This week, the media in the region reported on various investment projects targeting green transition in Central Asia, such as the World Bank pledging $350 million in grants and loans to construct the Rogun HPP and the AIIB providing a $250 million loan to Uzbekistan to finance various green and renewable energy projects. They also noted that Uzbekistan and Afghanistan extended their electricity supply agreement. Several outlets focused on the dismissal of Kyrgyzstan’s Prime Minister and Kazakhstan’s establishment of a new venture capital fund. Multiple sources picked up on the announcements that construction on the Kambar-Ata 1 HPP would begin next summer, while the construction of the China-Kyrgyzstan-Uzbekistan railway is set to officially commence on December 27. Finally, the media also disclosed that a Chinese company has bought Rosatom’s stakes in numerous Kazakhstani uranium deposits.
PM Olzhas Bektenov chairs a meeting with leading experts in venture capital, representatives of Kazakhstan's business community, and international partners. Source: PM's office
Investment
The World Bank has pledged a $350 million grant from the International Development Association towards the Rogun hydroelectric power plant (HPP) in Tajikistan (Daryo). The Rogun HPP is expected to cost $6.29 billion and generate 3.7 gigawatts when complete. The project will improve access to electricity nationwide and reduce power shortages that have plagued the country recently. 70% of the electricity produced will be exported to neighboring countries, helping to lessen their reliance on hydrocarbons. Electricity is one of Tajikistan’s major exports, showing a growth of 10.5% in November (Asia Plus). Tajikistan is also committed to allocating 3% of electricity sales from the project to a profit-sharing program, which will fund various social programs throughout the country (Daryo). In addition to the World Bank, the Asian Infrastructure Development Bank (AIIB) signed an agreement with Tajikistan to provide $270 million to the Rogun HPP this week (Asia Plus). The AIIB has committed to providing $500 million towards the project. These funds will not only help fund the building of the dam but will also go towards reconstructing several roads and bridges in the dam’s vicinity. Earlier this year, we also reported that several other significant international development agencies had agreed to fund the project, such as the Saudi Fund for Development, the Asian Development Bank (ADB), The European Bank for Reconstruction and Development (EBRD), the Asian Infrastructure Investment Bank (AIIB), and the Islamic Development Bank.
Elsewhere it was reported that the AIIB has approved a $250 million loan to support Uzbekistan’s green transition (Kun). This initiative will help support Uzbekistan’s efforts to promote sustainable economic growth through its “New Uzbekistan 2030” development strategy, which commits Uzbekistan to reduce its greenhouse gas emissions by 35% compared to 2010 levels before 2030. The project will include climate-related criteria in national decision-making, improve water and land management, and accelerate the development of low-carbon alternatives in energy and transport.
Meanwhile, at a December 19 meeting between Kazakhstani PM Olzhas Bektenov and Kazakhstani and international business representatives, the PM announced the creation of a venture capital fund to attract $1 billion in private investment (The Astana Times). So far, Kazakhstani businesses have already pledged $100 million in starting capital. The fund will distribute these private investments among international and local funds to gain access to the technologies and capabilities required to diversify Kazakhstan’s economy. More specifically, it will focus on AI in digital healthcare. The meeting also heard that Kazakhstan accounts for 70% of the region’s venture capital deals, with its total venture capital increasing sixfold to $80 million in recent years.
PM Olzhas Bektenov chairs a meeting with leading experts in venture capital, representatives of Kazakhstan's business community, and international partners. Source: PM's office
This week, Uzbekistan announced it intends to attract $43 billion in foreign investments next year (The Tashkent Times). President Shavkat Mirziyoyev chaired a meeting to discuss future investment plans for 2025. In 2024, the country received $36 billion in investment, helping to increase exports by $1 billion. The meeting also heard that since 2017, Uzbekistan attracted investments worth $188 billion, of which $87 billion came from foreign sources. President Mirziyoyev underscored the difficulties in achieving economic growth given the unstable international situation and decline in overall global investment. Nevertheless, he emphasized the need to improve conditions for investors if Uzbekistan is to grow its exports to $45 billion by 2030, as outlined in the “Uzbekistan-2030” plan.
Infrastructure
This week, Kyrgyzstani President Sadyr Japarov announced that construction work on the Kambar-Ata 1 HPP will begin in the summer of 2025 (AKIpress). He also announced that the construction of the landmark HPP project had increased to $3.5 billion (AKIpress). Several media outlets also reported that preparatory work on the dam would be completed in Q1 2025 (24.kg). Regarding the financing of the project, the World Bank’s International Development Association promised an additional $13.6 million ($11 million and $2.6 million grant) towards the project’s feasibility study, according to the Committee on Budget, Economic and Fiscal Policy of the Kyrgyzstani Parliament (24.kg). Kyrgyzstan had previously received $5 million from the World Bank for the feasibility study. As reported earlier this month, the Eurasian Development Bank (EDB) is another notable financier of the project.
On December 20, the Kyrgyzstani government signed an investment agreement with the China-Kyrgyzstan-Uzbekistan Railway Company LLC concerning the construction and operation of the new railway (The Times of Central Asia). The deal follows Kyrgyzstani President Sadyr Japarov’s earlier statement that the railway’s construction would begin on December 27. The railway will transport 15 million tons annually and is critical to developing the region's infrastructure. Currently, Uzbekistan and Kyrgyzstan lack a direct rail link to China. Instead, both countries have relied on routes through Kazakhstan, which have become increasingly congested in recent years. The project is a milestone in the development of the Middle Corridor route between Asia and Europe. This year, cargo along the Middle Corridor surged by 63% to 4.1 million tons (The Astana Times).
Investment agreement between Kyrgyzstan’s Cabinet of Ministers and China-Kyrgyzstan-Uzbekistan Railway Company signed in Bishkek. Source: 24.KG
Energy
Uzbekistani and Afghanistan's electricity providers have extended an electricity supply agreement into 2025 (Gazeta.uz). An Uzbekistani delegation, led by Energy Minister Jurabek Mirzamahmudov, arrived in Afghanistan for talks with the head of Da Afghanistan Breshna Sherkat (Afghanistan’s electricity provider), Abdul Bari Omar, earlier this week. Besides concluding an electricity purchase agreement for 2025 between Uzenergosotish and Afghanistan’s DABS, both sides discussed constructing a 500 kV power transmission line between the two countries, which will supply Afghanistan with 24 million kWh of electricity daily, amounting to 6 billion kWh annually. The project is estimated to cost around $100 million. Last week, we reported that Afghanistan only produces 20% of its electricity needs and relies on imports from Uzbekistan and Tajikistan. In 2019, Afghanistan and Uzbekistan signed a ten-year deal for 4.2 billion kWh annually, with plans to raise volumes to 6 billion kWh. Since 2002, Uzbekistan has been supplying Afghanistan with electricity. Last year, Uzbekistan exported 1.82 billion kWh, worth $91.18 million.
The Kazakhstani Ministry of Energy reported that the country’s petrochemical production had increased 1.6 times over the first 11 months of the year (Daryo). Oil production reached 80.5 million tons, with major contributors including the Tengiz, Kashagan, and Karachagank oilfields. Despite the temporary closure of the Tengiz field, total output for the year is expected to be 87.8 million tons, with exports amounting to 63.2 million tons. Gas output rose slightly to 53.8 billion cubic meters, with exports reaching 5.4 billion. 2.75 million tons of liquefied petroleum gas, 4.9 million tons of gasoline and diesel each, and 0.68 million tons of aviation fuel were produced. Electricity output totaled 106.7bn kWh, a 4.7% rise. Renewables accounted for 6.4bn kWh. So far this year, three new renewable energy projects have been completed, producing 34.95 MW. By the end of the year, the government expects to complete five more facilities, producing 128.4 MW.
During the first 11 months of 2024, Uzbekistan’s production of oil, gas, and other hydrocarbons continued to decline (Kun). The country’s statistics agency released data indicating a 4.7% drop in gas production and a 7.3% drop in oil production. However, coal extraction rose by 27.5% to 7.328 million tons. Overall, electricity production also increased by 4.5%. Natural gas production has declined for several years, decreasing by 24% since 2018. In 2018, Uzbekistan extracted 61.59 billion cubic meters of gas, compared to only 40.75 billion cubic meters so far this year. As a result, gas imports have increased, rising 2.8 times compared to 2023 and reaching $1.552 billion. However, under the “Uzbekistan-2030” development strategy, Uzbekistan plans to increase gas production to 62 billion cubic meters by 2030. Thus, at a meeting chaired by Uzbekistani President Shavkat Mirziyoyev, Uzbekneftegaz outlined its plans to increase gas production over the coming years (Kazinform). The Chairman of Uzbekneftegaz noted that several fields have almost been depleted while some remain remarkably inefficient. He stated that over the coming years, they intend to install new technologies and begin the exploration of 15 possible gas deposits. He reported they were working on a geological exploration program to attract the necessary foreign investment for further exploratory work.
Mining and Critical Minerals
China's State Nuclear Uranium Resources Development Company has bought Uranium One Group's 49.979% stake in the Zarechnoye uranium mine in Kazakhstan (Kursiv). Uranium One Group is a subsidiary of Rosatom. The Zarechnoye mine is located in Turkestan and contains uranium reserves of 3500 tons. The Chinese company also bought Uranium One Group’s 30% stake in the Severny Kharasan deposit in Kyzylorda region and its 30% stake in Kyzylkum LLP, which provides uranium processing services. Reports estimate reserves at the Severny Kharasan deposit at 33000 tons. Kazatomprom’s shares in these ventures remain the same, and the company remains committed to becoming an international leader in the industry. This year, it launched a significant exploration program, receiving four new licenses to explore deposits containing approximately 180000 tons. Rosatom’s sale of these critical assets comes amid Kazakhstan’s attempts to avoid secondary sanctions from cooperating with Russian companies and China’s growing influence in the region.
Political Developments
On December 16, Kyrgyzstani President Sadyr Japarov signed a decree dismissing Akylbek Japarov from the posts of Chairman of the Cabinet of Ministers and Head of the Presidential Administration (Kun). He was replaced by First Deputy Prime Minister Adylbek Kasymaliyev (Interfax). While President Japarov officially dismissed him to appoint him to another position, his removal comes amid an unfolding scandal at the State Tax Office. The scandal is connected with the falsification of e-consignment notes and the tax evasion by specific companies (24.kg). In recent years, the Kyrgyzstani government has implemented widespread tax reforms targeting previously unregulated sectors of the economy and increasing state revenues. The Chairman of the State Committee for National Security, Kamchybek Tashiev, stated, “He left because there was link with something, he would not have left for nothing,” implying he had some connection to the scandal. However, various other political figures praised his work (AKIpress).
Akylbek Japarov dismissed as Kyrgyzstan’s Prime Minister. Source: KUN.uz
Environment
Kazakhstan collected a record 75 billion cubic meters of water in its reservoirs this year (The Astana Times). The Kazakhstani Ministry of Water Resources and Irrigation also reported the collection of a record 12 billion cubic meters of floodwater. This increase has helped replenish the country’s lakes, rivers, and reservoirs. For instance, Lake Balkhash received 15.4 billion cubic meters, an extra 4 billion cubic meters compared to last year. The Caspian Sea received 17 billion cubic meters, the Kapchagai reservoir – 18 billion, filling it for the first time, Kamys-Samar Lakes – 80 billion, the Northern Aral Sea - 2.5 billion, 400 million more than in 2023, and the Kyzylorda Region’s lake systems - 4.7 billion, compared to 4.3 billion in 2023. Improved water management and increased glacier melting facilitated the increase in water flows.
Economy and Trade
At a government meeting chaired by Kazakhstani Prime Minister Olzhas Bektenov, it was revealed that Kazakhstan’s economy grew by 4.4% in the first 11 months of 2024 (Daryo). The non-resource sector was the main contributor to growth, with industries such as construction (10.3%), agriculture (13.4%), trade (8.4%), transport (8.1%), and manufacturing (5.1%) experiencing significant gains. The Prime Minister highlighted the measures taken by the government to stimulate growth and diversify the economy. He also noted the need for the relevant authorities to develop the necessary infrastructure and industrial sites to attract high-value industries. This week, Halyk Investment Bank also reported that Kazakhstan’s trade surplus increased by around a third to $20.1 billion in the first ten months of the year (The Astana Times). The increase was driven by growth in exports and a decline in imports. Exports rose by 5.1%, with oil climbing 6.5%, metal – 13.4%, and chemical products – 18%. Imports dropped by 3.3% due to an 8.7% decline in machinery imports. However, food and chemical imports rose 7.3% and 2.4%, respectively. Imports from Russia also grew across all sectors of the economy by 5.2%, while exports to Russia dropped by 10.7% (Kursiv). Russia continues to account for a third of Kazakhstan’s imports. Nevertheless, Kazakhstan remains heavily dependent on raw material exports, with minerals accounting for 80% of all exports (The Astana Times).
