The EBRD has provided a US$196.5mn loan to upgrade a road linking Kazakhstan and Uzbekistan.

The project is part of the ongoing upgrade of the Western Europe-Western China highway, which will connect western China with Russia by 2015. The loan was made to the Kazakh government.

This 62km section will connect Shymkent with the Uzbek border, down as far as the capital Tashkent. Tashkent, formerly the third largest city in the Soviet Union, is an economic hub and a vital trade route for Kazakhstan, the world’s largest landlocked country. It will facilitate more efficient trade flows of goods, particularly agricultural.

Thomas Maier, the EBRD’s director for infrastructure, tells GTR that the Kazakh government has “invested significant time and resources modernising the transportation network” and that the Shymkent-Uzbek stretch of highway is a “small piece in a much larger jigsaw”.

He adds: “We know from experience elsewhere that well-functioning transport corridors generate their own economic dynamics, in terms of light industrial, service and logistics sectors. The investment will make Kazakhstan a more attractive bridge between China, Russia and Europe.”

The finance for the Western China-Western Europe highway has come exclusively from international finance institutions (IFIs), such as the EBRD, the European Investment Bank, the Asian Development Bank and the Islamic Development Bank.

But Maier confirms to GTR that there are transport projects on the horizon in which he expects the private sector to take an important role. He explains: “The government is also looking at the possibility of public-private partnerships (PPPs) in Kazakhstan, particularly around Almaty which is the economic centre.

“We’re working with the government to structure and bring to the market a PPP solution for a bypass road. As you can see from the Bosporus Tunnel [the funding for which the EBRD helped co-ordinate with the private sector last year] and the St Petersburg bypass motorway, we would expect the private sector to take an important role.”

Previous attempts at PPPs have failed in Kazakhstan, due to incompatible legal frameworks. Maier is confident, however, that structural and regulatory reforms within the country will encourage the international construction and finance communities to take further risk in Kazakhstan.