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EBRD makes new investments in Uzbekistan
Over €100 million to promote trains, trade and heating across country
€77 million loan from the European Bank for Reconstruction and Development to the Uzbek rail company Uzbekistan Temir Yullari (UTY) will help speed the transportation of goods across Uzbekistan, the rest of Central Asia and beyond. The EBRD will also lend €17.5 million to the Republic of Uzbekistan to help bring year-round hot water and efficient, environmentally friendly heating to the people in the city of Andijan. EBRD President Jean Lemierre, who is currently travelling in the region, will also agree to expand the scope of a €41 million credit with the National Bank of Uzbekistan to promote trade in the region.
The rail company will use the loan to upgrade its diesel-electric freight locomotives, as well as the local locomotive workshop. The country's rail sector is undertaking reforms that have already enhanced rail development. The EBRD is supporting these reforms through its railway modernisation programme, and this loan builds on a €40 million loan signed in 1999. Technical cooperation funds from the European Union's TACIS programme are also being provided to assist in institutional strengthening of the rail company.
The EU, Japan and the EBRD-administered TurnAround Management Programme will also provide funds to help finance advisers from Western, Japanese and Taiwanese companies to help build up new firms that will provide services to the railway. These smaller companies are important not only for the railway, but also for Uzbekistan because they support economic development.
Mr Lemierre said the rail industry is crucial to Uzbekistan's economic development and important for cross-border cooperation. The loan to UTY will help the company develop its operations to meet the needs of its many customers, and stimulate competition in the freight transport sector. Mamarizo Nurmuratov, Minister of Finance of Uzbekistan, said the Government has adopted a wide programme of reforms in the railway industry that will be bolstered by EBRD participation in financing the programme.
The second loan will help to finance a new company, which will replace part of the existing heating network in the Andijan region to make it cleaner and more efficient. The project marks the first time the EBRD has helped a client to sell carbon credits which the Uzbek authorities may use to extend the heating network improvements. This is also the first time either the Bank or Uzbekistan has used the Clean Development Mechanism, defined in the Kyoto protocol, to help finance energy efficiency and reduce greenhouse gas emissions.
To support the development of the Andijan heating project, the Swiss Government and the Government of Japan intend to provide donor funds to the Government of Uzbekistan. The grant from the Swiss Government, of about US$ 4 million, indicates the Swiss authorities' support for the policy reforms by the Uzbek authorities to promote greater energy efficiency.
Mr Lemierre said the project is important for the people of Andijan. The loan will greatly improve levels of service, introduce hot water throughout the year, reduce water losses and give consumers the option to regulate the amount of energy they use. Mr Lemierre added that the project's integration into the private sector is an important step in Uzbekistan's transition towards an open market-oriented economy.
The €22 million revolving credit signed with the National Bank of Uzbekistan, will expand the Trade Facilitation Programme originally agreed in 1999 in the amount of €41 million to facilitate import and export transactions. It will support the pre-export finance needs of NBU's clients and allow them the flexibility to obtain both cash advances and guarantees. The EBRD's Trade Facilitation Programme provides EBRD guarantees to international and regional banks to support trade in the region. Since the programme began two years ago, it has supported €100 million of trade in Uzbekistan.
To date, the EBRD has signed 15 projects worth €570 million in Uzbekistan.
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