Uzbekistan to Receive $255 Million for China-Kyrgyzstan-Uzbekistan Railway Construction: What’s Known About the Project?

Uzbekistan continues to strengthen its position in the international transport network by participating in a major project to build a railway line connecting China, Kyrgyzstan, and Uzbekistan, this is reported by the railway transport news portal Railway Supply.

As part of this project, “Uzbekistan Railways” will receive significant financial support. The Reconstruction and Development Fund of Uzbekistan (FRRUz) will provide the company with a loan of $255 million.

AŽD Praha to Implement Advanced Signaling Systems at Five Stations in Poland: Contract Worth 97.2 Million PLN

These funds are intended to form the Uzbek government’s share in the equity capital of the Joint Project Company “China-Kyrgyzstan-Uzbekistan.”

The primary task of this company will be to develop and implement railway infrastructure along the entire route.

A draft decree signed by President Shavkat Mirziyoyev outlines the conditions for the loan. The fund will disburse the money in stages, starting in 2024, when the company will receive the first $14 million.

The total loan term is 15 years, with a seven-year grace period. The interest rate is set at 5% per annum, indicating significant government support for the project.

It is worth noting that the Reconstruction and Development Fund has previously provided financial assistance to “Uzbekistan Railways.”

In October 2023, the president signed a decree granting the company a $150 million loan. These funds were allocated for the production of freight and passenger cars, as well as for increasing production capacities to expand the country’s export potential. The loan was granted for 10 years at the same 5% annual interest rate.

The Reconstruction and Development Fund of Uzbekistan is actively used to finance key international projects involving the country.

These include projects with Hungary and Turkey, which also received funding from this fund.

However, despite significant government support, there are still questions about the financing of the remaining portion of Uzbekistan’s share in the project.

The decree does not specify where “Uzbekistan Railways” plans to obtain additional funds.

It is expected that Uzbekistan’s share in the project will amount to about $1.2 billion, which is 24.5% of the total budget.

Kyrgyzstan also faces a similar financial burden, needing to invest a comparable amount. However, the sources of financing for Kyrgyzstan remain uncertain at this time.

The China-Kyrgyzstan-Uzbekistan railway project is attracting attention not only for its scale and significance but also for the involvement of major players like China.

The Chinese side has already confirmed its willingness to allocate $2.35 billion for the project. This underscores the importance of the route to China and its desire to control key transport corridors in the region.

The project promises to significantly alter the transport map of Central Asia, enhancing the integration of the participating countries and providing new opportunities for economic growth.

Rail business, industry, and railway technology news from Railway Supply that you might have missed:

Lokaltog Chooses Stadler for Supply of Battery-Electric Trains: 14 Trains with an Option for 10 More