Tashkent, Uzbekistan (UzDaily.com) -- On the basis of the new principle of economic growth - the system of public-private partnerships, many projects are being implemented. Legislative acts envisaging these goals have been adopted. Active participation in this process of international financial institutions contributes to the effectiveness of the system.

This topic was discussed in an interview with Cassandra Colbert, IFC Regional Manager for Central Asia. 

- Tell us about IFC’s activities in Uzbekistan

- As a member of the World Bank Group, our goal is to help end poverty and create opportunity in this country. We do that by supporting the development of Uzbekistan’s private sector with both investments and advisory services. Our aim is to help companies grow and innovate, creating jobs, bolstering infrastructure, especially power systems, and supporting Uzbekistan’s goal of becoming a middle-income country.

Uzbekistan is an important country for us, and we are working on several fronts here. We are looking to invest in areas such as energy, manufacturing, services, and agribusiness. In the financial sector, we will continue to focus on financial institutions that lend and lease to support small and medium-sized enterprises. 

We are also helping the government establish and develop a strong pipeline of PPPs. Along with other international financial institutions, we are also supporting the government’s privatization programs in the banking and chemical sectors. 

Ultimately, I am a big believer in the future of Uzbekistan. The country has taken bold steps to remake its economy and create opportunities for its people. As that process continues, IFC is here to help. 

- How IFC can support Uzbekistan during the COVID-19 outbreak? 

- IFC is moving quickly to cushion the COVID-19 pandemic’s economic blow by supporting client businesses and financial institutions with a combination of financing and advisory. We recently held a webinar on stress-testing for Uzbekistan’s financial institutions as part of IFC’s response to the impact of the coronavirus pandemic. Seven local banks participated in the virtual session aimed at equipping them with knowledge and tools to urgently respond to unforeseen disruptive events. 

- Tell us about IFC’s involvement in PPP projects in Uzbekistan 

- PPPs are an important tool to attract investment to Uzbekistan for better infrastructure solutions and to increase efficiency of government investments. By bringing our global experience in PPPs to the table, IFC helps the government identify, structure, and procure PPP projects in the country transparently and competitively.

Since 2018, together with the World Bank, we advised the government on how to open up the power sector to private investment by implementing the first-ever competitive PPP solar project in the country. I’m referring to the plant coming up in the Navoi region. In October last year, Masdar Clean Energy of the United Arab Emirates was awarded the project with a bid to supply solar power at just 2.67 U.S. cents per kilowatt hour, one of the lowest tariffs in emerging markets. The PPP, tendered under the World Bank Group’s Scaling Solar program, will soon add 100 MW of clean, renewable energy to the country’s energy mix.

And that’s not all—we are particularly delighted that, given the successful outcome of the first tender, the government of Uzbekistan, with IFC’s support, launched another tender for an additional PPP for 400 MW, followed by more PPPs for a total of 1000 MW of solar power.

As part of these efforts, we recently organized a workshop on structuring of PPPs to develop solar photovoltaic (PV) parks with battery energy-storage systems; this was for officers from the ministries and state agencies working to attract investment in the energy sector. The workshop provided insights into—and discussed—the PPP structure for the proposed stations, which will generate a total of 500 MW of power. The new power stations will be the first of their kind in Uzbekistan as they will combine solar PVs with battery energy-storage systems. 

- Tell us a bit more about Syrdarya Combined-Cycle Gas Turbine (CCGT) Private Public Partnership Project 

- This is an important project for both IFC and Uzbekistan. We are helping the government structure a transparent and competitive tender process for the PPP to develop a 1,200 - 1,500 MW gas-fired power plant in Syrdarya region. This large-scale PPP will help modernize Uzbekistan's aging power infrastructure and provide both residents and businesses with a steady supply of electricity. 

Uzbekistan has ample natural gas reserves and gas-fired power plants are crucial to regulate the power grid. This, in turn, will enable increased penetration of intermittent renewable-energy sources, such as wind and solar. Modern and highly-efficient CCGT plants will reduce in half the use of gas, when compared to existing gas-fired plants. Not to mention that this will significantly reduce GHG emissions. 

We got together with the Ministry of Energy, Ministry of Investment and Foreign Trade, and the PPP Development Agency to organize an online investor conference on March 3, 2020. It brought together more than 100 participants, including investors, financial institutions, and other stakeholders, who were familiarised with the project’s scope and transaction structure, Uzbekistan’s power sector, and its PPP regulatory framework.

The investor conference highlighted the transparent and competitive tender process that we expect will attract interest from a number of market-leaders from across the world.

- What are the main advantages of PPPs?

There are plenty of advantages; but the most important one is that it allows governments to leverage private capital and expertise in a transparent and competitive fashion for the public good. This is key in situations where public funding is scarce.

All societies have growing needs and rising expectations for better services and infrastructure. Yet, most countries face serious resource constraints. The public sector often lags behind in funding, technology, skills, and efficiency. PPPs can help expand key services and complement traditional public-sector approaches with various forms of private-sector participation.

For decades, we have advised national and municipal governments on designing and implementing PPPs. Often, as lead advisors, we work closely with governments, providing advice on transaction structuring, technical, legal, and regulatory requirements; building capacity; addressing social and sustainability issues; and devising strategies to deliver successful PPPs.

As an institutional investor, we also provide financing to infrastructure projects, including loans, equity, quasi-equity, and local currency products, while the World Bank and MIGA, provide risk-mitigation tools, including guarantees and insurance.

When designed well and implemented in a balanced regulatory environment, PPPs can increase efficiency and sustainability to the provision of public services and attract foreign direct investment. But, I must state a caveat:  PPPs must be tailored to local contexts and our job is to work with governments and development partners to find the right solutions that work for that country and its future.