Uzbekistan Business & Economy - The Times Of Central Asia

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Uzbekistan Signs Strategic Partnership Agreement with Abu Dhabi Future Energy Company

Uzbekistan Signs Strategic Partnership Agreement with Abu Dhabi Future Energy Company Following a meeting between the President of Uzbekistan and a delegation of leading UAE enterprises led by Minister of Investment, Muhammad Hassan al-Suwaidi, an agreement on a strategic partnership with the Abu Dhabi Future Energy Company (Masdar) was signed. On December 2nd, President of Uzbekistan, Shavkat Mirziyoyev received a delegation of leading UAE companies led by the Minister of Investment and Chief Executive Officer of the ADQ holding, Muhammad Hassan al-Suwaidi. The meeting was held as part of the business program in Dubai, where the UN climate conference (COP28) took place a day earlier. The delegation also included the heads of leading Emirati companies, TAQA, Jasim Hussein Thabet, and Masdar Muhammad Jamil al-Ramahi. The parties discussed issues of supporting and promoting joint projects in trade, economic and investment cooperation. After the meeting, President Mirziyoyev presented the Chief Executive Officer of Masdar, Muhammad Jamil al-Ramahi, with a state award of Uzbekistan - the Order of Dustlik for his personal contribution to the development of Uzbek-Emirati multifaceted relations. Masdar is building several solar photovoltaic power plants in Uzbekistan. In 2023, the company began the construction of three photovoltaic power plants - Nur Jizzakh for 220 MW in the Jizzakh region, Nur Samarkand for 220 MW in the Samarkand region, and Nur Sherabad for 457 MW in the Surkhandarya region. For these projects, it attracted loans of almost $400 million.

Uzbekistan to Expand Investment in Renewable Energy

Uzbekistan to Expand Investment in Renewable Energy The Ministry of Investment, Industry and Trade and the Ministry of Energy of Uzbekistan and the Ministry of Investment of the UAE have signed a Memorandum of Understanding aimed at developing investment cooperation in priority sectors of the economy, including the production, transmission and distribution of renewable energy. The document seeks to create a solid basis for attracting investments, implementing joint research programs, and exchanging technical knowledge, skills and experience between government agencies, regulatory authorities and private sector enterprises of both countries. The forms of cooperation provided for by the agreement include the identification, exchange and assessment of projects and investment opportunities for the production of wind, solar, and hydroelectric power plants, and the construction of energy storage facilities. To ensure the effective implementation of the document, a joint plan for further activities will be developed, including specific mechanisms and responsible structures for its timely implementation.

Uzbekistan to Take Measures for Rational Use of Water Resources in Agriculture

Uzbekistan's President, Shavkat Mirziyoyev, led a government session last week focused on strategies for the efficient utilization of water resources. Discussions highlighted that 20% of Uzbekistan's water resources originate within the country, while the rest is sourced from neighboring territories. Ongoing climate shifts are progressively diminishing these water sources, with forecasts projecting potential water deficits of up to 15 billion cubic meters in Uzbekistan by 2030. Despite these challenges, there's notable inefficiency in water usage. A staggering 90% of Uzbekistan's water resources are allocated to agricultural purposes. For instance, irrigating a single hectare of cotton fields consumes 10-11 thousand cubic meters of water yearly, whereas countries with similar climates and soil profiles use 2-3 times less water. The annual expenditure on water management in Uzbekistan amounts to approximately $1 billion, making it the fourth-largest recipient of budget allocations following education, healthcare, and agriculture. Regrettably, due to flawed calculations and persisting outdated methodologies in water resource management, the desired efficacy isn't realized. The president emphasized that the upcoming year will be a transitional phase, shifting toward an emergency mode to conserve water. A primary goal is the concrete lining of canals and ditches. It's estimated that about 14 billion cubic meters, or 36%, are lost annually in natural irrigation systems without yielding any economic benefit. Most significant losses are observed in regions like the Republic of Karakalpakstan, Namangan, Navoi, Khorezm, and Bukhara. The water sector has declared a pivotal year for canal concreting, aiming to concrete 1,500 kilometers next year—four times more than in 2023. By 2025, the target is to concrete at least 2,000 kilometers of canals. Another crucial objective is the adoption of water-saving technologies. Uzbekistan, with 4.3 million hectares under irrigation, has introduced water-saving technologies in 30% of these areas. In these clusters and farms, efficiency gains of 30-40% in water usage alongside increased productivity have been achieved.

ADB Helps Support Privatization, Expand Lending to MSMEs in Uzbekistan

According to a press release by the Asian Development Bank (ADB), the bank, in partnership with Sanoat Qurilish Bank (SQB) have signed a $50 million senior convertible loan to support Uzbekistan’s privatization of state-owned banks, which will strengthen the banking sector, and contribute to economic growth and job creation. The International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD) are parallel lenders. The loan will be used to help SQB expand its financing to underserved micro, small, and medium-sized enterprises (MSMEs), including those owned or led by women (WMSMEs). Portfolio diversification will contribute to SQB's transition into a fully universal commercial bank by serving a broader customer segment. ADB will also provide technical assistance to help SQB implement its transformation roadmap. “ADB fully supports the Government of Uzbekistan in its transformation to a vibrant and inclusive market economy and its implementation of banking sector reforms”, said ADB’s Director General of the Private Sector Operations Department, Suzanne Gaboury. “This project will support the stability of the country’s banking system, capitalization and deposit levels, while strengthening resilience and lending to climate projects and underserved MSMEs and WMSMEs”. According to ADB’s Uzbekistan Country Director, Kanokpan Lao-Araya, “MSMEs continue to struggle to secure commercial financing to fund their growth, with women-owned enterprises being the most affected. ADB is supporting an enabling environment in Uzbekistan for MSMEs gain easier access to markets, as well as providing much needed financing to close the financing gap for MSMEs. ADB’s partnership with SQB builds on those two objectives”. MSMEs play a significant role in Uzbekistan’s economy, comprising the majority of registered businesses and employing 74% of the workforce. However, access to financing remains a challenge, with only 13% of the sector having access to commercial loans. Women-led businesses face an even greater financing gap, estimated at $2.7 billion, with loans to women-owned businesses making up just 2.5% of total bank loans.

ACWA Power to Build Green Hydrogen Plant

The Ministry of Investment, Industry and Trade of Uzbekistan on July 10 hosted negotiations between Minister Laziz Kudratov and Mohammad Abunayyan, Chairman of the Board of ACWA Power. The parties discussed implementation of the company’s current portfolio of projects in Uzbekistan and prospects for expansion of investment cooperation in energy and chemical industry, the Uzbek ministry said. Today the investment portfolio of the Saudi company in Uzbekistan includes 8 projects with a total cost of over 6.8 billion USD and design capacity of more than 5.5 GW. It was emphasized that the success of the company plays an important role in promoting Uzbekistan as a comfortable investment destination and a leading center for introduction of renewable energy sources in the Central Asian region. Constructive exchange of views was held on topical issues relating to implementation of current projects on construction of a combined cycle power plant in Syrdarya region with a capacity of 1.5 GW, wind power plants in Bukhara region and Republic of Karakalpakstan with a total capacity of 2.6 GW and solar power plants in Samarkand and Tashkent regions with a capacity of 1.4 GW. An agreement was reached to take a set of practical measures to ensure accelerated commissioning of the projects. A number of new initiatives were considered separately. Thus, the parties welcomed the completion of necessary procedures and reaching new agreements on the project of construction of a plant for the production of "green" hydrogen, with a capacity of 3 thousand tons per year. The start of construction works is scheduled for the fall of this year. In addition, a discussion was held on the prospects for accelerating the project of localization of equipment production for wind turbines. Each of the parties stressed that the implementation of this project in Uzbekistan will significantly expand the geography and volume of renewable energy sources and increase the availability of these technologies in the domestic market.

Kazakhstan and Uzbekistan to Bring Mutual Trade to $10 Billion

On November 9th, Alikhan Smailov, the Prime Minister of Kazakhstan, made an official visit to Tashkent, Uzbekistan, for the 16th summit of the Economic Cooperation Organization. Prior to the event, he met with the President of Uzbekistan, Shavkat Mirziyoyev. During their meeting, Smailov extended warm greetings from the President of Kazakhstan, Kassym-Jomart Tokayev, and highlighted the strong strategic partnership between the two nations, based on trust and mutual understanding3. Smailov pointed out that "Uzbekistan is one of the largest trade partners of Kazakhstan. Our countries account for about 70% of all trade in Central Asia. At the end of last year, trade turnover increased by 30%, and for the first time reached the milestone of $5 billion. We are actively working to bring mutual trade to $10 billion”. Mirziyoyev reciprocated the sentiment, noting that the strategic agreements between Kazakhstan and Uzbekistan were being systematically realized across various sectors, including trade, transportation, and water management5. He added, “All issues we have are moving forward; I think there is not a single unresolved issue. In terms of trade, the projects we have agreed on with the President of Kazakhstan will help us reach new frontiers”. In line with these discussions, Arman Shakkaliev, Kazakhstan’s Minister of Trade and Integration, and Laziz Kudratov, Uzbekistan’s Minister of Investment, Industry and Trade, signed an agreement to regulate the activities of the International Centre for Industrial Cooperation “Central Asia”7. This center, set to be established on the border of the two countries, will house production sites, warehouses for goods and equipment storage, and transport infrastructure. The aim is to expedite cargo delivery and reduce logistics costs. The Industrial Cooperation Centre is expected to stimulate the creation of new production facilities and jobs, aid in the processing of agricultural and industrial products, and provide logistics services for goods transportation. It's hoped that the centre will enhance transport efficiency and expedite customs clearance processes. The signing of this agreement is a practical step towards the realization of the project. The launch of the Industrial Cooperation Centre is poised to serve as a catalyst for the further development of international trade and economic integration between Kazakhstan and Uzbekistan. It's also projected to contribute to increasing bilateral trade turnover to up to $10 billion.