Uzbekistan Receives $100 Million ADB Loan for Railway Electrification

The Asian Development Bank (ADB) will provide a $100 million loan to Uzbekistan to finance electrification of a 140-kilometer stretch of railway between Marakand in Samarkand Province and Karshi in Kashkadarya Province. The project aims to improve railway operations in this section of the Central Asia Regional Economic Cooperation (CAREC) Corridor 6, which runs north to south, linking Europe through Central Asia to the Middle East and East Asia.

The loan agreement was signed by ADB President Haruhiko Kuroda and First Deputy Prime Minister and Finance Minister Rustam Azimov of Uzbekistan on 16 February 2012, together with other loan agreements, all totalling $508 million.

The Marakand-Karshi rail link is part of a rail corridor that runs from Keles on the border with Kazakhstan to Termez on the Afghanistan border. The northern part of the rail corridor from Keles to Marakand is already served by electric locomotives that increase capacity and improve freight and passenger services in comparison to the less powerful diesel locomotives. On the southern part from Karshi to Termez, however, electrification is in progress, cofinanced by the Government of Japan and Uzbekistan Temir Yullari. To complete electrification of the whole route from Keles to Termez, the Uzbekistan government requested ADB assistance to improve the remaining section between Marakand and Karshi.

An upgraded Marakand-Karshi rail link will help increase regional trade, promote regional cooperation, and speed up economic growth. CAREC Corridor 6 rail lines annually carry about 10 million tons of freight. The corridor will also help the provinces of Samarkand, Kashkadarya, and Surkhandarya increase exports of cotton and cotton by-products, horticulture products, marble, oil, and gas.

The electrification project will also improve the institutional capacity of UTY management by providing workshops and training on corporate governance, responsibility and profitability, as well as training in project management. In addition, skills updating will be provided to key technical staff.

Estimated at $176 million, the ADB loan of $100 million will have a 25-year term, including a 5-year grace period. The Government of Uzbekistan and UTY will finance the balance.

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