INTERNATIONAL JOURNAL OF ARTIFICIAL INTELLIGENCE
ISSN: 2692-5206, Impact Factor: 12,23
American Academic publishers, volume 05, issue 08, 2025
https://www.academicpublishers.org/journals/index.php/ijai
page 575
THE ROLE OF INTERNATIONAL FINANCIAL INSTITUTIONS IN SUPPORTING
PPPS IN UZBEKISTAN'S INFRASTRUCTURE
Eshquvatova Pokiza
University of World Economy and Diplomacy
+998991433973
INTRODUCTION
A Public-Private Partnership (PPP or P3) is a long-term arrangement where a government entity
collaborates with a private-sector company to deliver public infrastructure and services. Through
this arrangement, the public and private sectors pool their resources and expertise to provide a
service or facility that the general public can use. Each partner shares in the potential risks and
rewards associated with providing the service and/or facility, in addition to sharing resources. PPPs
are developed in fields where a collaborative effort between public and private organizations offers
effective solutions to significant societal problems.
Public-Private Partnerships are the best solution for developing countries that need infrastructure
development. Since, infrastructure projects are usually nation-scale and requires a great deal of
resources, expertise and finance, PPPs offers division of responsibilities and liabilities. This makes
high scale projects effective and accomplishable. Emerging economies which lack in financing
and providing required expertise for the infrastructure projects could use PPPS as effective
solution.
Along with other transition economies, Uzbekistan have been using PPPs effectively in covering
of infrastructure requirements. Since 2017, many projects have been started, some of them are
completed while others are being continued. Most projects are in sectors as green energy,
transportation, healthcare and education. International financial institutions as World Bank,
EBRD, IMF and IFC play crucial role in realization of these projects. By taking part in financing,
risk-sharing and capacity building, these organizations are helping Uzbekistan to make reforms
and changes in PPP framework as well as completing successful projects.
This article aims to define the role and contribution of IFIs in PPP development in Uzbekistan by
clearly stating each organizations efforts and case study of projects with participation of IFIs
Overview of Uzbekistan’s Infrastructure and PPP Needs
Despite the efforts being made since reforms in 2017, Uzbekistan has still infrastructural gaps.
According to World Bank
1
Uzbekistan faces substantial investment needs to maintain service
quality, particularly in transport, water supply, and energy. Water access challenges persist, with
less than half the population having access to clean drinking water. The country's strategic location
for transit between China and Europe is hindered by infrastructure bottlenecks, and the road sector
needs substantial maintenance investment. Energy inefficiencies cost the economy $1.5 billion
annually. The country's infrastructure requirements are estimated at around 10% of GDP annually
until 2030. External financing covers most public investments due to limited fiscal space.
Attracting private and foreign investment is a priority, with recent legal improvements. Most
1
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ISSN: 2692-5206, Impact Factor: 12,23
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investment in infrastructure since 2017 has come from international financial institutions (IFIs)
and bilateral creditors, and not from the private sector or the Government of Uzbekistan
Uzbekistan's infrastructure development goals focus on building a sustainable, resilient, and
modern economy by investing in transportation, energy, digital, and irrigation infrastructure, with
a strong emphasis on attracting private investment and leveraging Public-Private Partnerships
(PPPs) to achieve key objectives like boosting economic growth, increasing regional connectivity,
achieving green energy targets, and improving service delivery across sectors. The government
aims to upgrade roads, expand high-speed railways, modernize airports, increase renewable energy
capacity, and enhance the efficiency of irrigation systems to address energy shortages, promote
trade, and adapt to climate change. he government’s development priorities under the “Uzbekistan
– 2030” strategy foresee mobilizing at least USD 30 billion in private investment by 2030 through
PPPs in sectors such as highways, energy, water, education, and health, accompanied by targeted
projects like the Tashkent–Samarkand toll road and the transfer of energy distribution networks to
private operators.
2
Uzbekistan’s domestic financial system, while developing, lacks the depth and capacity to meet
the vast infrastructure investment needs estimated at billions of dollars annually. Local banks
typically have short-term funding bases and limited balance sheet capacity, which restricts their
ability to finance long-term, capital-intensive projects such as power plants, highways, and
hospitals. Moreover, interest rates in the domestic market are relatively high, which increases the
cost of borrowing for both the government and private sector investors. The capital market is still
underdeveloped, with insufficient liquidity and limited issuance of long-term bonds that could
support infrastructure financing. The outsized role of the state in Uzbekistan’s economy and its
underdeveloped domestic capital market act as significant constraints and call for a diversification
of sources to finance the green transition.
3
At the same time, the scale of infrastructure modernization required under Uzbekistan’s national
strategies (such as energy transition, transport connectivity, and digitalization) far exceeds what
domestic resources can provide. Fiscal constraints also limit the government’s ability to fund
projects directly, as maintaining macroeconomic stability and debt sustainability remain priorities.
Given these constraints, Uzbekistan cannot rely on domestic financing alone to meet its ambitious
infrastructure development needs. To bridge this gap, international financial institutions emerge
as key partners, not only by mobilizing long-term and affordable capital but also by providing
technical expertise, risk-mitigation instruments, and advisory support. Their involvement
enhances investor confidence and creates the institutional framework necessary for successful
public-private partnership projects.
Role of International Financial Institutions in Supporting PPPs
An international financial institution (IFI) is an organization established by multiple countries with
the purpose of promoting economic development and financial stability through the provision of
funding, technical assistance, and policy advice. These institutions are usually created by
international agreements and are owned by member states, which contribute capital and
2
https://azizovpartners.uz/en/legislativenews/ppp-project-for-2024-2030-in-uzbekistan
3
https://www.oecd.org/en/publications/financing-uzbekistan-s-green-transition_27d2489d-en.html
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ISSN: 2692-5206, Impact Factor: 12,23
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collectively govern their operations. Unlike purely commercial lenders, IFIs are mandated to
support long-term development objectives such as poverty reduction, infrastructure
modernization, and regional integration.
Their operations extend beyond financing; they also provide guarantees, risk-mitigation
instruments, and expertise that help countries attract private investment. In the context of public-
private partnerships, IFIs play a catalytic role by bridging investment gaps, strengthening legal and
institutional frameworks, and ensuring that projects are implemented according to international
standards of transparency and sustainability.
International financial institutions play several interconnected roles in supporting PPP
development. Their primary contribution lies in providing long-term financing and equity
investments that are often unavailable in domestic markets, while also mobilizing additional
private capital through co-financing arrangements with commercial banks and investors. Beyond
financing, they reduce uncertainty by offering guarantees and insurance against political,
regulatory, and currency risks, thereby making projects more attractive to private partners.
Equally important is their advisory and technical assistance. IFIs support governments in preparing
feasibility studies, structuring contracts, and ensuring that projects meet international standards.
They also assist in strengthening the policy and institutional environment by contributing to the
development of PPP laws, procurement frameworks, and specialized PPP units, while at the same
time training officials and building local expertise.
Another essential role is the transfer of knowledge and best practices. By bringing in international
experience and lessons from other countries, IFIs encourage the adoption of sustainable,
transparent, and socially inclusive project standards. In Uzbekistan, these functions are particularly
significant because the domestic financial system is still developing, and investor confidence
depends heavily on the credibility and involvement of trusted international institutions.
Key international financial institutions engaged in Uzbekistan’s infrastructure development
include the World Bank Group (particularly IFC and MIGA), the Asian Development Bank, the
European Bank for Reconstruction and Development, the Islamic Development Bank, the Eurasian
Development Bank, and the Asian Infrastructure Investment Bank. Each of these institutions
contributes not only capital but also technical expertise and risk-sharing mechanisms essential for
PPP implementation.
Case Studies of IFI-Supported PPP Projects in Uzbekistan
The
Zarafshan Wind Power Project
, located in the Navoi region, is a 500 MW wind farm
developed through a PPP model led by Masdar and structured with significant support from IFC,
exemplifying a major leap in Uzbekistan’s renewable energy ambitions. IFC anchored a combined
financing package of USD 94 million for the Shahom Zarafshan Energy SPV, complemented by
parallel loans from the Japan International Cooperation Agency (JICA), the Dutch Entrepreneurial
Development Bank (FMO), the Asian Development Bank (ADB), EBRD, Natixis, and First Abu
Dhabi Bank. This consortium structure ensured both project scalability and risk diversification
4
.
4
https://www.ifc.org/en/pressroom/2022/ifc-provides-financing-for-the-first-wind-farm-in-uzbekistan
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ISSN: 2692-5206, Impact Factor: 12,23
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Upon completion, the wind farm is projected to power approximately 500,000 households and
avert over one million metric tons of CO₂ emissions annually, aligning with Uzbekistan’s target to
derive 25 percent of its electricity from renewables by 2026
5
IFC’s role extended beyond financing: it provided structured advisory on PPP contracting and
institutional frameworks, ensuring policy alignment and investor confidence, while the
multilaterals collectively mitigated financing risk and offered long-term, low-cost capital. This
collaboration epitomizes how a combination of financial instruments and advisory mechanisms
from IFIs can enable a landmark renewable PPP in an emerging market.
In the energy sector, the European Bank for Reconstruction and Development (EBRD) has taken
a leading role in advancing several landmark wind energy initiatives. One of the earliest among
them was the
Karatau Wind Power Plant
, a 100 MW facility in Karakalpakstan developed by
ACWA Power. With EBRD financing of approximately USD 19.3 million—co-financed by
European development institutions such as DEG and Proparco—the project set a pioneering
precedent under Uzbekistan’s PPP framework and paved the way for competitive bidding, gender-
responsive workforce development, and low-cost renewable electricity. Supporting the
government's green transition objectives and reducing CO₂ emissions by over 178,000 tones
annually, the Karatau project has been described as a critical milestone in the country’s renewable
energy transformation.
6
Building on this momentum, the EBRD has also been instrumental in financing
larger-scale wind
power capacities
, including two 500 MW wind farms in the Bukhara region—the Bash Wind and
Dzhankeldy Wind projects. Financing these greenfield projects required syndicated loans totaling
USD 520 million, mobilizing both EBRD A-loans and B-loans from commercial banks. These
initiatives deliver substantial environmental benefits—reducing carbon emissions by nearly a
million tons annually—and introduce advanced environmental monitoring technology to protect
biodiversity.
7
In the healthcare domain, one of the most socially impactful PPPs is the
dialysis services pilot
,
where the IFC advised the Ministries of Finance and Health in structuring a tender that awarded
operations to NephroPlus, Asia’s largest dialysis provider. The agreement covers four clinics
across Tashkent, Karakalpakstan, and Khorezm, delivering care to over 1,100 patients with
significantly improved quality, reduced costs, and home-based peritoneal dialysis options for the
first time. This project introduced transparent patient selection criteria, cost-saving innovations
such as single-use filters, and improved patient outcomes—shifting the dialysis tariff to
approximately USD 48 per session from USD 60 previously. It has been celebrated as a "market-
changing PPP" that delivers both service quality and equity.
8
CONCLUSION
5
https://www.ifc.org/en/pressroom/2022/ifc-provides-financing-for-the-first-wind-farm-in-uzbekistan
6
https://www.ebrd.com/home/news-and-events/news/2023/ebrd-finances-landmark-wind-project-in-western-
uzbekistan.html
7
https://www.ebrd.com/home/work-with-us/projects/psd/52773.html
8
https://www.ifc.org/en/pressroom/2020/uzbekistan-set-to-deliver-improved-dialysis-services-to-patients-with-
ifc-support
INTERNATIONAL JOURNAL OF ARTIFICIAL INTELLIGENCE
ISSN: 2692-5206, Impact Factor: 12,23
American Academic publishers, volume 05, issue 08, 2025
https://www.academicpublishers.org/journals/index.php/ijai
page 579
Public–private partnerships (PPPs) have emerged as a cornerstone of Uzbekistan’s infrastructure
modernization strategy, offering a mechanism to attract private capital, share risks, and improve
service delivery in critical sectors such as energy, transport, and healthcare. International financial
institutions (IFIs) have played a decisive role in this process, not only by providing long-term
financing but also by enhancing institutional capacity, promoting good governance, and
introducing global best practices into project preparation and implementation.
The evidence shows that without IFI involvement, many of Uzbekistan’s large-scale PPPs—
particularly in renewable energy and healthcare—would not have reached financial close or
achieved international investor confidence. Instruments such as credit guarantees, blended finance,
and viability-gap funding have mitigated risks that the local financial system is not yet equipped
to absorb. At the same time, IFIs have helped shape Uzbekistan’s policy and legal frameworks,
reducing uncertainty and aligning PPP practices with international standards.
Looking forward, Uzbekistan’s success in leveraging PPPs will depend on moving from a pilot-
phase approach toward a holistic and sustainable PPP ecosystem. IFIs are uniquely positioned to
support this transition by catalyzing green and inclusive investments, strengthening fiscal
governance, and promoting regional integration projects. By strategically aligning IFI support with
national development priorities, Uzbekistan can ensure that PPPs not only bridge the infrastructure
gap but also contribute to long-term economic resilience, social equity, and environmental
sustainability.
REFERENCES
INFRASTRUCTURE GOVERNANCE ASSESSMENT 2023- World Bank
https://azizovpartners.uz/en/legislativenews/ppp-project-for-2024-2030-in-uzbekistan
https://www.oecd.org/en/publications/financing-uzbekistan-s-green-transition_27d2489d-en.html
https://www.ifc.org/en/pressroom/2022/ifc-provides-financing-for-the-first-wind-farm-in-
uzbekistan
https://www.ifc.org/en/pressroom/2022/ifc-provides-financing-for-the-first-wind-farm-in-
uzbekistan
https://www.ebrd.com/home/work-with-us/projects/psd/52773.html
