This week, the media across Central Asia reported on several critical diplomatic events, including the Third UN Conference on Landlocked Developing Countries. They also covered important energy developments, such as Afghanistan’s Taliban-led government concluding a $10 billion deal with Azizi Energy, the Kashagan oil field operator winning the lawsuit brought against it by the Kazakhstani government, the increase in Uzbekistan’s renewable energy production, Kazakhstan commencing construction work on its first NPP, and OPEC+ announcing another round of production increases. Several outlets also noted the World Bank’s provision of a $50 million grant to support Tajikistan’s economic reforms and Kazakhstan’s pledge to attract $24 billion to upgrade its utility infrastructure. Lastly, they reported on Kyrgyzstan leading the region in GDP growth in 2025.

Energy:

Afghanistan’s Taliban-led government recently signed a $10 billion deal with Azizi Energy to add 10000 MW of capacity to the country’s electricity supply (ToloNews). Under the agreement, signed with Afghanistan’s Ministry of Energy and Water, the company will develop the country’s coal, gas, hydro, wind, and solar resources to address its energy needs (Daryo). They will construct the projects outlined in the agreement between 2026 and 2032, with an initial capacity estimated at 2000-3000 MW. According to the plan, they aim to generate 3400 MW from coal in the Balkh, Bamiyan, Herat, and Baghlan regions, 3700 MW from gas in the Jawzjan and Herat regions, 2040 MW from hydropower in the Kabul, Kapisa, and Daikundi regions, 700 MW from wind in the Herat and Farah regions, and 200 MW from solar in the Kabul, Kandahar, and Ghazni regions. The projects also aim to expand local engineering and construction capacity, with Afghan nationals constituting 98% of the workforce. Additionally, they will establish a training center to develop the necessary skillsets to complete the projects. The announcement of these projects comes amid ongoing electricity shortages in the country and neighboring countries, such as Tajikistan, looking to reduce electricity exports to Afghanistan due to their domestic electricity shortages.

In July, Uzbekistan generated a record 1.246 billion kilowatt-hours of electricity from renewable energy sources, such as wind and solar, accounting for 17% of the country’s output (Daryo). Currently, eleven solar power plants and four wind power plants are operational with a capacity of 4119 MW. The solar plants generated 760.9 million kilowatt-hours, while the wind facilities generated 485.4 million kilowatt-hours. The latest record figures represent an increase of 142 million kilowatt-hours on the previous record production of 1.104 billion kilowatt-hours in May. This increase in renewable electricity production saved 377.5 million cubic meters of gas and prevented the emission of 1.12 million tons of greenhouse gases. If hydropower is included, renewable energy production reached 2.089 billion kilowatt-hours or 27% of total electricity generation, saving 633 million cubic meters of gas and preventing the emission of 1.88 million tons of greenhouse gases. Since the beginning of 2025, the total electricity produced by solar and wind has exceeded 6 billion kilowatt-hours. The Uzbekistani government also outlined plans to construct several solar power plants with an overall capacity of 752 MW and 812 MW of energy storage capacity at large enterprises and tourist resorts by 2027 (Daryo). The plans underscore the government’s ongoing efforts to improve Uzbekistan’s energy security and resolve persistent power outages, especially in Tashkent. In the last two years, they have spent $222.5 million upgrading energy infrastructure in the Tashkent region. As a result, they have modernized 36 substations, 665 transformers, and 2,000 kilometers of transmission lines. However, 46 substations and 207 transformers are operating above their capacity. In addition, the number of electricity consumers in the capital rose by 40000 or 6% in the past year. Extended heat waves in July have also placed further strain on the grid as total electricity for the month hit 900 million kilowatt-hours. According to the Ministry of Energy’s plans, they will upgrade 374 kilometers of transmission networks, 11 substations, and 62 transformers in 2025. In 2026, they will replace another 788 kilometers of transmission lines, 35 substations, and 145 transformers.

The operator of the Kashagan oil field, the North Caspian Operating Company (NCOC), won a case brought against it by the Kazakhstani authorities (The Times of Central Asia). An Astana court overturned the $4.2 billion fine imposed by the Kazakhstani Ministry of Ecology and Natural Resources on the company for environmental violations. They alleged that the field operator was storing 1.7 million tons of Sulphur at the site, exceeding the legal limit of 730000 tons. NCOC denied the allegations. While a lower court ruled in favour of NCOC in March, the case proceeded to an appellate court. The court cited procedural violations by the authorities for its ruling and did not address the substance of the government’s claims. They noted that the Ministry retains the right to take further legal action. Nevertheless, an international arbitration case between the two parties remains ongoing. The Kazakhstani government is claiming $150 billion in lost profits from NCOC, noting delays in launching production and oil deliveries. KMG Kashagan controls 16.877% of the NCOC consortium, Shell Kazakhstan Development 16.807%, Total EP Kazakhstan 16.807%, Agip Caspian Sea 16.807%, ExxonMobil Kazakhstan 16.807%, CNPC Kazakhstan 8.333%, and Inpex North Caspian Sea 7.563%.

During a virtual meeting on August 3, OPEC+ announced it will increase oil output by 547000 barrels per day in September (The Astana Times). The group of some of the world’s leading oil producers, including Kazakhstan, cited depleted global oil stocks and healthy demand for its decision. The move represents another significant step in the rolling back of earlier cuts to production of 2.2 million barrels per day, which began in April. They also pledged to continue compensating for any overproduction. In recent years, Kazakhstani oil production has exceeded its OPEC+ quota on several occasions, yet the country’s energy minister has maintained that they will compensate for any oversupply. This week, KazMunayGaz also reported that the Dunga oil field has produced nine million tons of oil since its operations began (The Astana Times). The company extracted 340000 tons from the field in the first half of the year, 7000 tons more than planned. In 2024, they extracted 630000 tons. This year’s production target has been set at 649300 tons. They attributed the increase in production to the renovation of the reservoir pressure maintenance system. In addition, the company delivered its first crude oil to a Hungarian refinery as part of its expanded cooperation with Hungary’s MOL Group (The Astana Times). They confirmed the shipment of 85000 tons from Novorossiysk to the Croatian port of Omišalj. The two companies have planned further deliveries.

Construction work on Kazakhstan’s first nuclear power plant began near Ulken village on the shores of Lake Balkhash (Kazinform). Head of the Kazakhstani Atomic Energy Agency Almassadam Satkaliyev and the Director General of Rosatom State Corporation Alexey Likhachev participated in the ceremony. The preliminary work includes collecting soil samples, which will be analyzed in Russia, and installing specialist equipment. Earlier, we reported that Kazakhstan announced that the Chinese company CNNC would build its second and third NPPs.

Investment:

The World Bank has approved a $50 million grant to support Tajikistan’s economic reforms to bolster the country’s nascent private sector and revitalize public sector efficiency (The Times of Central Asia). The International Development Association (IDA) and its fund for low-income countries will finance the endeavor. Overall, the First Competitive and Inclusive Tajikistan Development Policy Operation will support Tajikistan’s National Development Strategy 2030, which aims to improve the country’s economic competitiveness. The World Bank last approved a similar operation for Tajikistan in 2023. More specifically, this new operation will enhance competition in the telecommunications and digital sectors, increase air connectivity, update Tajikistan’s legal framework covering foreign investment, and improve transparency regarding subsidies in the electricity sector to attract greater private investment and modernize the network. It will also further develop the Rogun HPP’s Benefit Sharing Program, which will employ a portion of the plant’s revenues to support economically vulnerable individuals in Tajikistan. The World Bank has financed 26 projects worth $1.9 billion in Tajikistan. Nevertheless, poverty reduction has remained slow in the country, with 25% of the population surviving on less than $3.65 per day.

At a recent government press conference, Kazakhstani Deputy Prime Minister Kanat Bozumbayev announced that the Kazakhstani government would attract more than $24 billion to construct 86000 kilometers of utility networks and add 7.3 GW of electricity generation capacity (The Astana Times). President Tokayev recently approved the National Project for the Modernization of the Energy and Utilities Sectors. The government plans to finance the project with funding from international institutions, the state budget, and banks. They expect to complete the initiative by 2030. Thirty-five natural monopolies have enacted projects, with six expected to reduce network wear by 40% this year. In addition, the government is investing $278 million to upgrade 8500 kilometers of transmission lines and 42000 pieces of equipment. In 2026, the government will spend a further $1.8 billion to renovate 9,700 kilometers of networks and replace 46000 units of equipment. Kazakhstan also adopted a new water code and plans to modernize 6000 kilometers of irrigation canals, including 962 kilometers this year, irrigating 200000 hectares. The government will complete the renovation of the Karakuys reservoir in the Turkistan region and ten water supply projects in 2025. The country’s reservoirs received 16.9 billion cubic meters of water this spring, releasing 5 billion cubic meters to the Northern Aral Sea, increasing its volume to 24.4 billion cubic meters. According to the government’s plans, the total area employing water-saving irrigation technologies will rise to 912000 hectares by the end of 2027. To achieve this, they will increase the cost reimbursement for modern irrigation equipment from 50% to 80% and raise the tariff on excess water consumption by 20%. The Auyl Amanaty and Auyl-Yel Besigi programs will continue to support rural development, with the government allocating $92.6 million to the Auyl Amanaty program for 2025 and $834.1 million for 2026-2028. These funds will finance 25000 projects, creating an estimated 100000 jobs. The government will also aim to use local supplies where possible and has formed a pool of 220 manufacturers to substitute 2786 previously imported goods worth $3.8 billion. This announcement comes as Kazakhstan’s dilapidated utility networks come under increasing strain and suffer repeated outages due to rising demand, economic growth, and climate change. 

At a recent meeting regarding investment in the Navoi region, the Uzbekistani government announced that investors are ready to commit $566 million to developing eight mineral deposits in the region (Kursiv). So far in 2025, investors have pumped $643 million into the Navoi region. The region has also exported $635 million worth of goods and services, launching $550 million of new industrial facilities. Overall, these investments will boost the region’s economy and increase exports by an estimated $100 million. Additionally, they plan to establish a granite processing plant in the Nurata district, which contains approximately 750 million cubic meters of granite reserves. In the short term, they expect broader regional investments to amount to 1.6 trillion Soum, adding 10000 jobs and 1 trillion Soum to the national budget.  

Trade:

Afghan and Uzbekistani companies have concluded $20 million in deals at a business forum organized by the Afghanistan Chamber of Commerce and Investment in Kabul (UZ Daily). Afghanistan’s Acting Minister of Industry and Trade, Nooruddin Azizi, also revealed plans to increase trade with Uzbekistan to $3 billion annually. Uzbekistan’s Ambassador to Afghanistan, Oybek Usmanov, noted that Afghan exports to Uzbekistan surged 300% in the first half of 2025 and emphasized their readiness to increase trade to $2 billion in the near future. Meanwhile, the Afghanistan Chamber of Commerce and Investment Chairman, Sayed Karim Hashimi, pushed both governments to finalize a preferential trade agreement and provide long-term multiple-entry business visas. Moreover, the Chamber’s First Deputy Head, Mohammad Younus Momand, urged the establishment of a regional joint chamber of commerce involving Turkmenistan, Uzbekistan, Türkiye, Kazakhstan, and Azerbaijan. Regional governments have begun normalizing economic and political relations with Afghanistan’s Taliban-led government since it seized power in 2021. Russia became the first country to recognize the regime earlier this year.

Diplomatic Events:

The UN Secretary General, António Guterres, visited Almaty, Kazakhstan, on August 3 during his tour of Central Asia (The Astana Times). The Secretary General opened the new UN Regional Centre for Sustainable Development Goals (SDGs) in Almaty and met with the UN country team. The Secretary General also held discussions with President Tokayev (The Astana Times). After their deliberations, the two leaders held a press conference, where President Tokayev revealed that Kazakhstan will host a Regional Environment Summit in Astana in April 2026. Kazakhstani Foreign Minister Murat Nurtleu and UN Under-Secretary-General for Economic and Social Affairs Li Junhua also signed the host country agreement between the UN and Kazakhstan.

Last week, Awaza on Turkmenistan’s Caspian coast hosted the Third UN Conference on Landlocked Developing Countries (UN News). Over twenty heads of state and government, the UN Secretary-General, and 3000 delegates attended the conference. Several countries had pavilions exhibiting the latest developments in sustainable development, energy, and transport. Key exhibits outlined the Kazakhstan-Turkmenistan-Iran railway and the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline. Attendees emphasised that the conference reflected a new era of cooperation in Central Asia and addressed several climate-related issues in the region, such as the declining water levels in the Aral and Caspian Seas (UN News). The conference sought to establish partnerships to tackle the structural obstacles to the development of landlocked countries, including high transport costs, climate change, and underdeveloped infrastructure (UN News). As a result of their deliberations, the conference adopted the Awaza Declaration, which builds on the Awaza program for 2024-2034 approved by the UN General Assembly last year. The Declaration delineates a strategy based on five priority areas: structural economic transformation, trade and regional integration, transport and infrastructure, climate change adaptation and disaster risk reduction, and mobilizing finance and partnerships. It urges increased investment from international financial institutions, more South-South cooperation, and for the interests of landlocked countries to be reflected in global trade relations. During the conference, Turkmenistan proposed several initiatives, such as the Global Atlas for Sustainable Transport Connectivity, the Global Hydrogen Energy Transition Program, and the Caspian Environmental Initiative. The attendees also discussed implementing the program, with a mid-term review expected in 2030.

On the sidelines of the conference, Central Asian leaders, including the Chairman of the People's Council of Turkmenistan Gurbanguly Berdimuhamedow, Kazakhstani President Kassym-Jomart Tokayev, Tajikistani President Emomali Rahmon, Kyrgyzstani Prime Minister Adilbek Kasymaliyev, and Azerbaijani Prime Minister Ali Asadov met to consider preparations for the upcoming 7^th Consultative Meeting of the Heads of State of Central Asia (Daryo). President Mirziyoyev outlined the initiatives enacted during Uzbekistan’s chairmanship, such as the latest chairmanship concept and joint action plan finalized earlier this year. Regional Security Council secretaries, heads of special services, and ministers of industry, energy, water management, and ecology met, while youth and media forums also took place. They also explored possible future agreements and initiatives related to trade, water and energy cooperation, transport, and climate action. Meanwhile, an interparliamentary forum and meetings between ministers of defense, trade and transport will occur later this year.

Additionally, Gurbanguly Berdimuhamedow presented President Mirziyoyev with Turkmenistan’s Order for Contribution to the Development of Cooperation for his efforts to develop cooperation between their countries (Kun). Earlier, President Mirziyoyev met with Gurbanguly Berdimuhamedow to discuss the development of bilateral relations, the agreements concluded at their summit in April, and the planned “Shavat-Dashoguz” border trade zone (Daryo). In the first six months of 2025, trade between Turkmenistan and Uzbekistan reached $600 million. Additionally, Uzbekistani Minister of Investment, Industry and Trade Laziz Kudratov met Turkmenistani Minister of Trade and Foreign Economic Relations Nazar Aghakhanov and Minister of Industry and Construction Production Toyguly Nurov (Kun). They agreed to sign a treaty on the operation of the trade zone and a roadmap to increase annual trade turnover to $2 billion. President Mirziyoyev, Gurbanguly Berdimuhamedow, and Azerbaijan’s Prime Minister Ali Asadov held a trilateral meeting (Kun). The meeting focused on regional cooperation in energy, transport, industry, and agriculture. They also explored the reduction of transport costs and the development of transport corridors, which President Mirziyoyev addressed in his speech, noting Central Asia’s lack of seaports. According to the World Bank, transport costs account for up to 60% of the price of goods in Central Asia. Gurbanguly Berdimuhamedow also held a brief meeting with Kazakhstani President Kassym-Jomart Tokayev ahead of the conference (Kazinform).

Financial Reserves:

Uzbekistan’s gold reserves hit a record high of $38.68 billion in July, according to the country’s Central Bank (Kun). In July, the value of gold held by the Uzbekistani Central Bank rose by $265 million. The increase resulted from the growth in international gold prices as the amount of gold physically held by the Central Bank remained unaltered at 11.7 million troy ounces. Meanwhile, Uzbekistan’s total reserve assets grew by 0.4% or $193.7 million to $48.74 billion in July, in contrast to a slight decline in June. However, Uzbekistan’s foreign currency reserves fell by $366.3 million to $8.48 billion by the end of July, with $1.05 billion deposited in the central banks of other countries and the International Monetary Fund and $7.42 billion in foreign commercial banks. At the same time, the Central Bank’s purchased securities rose by $300 million or 42.7% to $1.01 billion. Bonds and equities currently account for 2% of Uzbekistan’s reserve assets. This news comes as other countries in the region, like Kazakhstan, diversify their reserve assets away from developed economies’ currencies and debt instruments due to increasing trade and economic restrictions. In last week’s report, we noted the changing portfolio of assets in Kazakhstan’s National Fund. This week, Uzbekistan’s Ministry of Mining and Geology signed an MoU with China National Gold Group to conduct geological exploration, develop deposits, process rare minerals, train personnel, and introduce advanced technologies (The Caspian Post).

Economic Growth:

Between January and June 2025, Kyrgyzstan recorded the highest GDP growth in Central Asia of 11.7% (Kun). Meanwhile, Tajikistan registered 8.1% growth, and Uzbekistan’s GDP expanded by 7.2% during the period. In addition, Turkmenistan’s GDP grew by 6.3% while Kazakhstan’s increased by 6.2%. Compared to the same period in 2024, Kyrgyzstan’s growth rate was 3.6% higher, Kazakhstan’s 3%, Tajikistan’s 1.9%, and Uzbekistan’s 0.6%. Kazakhstan and Uzbekistan have the largest economies in the region, with the countries’ GDP reaching $288 billion and $115 billion, respectively. This continued regional economic expansion comes as global economic headwinds, trade barriers, and commodity prices increase.