Pannier and Hillard’s Spotlight on Central Asia: New Episode Out Now

As Managing Editor of The Times of Central Asia, I’m delighted that, in partnership with the Oxus Society for Central Asian Affairs, from October 19, we are the home of the Spotlight on Central Asia podcast. Chaired by seasoned broadcasters Bruce Pannier of RFE/RL’s long-running Majlis podcast and Michael Hillard of The Red Line, each fortnightly instalment will take you on a deep dive into the latest news, developments, security issues, and social trends across an increasingly pivotal region. This week, the team covers a heatwave sweeping across Central Asia, anti-Taliban forces briefly seizing a district headquarters in a worrying sign of cracks in the Taliban's control, a shootout between different branches of Kyrgyzstan's security forces near the Uzbek border, promising new talks between Turkmenistan and Georgia, and a major shake-up inside Uzbekistan's presidential security services. Before then turning to our main story this week, where a growing number of countries are working with Central Asian governments to forcibly return Central Asian nationals, often into incredibly dangerous situations. - Steve Swedlow (Associate Professor of the Practice of Human Rights) - Bakhtiyor "Bakh" Safarov (Central Asia Consulting)

The Central Asia Debt Divide: Why the Region’s Borrowing Risks Are Not the Same

Central Asia’s biggest debtor is not necessarily its most vulnerable. Kazakhstan accounts for roughly two-thirds of the region’s external liabilities, but much of that debt sits on corporate balance sheets rather than the government’s. Tajikistan owes a fraction of the amount, yet remains at high risk of debt distress.

The total is an approximate calculation compiled from national statistics rather than a regional aggregate published by a single institution. The countries also release their debt data for different reporting dates and use different classifications, requiring caution when making direct comparisons.

Total external debt includes obligations owed to non-residents by governments, central banks, commercial banks, private companies, and, in some countries, local subsidiaries of foreign corporations. Government external debt is a narrower measure covering liabilities that are directly serviced or guaranteed by the state.

China remains an important bilateral creditor, particularly in Kyrgyzstan and Tajikistan, while multilateral institutions provide much of the region’s infrastructure and public-sector financing.

Kyrgyzstan: Rising Debt, but a Broader Creditor Base

Kyrgyzstan’s public debt has risen alongside increased infrastructure spending and domestic borrowing, although its creditor base has become more diversified. A smaller share is now owed to a single bilateral lender, while multilateral financing and the domestic securities market have grown in importance.

According to the Kyrgyz Ministry of Finance’s public debt data, the country’s total public debt stood at approximately $8.94 billion as of May 31, 2026, including around $6.1 billion in external obligations.

The debt debate has also become part of President Sadyr Japarov’s broader economic narrative. In an interview with the Kabar national news agency published on October 8, 2025, Japarov said his government was continuing to borrow but argued that new loans were being directed toward commercial projects expected to repay their own financing rather than place an additional burden on the state budget. He also said Kyrgyzstan intended to repay its older debts by 2035.

The International Monetary Fund said in its 2026 Article IV consultation that Kyrgyzstan had recorded strong economic growth for a fourth consecutive year, giving the authorities an opportunity to strengthen fiscal buffers and accelerate structural reforms. It also warned that the outlook remained exposed to significant downside risks.

Kazakhstan: A Large External Debt, but a Different Risk Profile

Kazakhstan accounts for the largest share of Central Asia’s external debt, but its headline figure can be misleading. Unlike several of its neighbors, the country’s external liabilities are dominated by corporate and intercompany borrowing rather than direct obligations of the government.

According to the National Bank of Kazakhstan, the country’s gross external debt stood at $182.8 billion as of April 1, 2026, an increase of $900 million during the first quarter.

The National Bank defines external debt as all outstanding liabilities of Kazakhstan’s residents to non-residents. This includes the government, the central bank, commercial banks, private companies, and intercompany loans between foreign parent companies and their subsidiaries operating in Kazakhstan.

A substantial share of these liabilities is connected to foreign investment in the oil, gas, and mining industries, where multinational companies frequently finance their Kazakh operations through loans from parent corporations. Such obligations are recorded as external debt under international statistical standards but are normally serviced from corporate revenue rather than directly from the national budget.

To provide a clearer picture of public exposure, the National Bank publishes a separate indicator covering public-sector external debt in an expanded definition. This includes the general government, the National Bank, state-controlled financial and non-financial corporations, and external obligations guaranteed by the government.

As a result, Kazakhstan's headline external debt overstates the government's direct exposure, since much of the liability sits on corporate rather than public balance sheets.

This structure creates a different set of vulnerabilities. Lower commodity prices, tighter international financing conditions, or reduced access to foreign capital could affect the ability of major companies to refinance their liabilities, with potential consequences for investment, exports, and financial stability.

Uzbekistan: Corporate Borrowing Drives Debt Growth

Uzbekistan has become the region’s second-largest external borrower as economic expansion and infrastructure investment have increased demand for foreign financing.

According to the Central Bank of Uzbekistan, the country’s total external debt reached $82.2 billion at the end of the first quarter of 2026. Public external debt amounted to $40.5 billion, while corporate external debt stood at $41.7 billion.

The figures illustrate a gradual change in Uzbekistan’s financing model. The government continues to attract international funding for infrastructure and social development, while banks, state-owned enterprises, and private companies are assuming a larger share of borrowing to finance expansion.

The growing corporate component does not necessarily represent a direct liability for the state. However, borrowing by state-controlled enterprises and banks may still create contingent risks if companies cannot service their obligations without government assistance.

The IMF said in its 2026 Article IV consultation that Uzbekistan’s economy continued to perform strongly and assessed its risk of external debt distress as low, while urging tighter oversight of state-owned enterprises, public-private partnerships, and other contingent liabilities.

Tajikistan: Lower Debt, Higher Vulnerability

Tajikistan has one of the smallest external debt stocks in Central Asia, but its limited export base and restricted access to private capital make it more vulnerable to repayment pressures.

According to the World Bank’s International Debt Statistics, Tajikistan’s total external debt stood at approximately $4.1 billion at the end of 2024, the latest internationally comparable figure available.

Most of Tajikistan’s external financing comes from official creditors. Multilateral institutions finance much of the country’s public investment, while bilateral lenders, including China, have backed major infrastructure projects.

The IMF concluded in its latest Debt Sustainability Analysis that Tajikistan’s public debt remained sustainable, but the country continued to face a high risk of external debt distress. The assessment reflected projections that repayments on government and government-guaranteed external debt would consume an excessive share of export earnings, particularly between 2025 and 2027.

Debt Quality Matters More Than Debt Size

The Central Asia debt divide shows why headline borrowing figures can be misleading. Kazakhstan’s liabilities are largely corporate, while Kyrgyzstan and Tajikistan remain more dependent on sovereign and concessional financing. Uzbekistan lies between the two.

Tajikistan Prepares for Another Winter Power Shortfall

Tajikistan is preparing for another autumn and winter in which electricity demand may outstrip supply. Network losses have fallen, and investment in hydropower continues, but officials say the seasonal imbalance between generation and consumption will persist. Mahmadumar Asozoda, chairman of state-owned power company Barki Tojik, said the imbalance would persist through the colder months. Asked whether electricity rationing would return, he did not rule it out. Tajikistan generates almost all of its electricity from hydropower, leaving supply tied to seasonal river flows. Output rises during the warmer months, when the country can meet domestic demand and export surplus electricity. In winter, river flows decline as electricity use increases for heating, creating a recurring shortfall. To cover part of the winter shortfall, Tajikistan plans to import electricity from Uzbekistan again. The two countries use a seasonal exchange: Uzbekistan supplies power in autumn and winter, and Tajikistan returns an equivalent volume during summer. Tajikistan imported 306 million kilowatt-hours (kWh) last winter, down from 350 million kWh a year earlier. Asozoda said the countries expect to sign a new agreement before the next autumn-winter season. Imports can ease the shortage, but they do not remove Tajikistan's dependence on hydropower or the winter drop in output. The seasonal arrangement with Uzbekistan gives Tajikistan access to power when domestic generation is lowest. As previously reported by The Times of Central Asia, Kazakhstan has signed a 20-year agreement to buy electricity from Tajikistan. Deliveries are expected to depend on additional generating capacity at the Rogun Hydropower Plant. The Nurek Reservoir stood at 888.21 meters on July 13, but Energy and Water Resources Minister Daler Juma said Tajikistan was experiencing low water levels. The country has reduced electricity exports and is retaining more water in its reservoirs for winter. Losses in the electricity system fell during the first half of 2026. At Barki Tojik's generating facilities, losses were 0.32% of output, down 0.07 percentage points from a year earlier. Losses in high-voltage transmission networks fell to 2.96%, while distribution losses dropped from 17.93% to 12.42%. Barki Tojik generated 8.89 billion kWh during the period, 2.7 million kWh less than in the first half of 2025. Hydropower plants supplied 7.93 billion kWh, while thermal plants produced 964 million kWh. The utility also bought 2.7 billion kWh from independent producers in Tajikistan and abroad, with Sangtuda-1 supplying 1.48 billion kWh. Rogun and Sangtuda-2 supplied 667.2 million kWh and 474.2 million kWh, respectively. Demand continues to rise as Tajikistan's population grows and industrial production expands, President Emomali Rahmon said in December 2025. The World Bank expects Rogun to help meet domestic needs and reduce recurring winter cuts. Rahmon has said rationing should end in 2027, when the third generating unit is scheduled to enter service, although the World Bank projects full completion in 2033. For the coming winter, Tajikistan is conserving reservoir water and arranging imports from Uzbekistan, but Asozoda's comments leave open the possibility of renewed rationing.

Urbanization: Only One in Four Tajik Residents Lives in a City

While its regional neighbors are increasingly undergoing urbanization, Tajikistan remains a predominantly rural country and the gap with the rest of Central Asia on this indicator is one of the most notable in the post-Soviet space.

The Lowest Rate in the Region

As of mid-2026, Tajikistan’s urban population stands at 27.98%, in other words, only slightly more than one in four residents of the country lives in a city. For comparison with the rest of the region: in Kazakhstan, the urban population is around 59%; in Turkmenistan, around 52%; in Uzbekistan, around 50%; and in neighboring Kyrgyzstan, roughly 38%. Against this backdrop, Tajikistan remains the country with the lowest level of urbanization in all of Central Asia and one of the few in the world where the rural population still makes up nearly three-quarters of the total.

Why This Happened

Tajikistan’s low pace of urbanization is largely explained by the structure of the country’s economy and the everyday life of a significant part of its population. Unlike states where industry, the services sector, and major urban agglomerations have long become the main centers of employment, Tajikistan still retains a notable dependence on agriculture. For many families, the village remains not only a place of residence but also the basis of income: people are engaged in farming, seasonal work, small local businesses, or rely on a household that provides the family with food and partial employment.

In Kyrgyzstan, rural areas also play an important role in the economy and settlement patterns, however, in Tajikistan this feature is more pronounced. The country remains one of the most rural in Central Asia in terms of settlement patterns and employment structure. Against this background, Uzbekistan and Turkmenistan present a different picture. In Uzbekistan, a significant share of the urban population is concentrated around major centers, primarily Tashkent, whose population has already exceeded 3 million. In Turkmenistan, Ashgabat plays an important role, as do territories linked to the oil and gas industry, where economic activity has traditionally been more closely tied to urban and industrial zones.

The Region Is Moving Toward Cities

Central Asia as a whole continues to urbanize rapidly, with cities continuing to hoover up people and capital. According to the Eurasian Development Bank, the region’s urban population is expected to increase from 39 million to 45 million by 2035, driven largely by internal migration as people move from rural areas in search of higher incomes and better infrastructure.

Today, nearly half of Central Asia’s population, about 49%, already lives in the region’s major urban centers, making urbanization one of the defining forces behind its economic transformation.

The expansion of cities, however, also brings mounting pressure on social infrastructure – from housing to schools and hospitals. For many urban centers, the challenge is no longer simply accommodating more residents but ensuring an acceptable quality of life. As a result, urbanization is increasingly viewed as a long-term test of governments’ capacity to plan sustainable urban development.

A similar conclusion appears in a United Nations report on global urbanization. Even countries where urban growth has been comparatively slow are expected to continue urbanizing over the coming decades. For Tajikistan, today’s low urbanization rate therefore appears less an exception than a delayed stage of a broader regional trend. The key question is no longer whether the country will urbanize, but how quickly that process will unfold and whether its cities will be prepared to absorb it.

Not Just Numbers But Risks

The Eurasian Development Bank also warns that rapid urbanization comes with significant costs. Uzbekistan and Tajikistan have already experienced electricity and water supply disruptions during peak demand periods, illustrating how infrastructure can struggle to keep pace with urban growth.

For Tajikistan, where urbanization remains at a comparatively early stage, these experiences offer a preview of the challenges likely to emerge as migration toward cities accelerates. The country’s relatively limited urban infrastructure means that future population growth could place even greater pressure on municipal services unless investment keeps pace.

The gap between Tajikistan’s urbanization rate of around 28% and Kazakhstan’s nearly 60% is reflects the divergent economic and demographic trajectories that have shaped Central Asia since the collapse of the Soviet Union. While Tajikistan’s predominantly rural character remains an important feature of its economic structure today, sustained population growth and regional development trends suggest that managing urban expansion will become an increasingly important policy challenge in the years ahead.

Russian Fuel Shortages Revive Tajikistan’s Search for Oil and Gas

On July 10, Tajikistan’s Energy Minister Daler Juma said the country had enough fuel to last two more months. This situation is due to Tajikistan’s dependence on Russian petroleum products, which are in short supply in Russia itself because of Ukrainian drone strikes on Russian oil refineries. Located in the southeast corner of Central Asia and ringed by mountains on three sides, Tajikistan has few options to replace those Russian supplies, so the Tajik authorities are preparing to try again to find domestic hydrocarbon supplies. Looking to Strike Oil at Home Estimates of the share of Tajikistan’s petroleum imports supplied by Russia range from 70% to 80%. Tajikistan’s head of civil aviation, Habibullo Nazarzoda, said on July 9 that his country is facing shortages of airplane fuel and is in talks with Turkmenistan. Russia has a prohibition on exporting aviation kerosene that runs from June 1 to November 30. Tajikistan does have hydropower and coal, but neither one of those helps with shortages at petrol stations, and much of the internal transport of people and goods in mountainous Tajikistan is done via the road network. So, Tajikistan is again looking at the potential to develop domestic hydrocarbon fields, this time with the help solely of the China National Petroleum Corporation (CNPC). On July 7, the head of the Tajik government’s Geological Department, Ilhom Oymuhammadzoda, said CNPC was already carrying out exploration at several potential hydrocarbon deposits in Tajikistan. “I think [CNPC] will present a progress report on the seismic survey operations by the end of the year,” Oymuhammadzoda told a press conference in Dushanbe. He named the Tajik Depression, in southwestern Tajikistan, and the Ferghana Basin, in northwestern Tajikistan, as two of the more promising sites. However, Oymuhammadzoda indicated that work in northern Tajikistan could require drilling down to a depth of 7,000 meters. Tajikistan’s Search for Oil and Gas Past studies of Tajikistan’s potential oil and gas fields point especially to the southwest of the country as a logical place to seek these hydrocarbons. Southwest Tajikistan is adjacent to gas and oil fields in southern Uzbekistan that have been producing for decades, to fields in northern Afghanistan, where exploration has confirmed commercial flows, and not too far east from the giant gas fields in Turkmenistan. Looking at a map, it seems logical that southwest Tajikistan is part of this same hydrocarbon structure. In 2008, Canadian company Tethys started exploring the Bokhtar area about 100 kilometers south of Dushanbe. Tethys found both oil and gas in the area. In 2012, the Canadian company estimated the area’s gross prospective resources at 8.5 billion barrels of oil and condensate and 3.22 trillion cubic metres of gas. For a small country like Tajikistan, it was potentially enormous, although these resources remained unconfirmed and commercially unproven. However, getting to that oil and gas required drilling wells that were 3,500 meters or deeper, which greatly added to production costs. In 2013, Gazprom International drilled a well at the Sarykamysh field in southwest Tajikistan that was 6,450 meters deep before abandoning the project as not commercially viable. It was estimated there could be up to 18 bcm of gas and 124 million barrels of recoverable oil at the site. For a Gazprom subsidiary, 18 bcm was a small amount. For Tajikistan, where annual gas consumption is measured in the millions of cubic meters, 18 bcm is at least 25-30 years of supplies. In the case of Tethys, the company brought in partners for the Bokhtar projects. France’s Total and CNPC. But by 2015, Tethys was unable to meet its financial commitments to the Tajik projects, and in 2016, CNPC and Total filed arbitration proceedings against the Canadian company. In 2024, Total left the project, selling its shares to CNPC, after which CNPC started a new phase of surveying and drilling exploratory wells at Bokhtar. Gazprom suspended work in Tajikistan in 2018. As recently as April of this year, Dushanbe was calling on Gazprom to return and participate in projects in Tajikistan. Only China, For Now The current problem in obtaining petroleum products from Russia is a reminder to the Tajik authorities that having even these relatively small gas and oil fields would go a long way toward supporting Tajikistan’s domestic fuel needs. Among the fields relinquished by Gazprom was Rangon (Rengon), in the Tajik Depression just south of Dushanbe. Oymuhammadzoda said CNPC was now doing work there, and added that, at the moment, the “major oil and gas operations (in Tajikistan) are linked to CNPC.” The search for oil and gas in Tajikistan goes on. The Tajik authorities expressed disappointment in the failure of earlier efforts to find either, or both. Exploration has already shown there is some gas and oil in Tajikistan. The question is whether it is commercially prudent to develop these fields, as many seem to be at depths of 5,000 meters or more. Dushanbe is convinced further exploration will show that there are other oil and gas fields closer to the surface. CNPC has the money to find out and develop even the deep deposits, so it becomes a question of China’s commercial interests against strengthening its political influence in Tajikistan. The figure of 18 bcm for the Sarykamysh field represents half the amount of gas China buys from Turkmenistan annually. Financially, there does not appear to be much chance that CNPC will make a profit from oil and gas ventures in Tajikistan. But if Beijing’s goal is to boost its influence in Tajikistan, it makes sense for CNPC to develop the most promising fields. Tajikistan is an important country for China. It is an immediate neighbor that can play a role in the Belt and Road Initiative and shares a long border with Afghanistan. Beijing is concerned that terrorist groups connected to areas in western China could make their way through Afghanistan and Tajikistan and enter China. However, any CNPC success in producing oil and gas in Tajikistan would come at Russia’s expense. It would wean Tajikistan, at least somewhat, off its dependence on Russian supplies. For Tajikistan, it would no doubt be enough never to have to worry again about having only two months of fuel left.

Tajikistan’s Electricity Losses Add Pressure to Water and Climate Agenda

Tajikistan’s aging power grid has become part of the country’s water and climate policy. The issue returned to the agenda of European Union-Tajikistan cooperation on July 3, when the two sides held a development cooperation meeting in Dushanbe. Energy and water were included in the Global Gateway agenda, while other talks addressed transport and energy infrastructure, the digital economy, water-resource management, and strategic raw materials. Tajikistan gets nearly 98% of its electricity from hydropower. That gives the country a low-carbon power mix, while tying electricity supply to river flows, snowmelt, reservoirs, and glacier change. Losses in the power system add pressure to that link. Each kilowatt-hour lost in transmission or distribution must still be generated. In Tajikistan, that usually means more water passing through hydropower plants or imported electricity when reservoir levels are low. The European Bank for Reconstruction and Development (EBRD) has focused on concessional funding for loss-reduction projects. After a May meeting between Energy Minister Daler Juma and Holger Wiefel, the EBRD’s head in Tajikistan, the energy ministry put the aim plainly: “The sides discussed attracting concessional financing for projects aimed at reducing electricity losses and improving the efficiency of the country’s energy system.” Officials also discussed private investment. Hydropower plants in the Zarafshan basin and solar plants were discussed as well. No new financing has been announced from those discussions. The immediate context is an existing EBRD- and EU-backed program for the distribution network. The Times of Central Asia previously reported in April that Tajikistan would receive nearly €49.6 million from the EBRD to reduce electricity losses. The package combines a €28 million loan with grants and technical assistance for work in nine branches of the distribution network in Sughd and Khatlon. First Deputy Finance Minister Yusuf Majidi said the project would reduce energy losses, replace worn-out infrastructure, install modern meters, and improve billing and revenue collection. The EBRD project file gives the total project cost as €43 million. It includes up to €28 million in EBRD financing and a €15 million EU co-investment grant through the Asia Pacific Investment Facility. The project targets automatic billing and metering systems in nine networks of the Bokhtar, Kulob, and Guliston branches of Shabakahoi Taqsimoti Barq. The bank says the project is aimed at reducing high inefficiency and technical losses in Tajikistan’s power distribution network. Distribution losses fell from 19.2% in 2024 to 15.6% in 2025. Even after that fall, more than 3.1 billion kWh were lost in 2025. Officials linked the reduction to smart meters and digital metering. President Emomali Rahmon put the issue in direct terms in a late 2023 parliamentary address. “Our electricity losses are about 4 billion kWh,” he said, adding: “If we prevent this, then there will be enough electricity for everyone.” That comment predates the 2025 improvement, but it still explains why loss reduction has become part of the environmental case for energy-sector financing. Cutting losses can free up electricity without new generation and reduce pressure on winter imports and hydropower reservoirs. Reuters reported in December 2025 that Tajikistan had imposed restrictions on energy consumption after a dry autumn reduced water levels at hydropower plants. Nurek Hydroelectric Power Station, which supplies around 70% of the country’s electricity, had a reservoir level 3.5 meters lower than one year earlier. Water stress is now central to Dushanbe’s climate diplomacy. The Times of Central Asia reported in May that Tajikistan hosted the Fourth High-Level International Conference on the International Decade for Action “Water for Sustainable Development” in Dushanbe. The conference brought water security and glacier loss into regional cooperation talks. Around 30% of Tajikistan’s glaciers have disappeared over the past century. Vanch-Yakh Glacier, formerly Fedchenko Glacier, has retreated by more than one kilometer over the past 70 to 80 years. Over the past three decades, more than 1,000 glaciers have disappeared in Tajikistan. The effects of glacier loss are felt well below Tajikistan’s high mountains, where power generation and irrigation depend on the same water systems. Hydropower plants need reliable river flows, while irrigation pumps use electricity to move water to farms. In many areas, canals lose water before it reaches fields. The World Bank approved a $75 million grant on July 1 for a water and irrigation management project. The project will modernize irrigation systems serving 100,000 hectares and aims to help about 470,000 farmers and rural residents. It also targets energy savings of 65,000 MWh and emissions cuts of 29,000 tons of CO2 equivalent per year. “This investment reflects the World Bank’s deep commitment to building a more resilient and sustainable future for Tajikistan,” said Gael Raballand, the World Bank Group Country Manager for Tajikistan. Tajikistan has also drawn new climate finance for water and energy projects. The Green Climate Fund approved two projects for Tajikistan worth $190 million after its June 29 to July 2 board meeting in Dushanbe, with $62 million as grants. The projects cover water-saving technology and municipal water systems, with work planned across several municipalities. The EBRD is also preparing a separate project in Kulob. Its project file describes a proposed €10 million sovereign loan for distribution lines and billing and metering infrastructure in Kulob and surrounding areas. The project file lists July 22, 2026, as the approval date, and 100% of the EBRD financing is classified as green finance. For Tajikistan, water and energy policy now extends beyond new generating capacity. Better metering, lower grid losses, more accurate billing, and modern irrigation can save water and cut wasted electricity as the country’s hydropower system faces a less predictable climate.

Central Asia’s Fuel Squeeze Becomes a Winter Energy Security Problem

Central Asia’s fuel squeeze is moving from filling stations into winter planning. Governments are now tracking gasoline and diesel, gas pipelines, coal deliveries, power imports, jet fuel, and emergency repair crews. Seasonal fuel and power stress is familiar across the region, but the current pressure - tied to Russia, the main supplier for several regional fuel flows - has arrived early. Russia’s own fuel crisis has sharpened the risk. Ukrainian drone attacks and repair work have cut refinery output, while export limits have pushed more Russian supplies back into the domestic market. Reuters reported queues, regional restrictions, and gasoline above 100 roubles a liter at some independent stations. President Vladimir Putin acknowledged the strain on June 28. “You are well aware that problems for drivers and for businesses persist,” he said, adding that “the harvest depends on” keeping seasonal fuel schedules for farms. For Central Asia, Russian shortages travel through contracts, rail slots, import prices, and public nerves. Kyrgyzstan is among the most exposed. The country consumes about two million tons of fuels and lubricants each year, and almost 95% comes from Russia, according to Deputy Energy Minister Nasipbek Kerimov. “Due to the lack of adequate oil and gas production, we remain a country dependent on imports,” Kerimov said. Bishkek has asked Russia, Kazakhstan, Belarus, Azerbaijan, Uzbekistan, and Turkmenistan for help securing supplies. That dependence is now impacting households, farmers, and small transport firms. The cabinet has capped pump prices and set a subsidy mechanism through September 30. Kerimov said importers were seeing offers at several prices, but promised that “there should be no shortage on the domestic market.” Oil traders put AI-92 stocks at 30 to 45 days, while diesel remained available for harvest work. Kyrgyzstan is trying to buy time through domestic refining. The modernized Junda refinery in the Chuy Region has been pressed to raise gasoline output to 24,000 tons a month soon, then 50,000 tons a month by the end of 2026, with finished products directed to the domestic market. Those gains would help, but Russian supply still sets the pace. Uzbekistan has the Bukhara and Fergana oil refineries, the Altyaryk unit of the Fergana refinery, and the Uzbekistan GTL complex, but demand has still moved faster than domestic supply. In January-April 2026, gasoline imports reached 568,700 tons, worth $327.1 million, more than double the same period in 2025. Local refineries produced 417,500 tons over those four months. A shift away from AI-80 gasoline has also pushed drivers toward AI-92 and AI-95. The pressure reached the exchange in late June. AI-92 gasoline climbed to a record 13.919 million soums per ton on June 29, about $1,160, after an 11.8% rise since the start of the month. Jet fuel has become an issue, too. Uzbekistan Airways reduced some Russia flight frequencies in June, citing aviation fuel shortages and higher costs. Tashkent is now preparing for winter in concrete volumes. On July 6, President Shavkat Mirziyoyev reviewed measures for the 2026-2027 autumn-winter season. The plan includes replacing 53.7 kilometers of defective main gas pipelines, repairing 77 compressor-station gas pumping units, supplying 325,700 tons of liquefied gas, and creating a 120,000-ton motor gasoline reserve for December and January. Thermal power plants are projected to receive 4.161 million tons of coal. Uzbekneftegaz is also due to repair 90 processing units. Tashkent has discussed oil, gasoline, jet fuel, and refinery feedstock supplies with Russian energy companies. Kazakhstan enters the crunch with more domestic refining capacity, but cheap fuel creates its own problems. Kazakhstan’s low pump prices encourage cross-border outflow, especially when neighboring markets pay more. On July 4, Prime Minister Olzhas Bektenov was told that 593 attempted exports of petroleum products, totaling more than 40,000 liters, had been prevented at road checkpoints since the start of the year. Mobile teams stopped another 61 attempts over two days, involving more than three tons in extra tanks and canisters. Gas planning has joined the security picture. On July 7, Bektenov said Kazakhstan’s domestic gas consumption had reached 20 billion cubic meters last year. The government says 13.1 million people have access to gas and wants gasification to rise from 64.2% to 80%. Bektenov ordered weekly monitoring of gas processing plants at Kashagan, Karachaganak, and Zhanaozen. “We must ensure a long-term balance between the industry’s resource capacity and the needs of the economy,” he said. Electricity adds another layer of stress. Kyrgyzstan recorded its highest summer daily power use on June 29, when consumption reached 47.112 million kilowatt-hours, compared with about 40 million on the same date in 2025. The system expects consumption of 19.6 billion kilowatt-hours in 2026, with domestic generation at 15.7 billion. Imports of about 4 billion kilowatt-hours are expected from Kazakhstan, Turkmenistan, Uzbekistan, and Russia, mainly in the autumn and winter. Kazakhstan generated 123.1 billion kilowatt-hours in 2025, and consumed 124.6 billion. Tajikistan has fewer buffers. Diesel shortages appeared in Dushanbe in early July, with prices rising by 1.5 to 2 somoni in two days. Some filling stations ran out, while others limited sales to 20 liters per vehicle. On July 6, Tajikistan’s economic authorities held a government-level meeting on fuel supply and price regulation. The agenda covered petroleum products, liquefied gas, import diversification, crude oil processing at domestic facilities, and monitoring to prevent artificial retail price increases. Across Central Asia, the squeeze is taking different forms: Kyrgyzstan is looking for new suppliers, Uzbekistan is building reserves, Kazakhstan is tightening controls, and Tajikistan is watching prices. Low and controlled prices protect families, but they push fuel toward borders. Import dependence keeps pumps open, but it leaves governments exposed to refinery outages abroad. Gasification can ease pressure on coal and power, but it also raises winter demand for gas. Electricity imports can fill a gap, but cold weather turns small deficits into public risk. Central Asia’s fuel squeeze has become a winter energy security problem long before the first cold snap. The region needs gasoline at filling stations, diesel for trucks and farms, gas for homes, coal for power plants, and electricity imports when demand peaks. For households, the labels mean less than the outcome. Heat, light, and transport must hold through December and January.

Kyrgyzstan’s Water Compensation Push Tests Central Asian Unity

Central Asia’s water diplomacy is entering a contentious phase. Kyrgyzstan, where much of the region’s runoff is formed, is reviving calls for economic compensation from downstream users. Kazakhstan and Uzbekistan have rejected the idea, saying current agreements do not provide for payments for transboundary river water. The dispute comes as the region tries to maintain annual water-allocation deals while adapting agriculture to worsening scarcity and climate pressure. Water has long tied together the region’s upstream and downstream states. The 2021 and 2022 clashes on the Kyrgyz-Tajik border showed how disputes over land, border infrastructure, roads, security posts, and water access can escalate when local tensions are not contained. Yet political will alone does not guarantee agreements between countries. The Central Asian republics cooperate on water issues through two interstate bodies. One is the International Fund for Saving the Aral Sea, established in 1993 by all five Central Asian republics. Kyrgyzstan suspended its participation in IFAS in 2016, and now attends the fund’s meetings as an observer. The second body is the Interstate Commission for Water Coordination, whose meetings are held once a quarter. At its 93rd meeting in Bukhara in early April, the commission confirmed limits for water withdrawal from transboundary rivers, following decisions approved at the 92nd meeting in Dushanbe. For the Amu Darya, the 2026 water allocations set the total withdrawal limit for the water-management year from October 2025 to October 2026 at about 55.4 billion cubic meters. Of this, 15.9 billion cubic meters is allocated for the cold period, from October to April. Tajikistan has been allocated 9.8 billion cubic meters per year, while Turkmenistan and Uzbekistan each receive 22 billion. A significant part of the flow, 44 billion cubic meters, must pass through the adjusted section of the Kerki hydrological post, helping secure the lower reaches of the river. For the Syr Darya, the total water withdrawal limit for the non-growing season is 4.219 billion cubic meters. Kazakhstan will receive 460 million cubic meters through the Dustlik Canal, Kyrgyzstan 47 million, and Tajikistan 365 million, while the largest share will go to Uzbekistan, 3.347 billion cubic meters. The inherited framework is also facing pressure from outside the five-state system. Afghanistan’s Qosh-Tepa Canal, which is being advanced outside the Soviet-era allocation structure, has added uncertainty on the Amu Darya. The Central Asian republics also cooperate in bilateral and trilateral formats. In January, Kazakhstan-Uzbekistan joint working groups met in Turkestan. The sides reaffirmed water cooperation, agreed to continue repairs on the Dostyk canal, and planned automated hydrological posts on the Syr Darya. In May, Kazakhstan, Uzbekistan, and Tajikistan agreed on the operating regime of the Bahri-Tojik Reservoir for the summer of 2026. From June to August, the reservoir is to operate in a coordinated mode to supply irrigation water to farmers in the Maktaaral and Zhetysai districts of southern Kazakhstan. These agreements show that regional mechanisms still work, but experts continue to warn that climate pressure, data gaps, and uneven national interests could overwhelm existing formats. “Forecasting the likelihood of ‘water conflicts’ in the near future is difficult, since much depends not only on the political will of states, but also on the availability of effective tools for managing water resources amid scientific uncertainty and discrepancies in data assessment,” according to Shamshagul Mashtayeva, a Kazakh hydrologist and water-diplomacy specialist. “The time has come for a paradigm shift in the management of these resources and in water diplomacy in order to give the second scenario a greater chance, since the well-being of future generations directly depends on the success of these efforts.” In her view, the combined impact of irregular weather patterns, glacier melt, and biodiversity loss creates uncertainty. That uncertainty could lead to two scenarios: growing economic, social, environmental, and political shocks and conflicts over water, or improved policy with large-scale reforms in the water sector. Kazakhstan and Uzbekistan have responded partly by introducing digital and water-saving technologies, and by changing crop structures. In Kazakhstan, priority in this year’s sowing campaign was given to higher-margin and strategically important crops. Oilseed crops will exceed 4 million hectares, while more than 3.3 million hectares have been allocated for fodder crops. Wheat acreage has been reduced to 12.1 million hectares, 125,000 hectares less than last year. Corn acreage was also reduced. Rice fields were reduced by 20,600 hectares, and the area of cotton under drip irrigation increased by 29,800 hectares as water-saving technologies were expanded. Kazakhstan has taken a stricter approach to reducing rice planting. In the Shardara district of the Turkestan Region, dozens of farmers who planted rice fields beyond approved volumes were left without irrigation water. Permits were processed through an electronic system, and once the limit was reached, registration of new areas was closed. Uzbekistan has also started to shift land away from water-intensive crops. President Shavkat Mirziyoyev supported a proposal in late April to reduce cotton and grain areas by 7,400 hectares in the Ferghana Region and redistribute land to more profitable crops. Orchards and export-oriented plantations are being created in the Ferghana, Yozyovon, Kuva, and Uzbekistan districts. Uzbekistan’s cotton sector has prepared for intensive planting schemes on 888,000 hectares. Of these, 500,000 hectares are planned for high-yielding, salt-resistant, and drought-resistant foreign varieties. Work is also being organized to plant cotton on 300,000 hectares based on Xinjiang’s experience. Kyrgyzstan, where about half of the region’s runoff is formed and which uses roughly a quarter of that water itself, has repeatedly raised the issue of economic compensation for irrigation water. On January 1, 2026, a new Water Code came into force in the republic, changing the approach to the use of water resources. Water is now recognized as a commodity, and fees will be charged for its use by domestic and external consumers. This marks a shift away from the old “water in exchange for electricity” system toward a market model of water use. The new code regulates domestic water use and its distribution among neighbors such as Kazakhstan and Uzbekistan. In February, Jogorku Kenesh (parliamentary) deputy Umbetaly Kydyraliyev also raised the issue, saying Kyrgyzstan bears the cost of maintaining hydraulic facilities, including repairs and maintenance of dams, but receives no direct economic compensation. He cited international practice in which countries pay compensation for the use of water resources. Kyrgyz President Sadyr Japarov raised the issue again at a regional economic summit in Astana in April. He said emergencies in Kyrgyzstan have increased significantly in recent years: mudflows and floods have become three times more frequent, while annual damage reaches about $16 million. The glacier area has also shrunk by 16%, and by the end of the century, the country could lose up to 80% of its glaciers. “We propose resuming the introduction of a mutually beneficial economic compensation mechanism in the water and energy sector under modern conditions. It is necessary to find a balance of interests and develop mutually acceptable solutions based on a comprehensive approach,” Japarov said. Professor Yarash Pulodov, a Tajik scholar in water resources and ecology, has supported the introduction of water-use fees in Kyrgyzstan. He said the transition to market mechanisms, under which water would be treated as a commodity, is a logical step. In his view, charging for water is aimed at modernizing water-resource management, increasing transparency, and ensuring efficient distribution in water-scarce regions. “Although water is a gift from heaven and its use can be regarded as the legitimate right of everyone, in a developed society the infrastructure for delivering this water requires significant costs. Ultimately, all water users and consumers must pay for delivery,” he said. Downstream governments do not accept that premise. Kazakhstan and Uzbekistan say no agreement has ever existed, and none exists now, to pay for river water. Kazakhstan’s Ministry of Water Resources and Irrigation said: “The introduction of payment for transboundary water is not provided for by the current contractual and legal framework and is not under consideration. The main emphasis is on improving the efficiency of water use within the country, building and modernizing reservoirs, reducing losses, and introducing water-saving technologies. The system remains based on recognized principles of water sharing, equality of parties, and long-term regional cooperation.” That leaves Central Asian water diplomacy with less room for ambiguity. Annual allocation agreements still function, and governments are investing in more efficient usage. Yet Kyrgyzstan’s warning has put a price tag on a resource downstream states have long treated as shared under existing agreements. Tajikistan, another upstream state, may face similar incentives as glacier loss and infrastructure costs rise. Whether the region can manage that debate without turning water into a new interstate dispute will depend on stronger data, clearer rules, and trust between upstream and downstream states.