Driving Uzbekistan’s Future with PPP Road Projects for Sustainable Development
Public-private partnerships (PPPs) are emerging as a crucial tool in Uzbekistan’s efforts to modernise its infrastructure, particularly in the road sector.
With road networks being the backbone of the country’s economy, PPPs offer a unique opportunity to attract private investment, boost innovation, and accelerate progress toward achieving key sustainable development goals (SDGs). But, like any major undertaking, the road to success isn’t always smooth.
Why Uzbekistan’s Roads Matter
Uzbekistan, being landlocked, relies heavily on its extensive road network for the transport of goods and people. In 2020, a staggering 90.6% of the nation’s freight—amounting to 1.24 billion tons—was moved by road. This reliance underscores just how critical road infrastructure is to the country’s economic vitality.
However, Uzbekistan’s road network faces significant financial challenges. The World Bank estimates that there is a funding gap of about $1.5 billion annually just to maintain and expand these essential networks. Addressing this shortfall requires creative approaches, and public-private partnerships (PPPs) have emerged as a promising solution.
How PPPs Can Drive Infrastructure Growth
Uzbekistan has been actively pursuing PPPs since 2017 to leverage private sector expertise and finance. These partnerships are designed to address the country’s infrastructure needs while ensuring better long-term value for money. By involving private companies, the government hopes to tap into innovative construction methods, management practices, and technology that would otherwise be out of reach.
The Ministry of Economy and Finance’s PPP Development Department (PPPDD) monitors progress on these projects. To date, 973 PPP contracts have been signed, totalling approximately $2.152 billion. Yet, despite the flurry of activity in areas like water management and heating systems, only two projects in transportation have been earmarked for development. Both of these focus on road construction, an area that requires particularly large investments.
Tashkent-Andijan and Tashkent-Samarkand Roads
Among the most significant road projects currently in the works are the Tashkent-Andijan Road (TAR) and the Tashkent-Samarkand Road (TSR). Together, these two projects represent a combined investment of nearly $6.75 billion, with TAR alone estimated at $5.35 billion.
Both roads are at the structuring stage, with feasibility studies underway. The TAR project, backed by the World Bank, has progressed significantly, with a pre-investment study completed in 2015 and a more detailed plan released in December 2023. The government is now seeking expressions of interest from private investors, with prequalification expected by the end of the year.
On the other hand, the TSR project, funded by the European Bank for Reconstruction and Development (EBRD), has been slower to develop, but it remains a crucial part of the country’s long-term transportation strategy.
Expanding the PPP Pipeline
While the TAR and TSR projects have garnered the most attention, Uzbekistan is also exploring several other potential road projects under the PPP model. These include:
- Kungrad-Daut-Ata A380 Highway (KDH) for operations and maintenance
- Nationwide electronic tolling system
- Real-time traffic monitoring and weigh-in-motion systems
- Takhtakaracha tunnel construction
- New road crash and vehicle operations database
One particularly noteworthy development is the creation of the Uzbekistan PPP Project Development Facility (UPDF). This initiative, backed by a €10 million loan from the EBRD, is designed to support the preparation of priority PPP projects, with a particular focus on road infrastructure. The UPDF promises to streamline the development of future road projects by providing the necessary financial and technical support.
PPP Legislation
A key factor in the success of PPPs in Uzbekistan has been the establishment of a strong legal framework. The 2019 PPP Law, along with subsequent amendments, provides the regulatory environment needed to attract private investment. This framework is complemented by the draft toll road law, which is currently awaiting approval by Parliament.
The introduction of toll roads is a critical aspect of Uzbekistan’s infrastructure strategy. Tolling helps to ease budget constraints while ensuring that road services remain of high quality. Preliminary estimates suggest that tolls for the TAR route could range between $5–7 for cars and $15 for trucks and buses. While these tolls may not fully cover the costs of construction and maintenance, they offer a practical way to reduce the financial burden on the government.
Keeping Debt in Check
Of course, PPPs are not without their risks. The long-term financial commitments associated with large infrastructure projects could increase Uzbekistan’s debt burden, which reached 36.8% of GDP in 2023. To mitigate this risk, the International Monetary Fund (IMF) has advised the country to improve its fiscal risk assessments, particularly for state-owned enterprises and PPPs. Careful management of external borrowing and prudent public financial management will be essential to avoid fiscal pitfalls.
A Step Towards Sustainable Development
Ultimately, Uzbekistan’s PPP road projects are about more than just building roads—they are about creating a sustainable future. By improving the country’s infrastructure, these projects will help to create jobs, boost industrial innovation, and enhance regional connectivity. This aligns with the country’s broader goals of achieving several SDGs, particularly in the areas of decent work, economic growth, and infrastructure development.
To achieve these goals, the government is working with international development partners like the Asian Development Bank (ADB). The ADB has already provided over $1.3 billion in support for road projects since 2007, and it is likely to play a key role in the implementation of the country’s first toll road under the PPP model.
Building a Brighter Future
As Uzbekistan moves forward with its ambitious road development plans, PPPs will continue to be a critical part of the equation. These partnerships offer the opportunity to bring in much-needed private investment, improve efficiency, and ensure long-term sustainability. While challenges remain, particularly in terms of fiscal management, the potential benefits far outweigh the risks.
By fostering strong international partnerships, building on its robust legal framework, and ensuring prudent financial management, Uzbekistan is well on its way to creating a road network that can support its economic and social development for years to come.
