Last week, the media in Central Asia covered several important diplomatic and investment stories. For instance, the India-Central Asia Business Council met in New Delhi, the China-Central Asia Interregional Forum took place, and the CIS Heads of Government met in Dushanbe. Kazakhstan also announced that it would receive $280 million from the UN Green Climate Fund. They also reported on the increase in cargo transit through Kazakhstan, and Japan and Uzbekistan agreeing to cooperate in training 10000 medical specialists. Several outlets also noted numerous important energy stories, including Kyrgyzstan commencing construction on its first wind power plant, Kazakhstan holding talks with Chinese companies on increasing gas production, several Chinese companies winning new oil and gas deposits at auction in Kazakhstan, and Kazakhstan pressuring international energy firms to buy more local goods and services. Other sources reported on ERG announcing a substantial new copper deposit and the continued rise in inflation across the region.

Diplomatic Events:  

The CIS Heads of Government Council met in Dushanbe on June 4-5 (Asia Plus). The member states’ Prime Ministers discussed trade, development, and cultural cooperation. They also approved multiple development concepts concerning light industry, harmonizing air traffic management systems, and collaborating in healthcare provision. They also signed an agreement on the heavy industry. They also considered the upcoming CIS Volunteers Forum and establishing a joint military communication system.  

The Central Asia-India Business Council took place in New Delhi on June 5 (Daryo). The meeting brought together foreign ministers from India, Kazakhstan, Turkmenistan, Uzbekistan, Kyrgyzstan, and Tajikistan to discuss trade and investment ties. Their deliberations concentrated on energy, pharmaceuticals, logistics, and IT cooperation. Addressing the Business Council, Kazakhstani Foreign Minister Murat Nurtleu noted that India is a crucial strategic partner for Central Asia (Kazinform). He said that trade between Kazakhstan and India reached $1 billion in 2024 and highlighted the 41% increase in Indian investments in Kazakhstan, which surged to $525 million. On June 6, the fourth meeting of the Central Asia-India Dialogue occurred (Kazinform). The foreign ministers explored transport and connectivity, green energy, rare earth minerals, security, trade, and technological development. Additionally, they discussed how to contend with environmental issues in the region before discussing several joint projects. They considered the activities of the India-Central Asia Joint Working Group on Chabahar Port and its efforts to boost trade along the International North-South Transport Corridor, the India-Central Asia Rare Earth Forum, and India Stack’s efforts in accelerating digitalization. Lastly, they signed a joint statement reaffirming their commitment to multilateral cooperation (Asia Plus).

Renewable Energy:

Construction work on Kyrgyzstan’s first wind power plant began in Balykchy (24.kg). Metrum TEC is constructing the plant in the Karakol Free Economic Zone. They expect to commission the first 1 MW wind turbine in August 2025. Once complete, the plant will have a total capacity of 100 MW. The first phase will see the construction of 21 turbines, followed by another 20 turbines (each producing 2.5 MW) in the second phase. The plant will generate 250 kilowatt hours of electricity annually, reducing energy shortages and greenhouse gas emissions. Meanwhile, a Kyrgyzstani Ministry of Energy report revealed that electricity demand is growing by 3-10% annually (24.kg). However, since 2010, the country has only added 420 MW or 10% of the grid’s output, including the first unit of the Kambarata HPP-2 (120 MW) and the two new units at the Bishkek Combined Heating and Power Plant (300 MW). The Energy Ministry also reported this week that electricity generation at the Bala-Saruu HPP has doubled in the first five months of 2025 (24.kg). The plant generated 47.5 million kilowatt-hours, outstripping the plan by 22 million.

Last week, Uzbekistan’s Energy Ministry reported that its wind and solar power plants produced a record-breaking 1.1 billion kilowatt hours of electricity in May, the first month renewable energy production exceeded 1 billion kilowatt-hours (Kun). In contrast, in May 2023, renewable energy generation stood at 576.9 million kilowatt hours. During the month, renewables accounted for 17% of the country’s electricity output. In total, eleven solar plants generated 712 million kilowatt hours, and three wind plants generated 392 kilowatt hours. This growth of renewable energy production saved 355 million cubic meters of natural gas, preventing the emission of 638,000 tons of carbon dioxide, 537 tons of nitrogen oxide, 100 tons of carbon monoxide, and 6.7 tons of sulfur dioxide. If hydropower is included, non-fossil fuel electricity production reached 1.82 billion kilowatt hours or 28% of the total output in the month. This saved 551 million cubic meters of gas and 1 million tons of carbon dioxide. Uzbekistan has ambitious plans to expand its renewable energy output. It aims to increase renewable energy’s share of the country’s total electricity output from 16% today to 26% by the end of 2025. By the end of 2027, it expects to commission 28 green energy plants, adding 8 GW of capacity (Kun). They also aim for renewable energy plants to provide around half the country’s electricity by 2030 (Interfax).

Trade and Investment:

Construction has begun on a new $50 million electronics plant in Semey (Kursiv). Suto Kazakhstan is leading the project. The plant will manufacture microchips, optoelectronic modules, smart host controllers, power supply units, energy-efficient lamps, and digital displays. The regional government stated the plant will create 500 permanent jobs. A delegation from the Abai region recently travelled to the Greater Altai International Conference on Subregional Cooperation in Xinjiang and concluded 15 memoranda of understanding worth $1.5 billion with Chinese investors.  

Kazakhstani Prime Minister Olzhas Bektenov recently met with Afghanistan’s Acting Minister of Industry and Commerce, Nuriddin Azizi, on the sidelines of the Astana International Forum to discuss economic cooperation and trade (Daryo). They explored a range of topics, including digitalization, agriculture, mining, logistics, healthcare, trade, and education. In 2023, trade between the countries reached $545.2 million, with Kazakhstani exports accounting for $527.7 million. They also discussed projects like the Torghundi–Herat Trans-Afghan railway, which aims to enhance connectivity along the North-South Transport Corridor, joining Central and South Asia.

On the sidelines of the 13th meeting of transport ministers from the Economic Cooperation Organization, Uzbekistan and Iran signed a memorandum of understanding on increasing transit and trade ties (Daryo). The memorandum focuses on expanding investment in port and corridor development. The Iranian Minister of Transport and Urban Development, Farzaneh Sadegh, the Uzbekistani Minister of Transport, Ilhom Makhkamov, and the head of Iran’s Ports and Maritime Organization, Saeed Rasouli, attended the signing ceremony. They agreed to facilitate private Uzbekistani investment in Iran’s southern port of Shahid Rajaee. They also plan to build a logistics center and terminal at the port. This initiative follows a similar 2022 transit project through the Iranian port of Chabahar. In 2023, Uzbekistan, Turkmenistan, Türkiye, and Iran signed an agreement to establish a new transport corridor. In addition, Uzbekistan and Iran waived their respective entry and exit fees for each other’s freight transport in January 2025.

The second China-Uzbekistan Interregional Forum occurred in Samarkand on June 1-2 (UZ Daily). Over 2800 business representatives, government officials, and other experts attended the forum. Deputy Prime Minister of Uzbekistan Jamshid Khodjaev led the Uzbekistani delegation. The event offered a unique opportunity to bolster investment and trade cooperation between the two countries. China is Uzbekistan’s principal trade and investment partner. Trade has doubled in the last five years, surging to $13 billion in 2024. Meanwhile, direct investment from China has risen five times since 2017, and the number of joint ventures tripled to 3700. The Chinese delegation consisted of representatives from Shaanxi, Shandong, Heilongjiang, and Gansu, as well as the Inner Mongolia Autonomous Region, Xinjiang Uyghur Autonomous Region, and Ningxia Hui Autonomous Region. The two delegations discussed multiple ventures in agriculture, energy, electronics, textiles, construction, and chemicals. They also explored the commencement of construction work on the China-Kyrgyzstan-Uzbekistan railway. Over twenty Chinese companies, including Shaanxi Construction Engineering, Yalan Textile, and Shaanxi Coal and Chemical Industry, attended the forum. They signed over ten bilateral agreements and exhibited various Uzbekistani and Chinese products (Kun). For instance, the Namangan regional administration concluded several deals worth $530 million. Navoi region also finalized an agreement with Hong Dau Ke Ji to build a $30 million oil refinery. In addition, Shichuan Chuahe Shengxin Electric Engineering plans to construct a $5 million shopping center in New Navoi and invest $20 million in gold and silver mining. The Governor of the Samarkand region, Adiz Boboev, met with the Deputy Governor of Shandong Province, Sun Zhongzhi. They concluded a partnership memorandum and several agreements related to production and trade. They explored cooperation in agriculture, textiles, and pharmaceuticals. In addition, they discussed opening a joint vocational training center in Samarkand. Boboev also met with the Governor of Shaanxi Province, Zhang Gang. They explored the possibility of companies from Shaanxi setting up an industrial hub in the Urgut Free Economic Zone.  

Transport officials from Uzbekistan and Türkiye recently held talks in Bukhara (Kun). They finalized an agreement to digitize all freight transport permits. Currently, only transit and bilateral permits are issued through an e-permit system. They agreed to expand this to third-country permits by the beginning of 2026. They also discussed the upgrading of bus terminals and passenger transportation. In addition, they decided to study Türkiye’s implementation of smart transport systems and the development of passenger infrastructure. Overall, the agreement aims to boost bilateral trade. In April 2024, Uzbekistan launched a similar e-permit system with Kazakhstan.

In 2024, cargo transit from China via Kazakhstan to third countries reached a new high of 15.4 million tons, amounting to a 23% increase compared to 2023. (Kazinform). Of the total cargo that transited through Kazakhstan in 2024, 72% came from China, while only 2% was sent to China. Recipients like the EU and Uzbekistan were responsible for most of the growth. Cargo transiting to Uzbekistan rose by 60% to 5.3 million tons, while cargo transiting to the EU grew by 134% to 2.3 million tons. On the other hand, the amount of freight transported to Russia fell by 14.7% to 3.6 million tons. Key items transported from China included vehicles (3.1 million tons) and machinery (1.2 million tons). In total, 62% of the cargo was transported by rail. At the same time, cargo shipments from China along the Trans-Caspian International Transport Route rose 33 times in 2024.

Migration:

Uzbekistan’s Migration Agency signed a cooperation agreement with the Japan-China-Asia Educational Medical Cultural Exchange (JCAEMCE) Foundation to recruit 10000 Uzbekistani medical specialists to work in Japan (Kun). As part of the program, they will open training centers in Tashkent, Samarkand, and Namangan to teach potential recruits Japanese and prepare them for qualification exams. They will also launch a new online platform later this month called WiseBridge. This platform will enable applicants to search for job vacancies and contact employers. This program comes as Japan struggles with an ageing population and shrinking workforce. At the same time, Uzbekistan is looking to diversify the destinations available to its labor migrants.

Inflation and Debt:

According to Uzbekistan’s Statistics Committee, annualized inflation fell to 8.7% in May, down from 10.1% in April (Kun). However, the country experienced the sharpest month-on-month rise in inflation in the last year – 1.5%. A surge in prices for non-food items and services drove the spike. While food prices fell by 0.8%, prices for non-food items rose by 1.7% and the price for services increased by 5.9%. The increase in utility prices caused a steep rise in prices for services. Electricity tariffs rose by 18.8%, and gas prices skyrocketed by 39.2%.

This week, Uzbekistan’s Central Bank expressed concern over the population’s increasing debt burden (Daryo). According to its 2024 Financial Stability Review, the share of credit repayments relative to monthly income (debt burden) stood at 34%. However, they noted that a substantial segment of the populace spent half their monthly income repaying loans. They highlighted that if there was a significant economic downturn, four major banks risk falling below the minimum required capital adequacy ratio, undermining their stability. They also warned that several banks remain reliant on the deposits of a few large customers, which, if they were to withdraw their funds, would threaten the banks’ liquidity. Microloans remain an area of concern. Many are non-performing, and some banks lack the liquidity to cover them. In addition, house prices rose 17% in 2024, further heightening the threat to the financial sector. Continued geopolitical instability and its effect on inflation are another possible threat. Nevertheless, confidence in the sector remains high, with 67% of respondents to a Central Bank survey expressing confidence in the system. However, 56% and 61% expect systemic threats to emerge in the next year and 1-3 years, respectively. 

Meanwhile, the Kazakhstani National Bank maintained its base interest rate at 16.5% amid continued inflationary pressure (The Astana Times). Annualized inflation rose to 11.3% in May, while monthly inflation stood at 0.9%. Inflation expectations rose to 14.2% in May, compared to 10.1% in April. However, due to strong consumer demand and increased investment, the bank revised its economic growth forecast upwards to 5-6% for 2025. Nevertheless, they expect growth to decline to 4-5% in 2026. The National Bank anticipates future inflation of 10.5–12.5% in 2025 and 9.5–11.5% in 2026. They hope it will fall to 5.5–7.5% in 2027 if they continue to pursue a tighter monetary policy and the government reins in the budget deficit.

On June 1, Kazakhstan’s Economy Ministry reported on the state of the National Fund (Kazinform). At the beginning of June, its assets stood at 33.86 billion tenge, compared to 31.90 billion at the start of May. The Fund received 1775303400 tenge, with 1762526089 tenge paid by taxes from oil companies. Other sources of revenue included privatizations and the sale of agricultural land. Over the same period, the government withdrew 2638925501 tenge from the Fund, 2 billion in guaranteed transfers ,and 620 million in targeted transfers. They also spent 1.7 billion tenge upgrading the Ridder Combined Heat and Power Plant in East Kazakhstan.

On the sidelines of the Astana International Forum, Kazakhstan signed an agreement with the OECD to support its structural economic reforms, improve its legal and institutional frameworks, and boost its economic competitiveness (Daryo). The initiative is part of the Eurasian Competitiveness Program, which coordinates policy development, technical expertise, and capacity-building efforts in the region.

Environment and Water Management:

Tajikistan, Kazakhstan, and Uzbekistan met on the sidelines of the recent International Conference on Glacier Preservation in Dushanbe (The Caspian Post). The three countries agreed on the joint operation of the Bahri Tojik Reservoir for the summer of 2025. Tajikistan’s Minister of Energy and Water Resources, Daler Juma, Uzbekistan’s Minister of Water Management, Shavkat Khamrayev, and Kazakhstan’s Minister of Water Resources and Irrigation, Nurzhan Nurzhigitov, represented their countries at the meeting. Before signing the protocol on the reservoir's management, the parties explored several issues pertaining to cross-border water management. The Syrdarya Basin Water Organization anticipated water inflow of 12.32 cubic kilometers between October 2024 and March 2025. However, inflow exceeded their expectations by 1.04 cubic kilometers. Water outflow was also 1.23 cubic kilometers greater than expected, reaching 11.13 cubic kilometers. They expect the total inflow into the Syrdarya basin to be 25.77 cubic kilometers during the 2025 growing season, or about 87% of the norm. The 89th meeting of the Interstate Coordinating Water Management Commission on April 5 set Kazakhstan’s water limit to 909 million cubic kilometers, Kyrgyzstan's - 270 million, Tajikistan's – 1.905 billion, and Uzbekistan's – 8.8 billion.

Kazakhstan will receive $280 million from the UN Green Climate Fund to support several environmental initiatives (The Astana Times). The UN Green Climate Fund is a global mechanism to aid countries in addressing the challenges posed by climate change. Under Kazakhstan’s country program, the government has outlined seven projects concerning reducing emissions from the energy sector, improving water management in agriculture, and upgrading livestock farms. These projects will cost $1 billion, with $630 million covered by the Green Climate Fund. They also plan to commission eleven renewable energy projects through the EBRD Renewable Energy Program. This program has already funded nine projects in Kazakhstan.

Oil and Gas:

Representatives of QazaqGaz recently met with a delegation from China National Petroleum Corporation (CNPC) (Kazinform). The Chairman of the Board of QazaqGaz, Sanzhar Zharkeshov, and the Deputy Director General of the CNPC Development and Planning Department, Zhang Pinxian, led their respective delegations. They discussed expanding cooperation and explored possible new oil and gas projects. Specifically, they considered expanding gas production in Kazakhstan and introducing new technologies to bolster their countries’ energy security.

Officials from QazaqGaz and China’s NCOC also toured the new gas processing plant under construction at Kazakhstan’s Kashagan field (Kazinform). Once complete, the plant will have a capacity of 1 billion cubic meters. Earlier, we reported that several Western shareholders in the Kashagan field were skeptical about investing in the new plant. Additionally, Kazakhstan’s Energy Minister Yerlan Akkenzhenov confirmed on June 3 that the country would establish seven more joint oil and gas projects to grow local production (Kazinform). The Minister also confirmed that Kazakhstan has built eight production facilities since 2022.

Moreover, Kazakhstan has pushed international energy firms to spend more locally in Kazakhstan (Kursiv). Kazakhstan’s Prime Minister Olzhas Bektenov recently called on the operators of the country’s three largest fields, Tengiz, Kashagan, and Karachaganak, to spend more on Kazakhstani goods and services. Currently, they source only 23% of their goods and services from Kazakhstani firms. According to the Energy Minister, the energy sector spent $2.1 billion in the first quarter on goods and services, with Kazakhstani products accounting for 60.2%, a slight decline compared to 61.9% in 2024. However, as reported earlier, Kazakhstan is pushing several firms to renegotiate contracts. In 2024, they signed 58 contracts worth $828.9 million with local firms. So far this year, they have inked eight more contracts valued at $24.4 million. The government is also amending the tender procedures for the three fields to ensure the purchase of more local items. They expect the share of Kazakhstani goods purchased by the Karachaganak field to rise from 18% in 2025 to 30% by 2030, while the share bought by the Kashagan field will increase from 17% to 28%. However, the amount of local goods purchased by the Tengiz field dropped slightly in 2024 from 70% to 69%.

Chinese companies prevailed in Kazakhstan's latest auction of oil and gas deposits (Kursiv). Earth Oil & Gas gained the Sarysu block in the Kyzylorda and Turkestan regions, Taraz Petroleum the Kokoi block in the Zhambyl region, Kazakhstan Dinghua Energy the Ustyurt site in the Mangystau region, and Almaty Oil Ventures the Zharkent site in the Zhetysu and Almaty regions. Hong Kong Bai Li Oil & Gas Limited and Kazakh businessman Ramil Kimurov control Earth Oil & Gas, while Serik Myrzabekov and Sattar Mutalkhanov own Taraz Petroleum. Li Jie owns Kazakhstan Dinghua Energy, and Bekzhan Safinov and Daniyar Kauldashev own Almaty Oil Ventures. However, the Energy Ministry confirmed that they did not receive any successful bids for five blocks: Aiyrtau II in the Atyrau region, Tyubedzhik (Karakum) in the Mangystau region, Yuzhno-Gremyachenskoye in the West Kazakhstan region, Karatusai in the Aktobe region, and Darinskoye in the West Kazakhstan region.

Mining:

The Eurasian Resources Group (ERG) recently announced the discovery of a significant copper deposit at the Karabas copper porphyry site in central Kazakhstan (Kursiv). Initial estimates indicate the deposit could contain as much as 250000 tons of copper. ERG plans to complete a full resource assessment of the deposit by the end of 2025. ERG aims to extend its resource base amid increasing demand for critical minerals. For instance, they expect to expand operations at the Ayat iron ore deposit and produce gallium at the Pavlodar Aluminum plant. According to CEO Serik Shakhazhanov, they have focused two-thirds of their exploration efforts on chromium, iron ore, and bauxite, with 20% on rare earth metals. Copper is an essential metal for the green transition. However, the International Energy Agency reported that they anticipate demand will exceed supply by 30% by 2035, possibly hindering the development of green energy.