Brief market overview. Infrastructure is relatively underinvested as the primary source of funding has been domestic resources, including central government budget and SOEs as well as multilateral development agencies such as the World Bank, Asian Development Bank and foreign governments such as Japan and China. This is despite the fact the government has committed appr $1bn a year for infrastructure related projects. Brief characteristics of the current status of infrastructure can be described as follows:

Road, railway, air transport networks. Transport infrastructure of Uzbekistan is probably the best developed in Central Asia. However, road quality is still relatively poor as the technology, machinery and solutions used have not been up to very advanced standards. The transport network itself needs expansion due to growing traffic domestically, inter-regional within the country and international with other Central Asian countries due to the country’s being double-landlocked.

Cargo storage and distribution: the segment is nascent, as the country, traditionally cotton-exporter, has not developed respective facilities and channels to cover non-traditional products such as fresh and processed fruits and vegetables, food, and many others.

Water supply and sanitation: The Government of Uzbekistan has been steadfast in assigning priority to the water sector, and public funding in the sector have never dropped. The portfolio of public borrowing for water supply and sanitation projects and grant funds during 1995–2014 amounted to $344.1mn, the largest for any country in Central Asia. Still, 20% of rural areas have no access to water, with periodic cuts in supply.

Electricity: Although billions of dollars have been spent to improve power sector, per capital consumption is still low, 10x lower than in the US. The production and distribution is inefficient with 74% of output using natural gas and a loss of appr. 9%.

Funding sources have been primarily central government budget, state-owned enterprises, loans of multilateral financial institutions - mostly the World Bank and ADB. Private investments are non-existent, as public private partnerships (PPP) models are not developed.

However, the situation is set to change as the new leadership has launched improving ties with neighbors and initiating regional transport network projects as well as has announced to introduce more PPPs in the infrastructure sectors.

Government program. World Bank country strategy for Uzbekistan adopted in 2015 suggested that the newly adopted public investment program, which amounts to $41 billion over 2015–19 to upgrade industry and infrastructure. ADB’s country strategy for 2012-2016 also mentioned that The government estimates an investment requirement of $47 billion during 2011–2015 to develop infrastructure and industrial projects.

Investment requirements. $565 billion investments are required in infrastructure needs in Central Asia by 2030, ADB estimated in February this year. “Emerging economies across the region [Asia] will need to invest as much as $26 trillion on building everything from transport networks to clean water through 2030 to maintain growth, eradicate poverty and offset climate change” said ADB

We expect infrastructure industry to continue attract multi-billion dollar investments from different sources – public, SOEs, IFIs and possibly international infrastructure investors, including through PPPs. President Mirziyoyev invited US companies to co-finance and manage Uzbek SOEs and projects when he spoke at the US-Uzbekistan Business Forum in New York on September 22 this year. We believe there will be more upcoming financing and management agreements with global groups, including from US, Europe and Asia economies with strong industry expertise.