan’s Saneg oil refining company has begun processing Afghan crude oil at its Fergana refinery, to help ease Afghanistan’s energy shortages under Taliban rule. The first shipment of oil was transported by rail from the Hairatan terminal in Afghanistan's northern Balkh province. Afghanistan faces a significant energy crisis due to supply issues from Iran and Turkmenistan. The Taliban wants to restart domestic oil production to reduce its dependence on imports. Afghan crude oil, mainly extracted from the Amu Darya basin, is not fully used because Afghanistan needs more facilities to refine it. However, fortunately for Afghanistan, its neighboring countries to the north and west are willing and capable of supplying electricity, gas, and light oil products so that the country can, to some extent, improve its energy security. The refining agreement represents one of the first cross-border collaborations for Afghan crude oil, despite the historically complex relations between Afghanistan and Uzbekistan. Other countries, such as Russia and Kazakhstan, are looking at similar opportunities to gain market share and indirectly support the Afghan economy. This shows how the Central Asian countries are changing their strategies while Afghanistan is isolated internationally. For example, at the end of April this year, a delegation from Kazakhstan paid an official visit to Kabul, where a meeting of the Kazakh and Afghan businesses and an exhibition of Kazakh products were held. The visit to Kabul shows Astana’s intention of using trade to improve Kazakhstan’s relations with the new Afghan government. Saneg’s initiative to process Afghan oil is part of Uzbekistan's strategy to boost its refining and seize business opportunities in a volatile region. Exporting refined products to Afghanistan could bring extra revenue, and help a struggling neighbor. However, political instability and fragile relations may limit the long-term benefits. Companies from Russia are also interested in similar deals. Uzbekistan has also signed five agreements on mining projects in Afghanistan. These agreements, worth $1.15 billion, were part of a larger package of 35 agreements and memoranda of understanding signed between the two countries. These agreements increased Uzbekistan’s investment in Afghanistan by more than $2.5 billion.

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Russia to Join Central Asia’s Unified Energy System

Russian Energy Minister Sergey Tsivilev has announced that the Russian and Uzbek energy ministries have agreed to connect the Russian “System Operator” to Central Asia's Unified Energy System (UES). The connection itself is expected to happen soon. Uzbekistan's Minister for Energy, Zhurabek Mirzamakhmudov, has commented that this move will ensure the security and stability of the energy system in the region. These measures are expected to allow prompt response to problems in energy supply and avoid interruptions. In addition, Inter RAO has announced that it is preparing to export electricity to Uzbekistan, with the start of supplies scheduled for this fall. Central Asia's Unified Energy System was created in the 1970s. It is managed by the coordination and dispatch center in Tashkent, and allows the balancing of seasonal fluctuations in demand for electricity and water needs during the irrigation period. It currently includes Uzbekistan, Kyrgyzstan, Kazakhstan and Turkmenistan. In May it became official that Tajikistan would join the system.

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Protocol Signed to Begin Work on Uzbekistan Nuclear Plant

On September 10, Atomstroyexport, the engineering subdivision of Russia’s Rosatom State Corporation, and Uzbekistan’s Atomic Energy Agency signed a protocol on the commencement of works for the future low-power nuclear power plant (NPP) in Uzbekistan. Pavel Bezrukov, Atomstroyexport’s Director for NPP Construction Projects in Central Asia, commented that according to the protocol, Atomstroyexport will begin the documentation process for obtaining the required licenses. Otabek Amanov, Director of the NPP Construction Directorate at the Uzbek Atomic Energy Agency, added that the signing of the protocol “marks the transition to active work for implementation of the first low-power NPP project in Uzbekistan and will allow starting works at the construction site in the nearest future.” Late in August, work began to construct a residential settlement for builders of the future NPP. On May 27, Uzbekistan and Rosatom signed a contract to construct a 330 MW Russian-design low-power NPP in the Jizzakh region of Uzbekistan (6 reactors of 55 MW each). Atomstroyexport JSC is the project's general contractor. As natural gas reserves deplete and production decreases in Uzbekistan, the country strives to build new power-generating facilities, with a focus on renewable energy sources such as wind and solar power. The future nuclear plant, the first of its kind in Central Asia, is expected to help resolve the problem of Uzbekistan’s power shortages amid forecasts that the country’s demand for electricity will almost double by 2050. Neighboring Kazakhstan will hold a nationwide referendum on October 6 on whether to build its first nuclear power plant. The Kazakh government insists that building a nuclear power plant will help solve the problem of electricity shortages by 2030.

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Rise in Trade Between Kyrgyzstan and Afghanistan

In January-August 2024, trade between Afghanistan and Kyrgyzstan reached $14 million, including $6 million worth of Afghan exports to Kyrgyzstan. According to a TOLOnews report, based on data from the Afghan Ministry of Industry and Commerce, most of Afghanistan's exports to Kyrgyzstan and Uzbekistan consist of mineral water, carpets, non-alcoholic beverages, dried fruits, fruit juices, apricots, and sesame seeds. The report was issued in the wake of an announcement on September 6, in which Kyrgyzstan's Ministry of Foreign Affairs stated, "A decision has been made to remove the Taliban from the list of prohibited organizations within the territory of the Kyrgyz Republic.” The Ministry emphasized that the removal of the Taliban, the unrecognized group that effectively controls Afghanistan, from the list of banned terrorist organizations, aims to enhance regional stability and support ongoing dialogue. Confirmation was also made of Kyrgyzstan's ongoing commitment to supporting the efforts of the international community to ensure a stable and peaceful environment in both Afghanistan and the surrounding region. Reporting on the meeting between Chairman of the Cabinet of Ministers of the Kyrgyz Republic, Akylbek Japarov and the Chargé d'Affaires of Afghanistan in Kyrgyzstan, Nurullah Amin, on September 6, the Kyrgyz government’s press service outlined the parties' discussions on furthering bilateral cooperation between the two countries. On the Kyrgyz side, Japarov expressed interest in developing trade and economic relations, and transport links with Afghanistan, engaging in the joint development of Afghan mineral deposits, and cooperating in the energy, industry, and agriculture sectors.