The Japan Bank for International Cooperation (JBIC) has signed a loan agreement totaling up to Y16.36bn (US$154mn) with the government of the Republic of Uzbekistan for the new Tashguzar-Kumkurgan railway construction project.
The loan will finance the construction of a new 222km railway line between Tashguzar and Kumkurgan as well as the renovation of the existing line, in southern Uzbekistan, a land-locked country where the railway service plays an important role in transportation.
The proceeds of the loan will be used for the construction of bridges, signal and communication facilities, and procurement of equipment for construction and maintenance of tracks.
The railway network in Uzbekistan was constructed in the Soviet era, with Moscow serving as its hub. For this reason, some of the country’s trunk lines connecting various domestic locations have to pass through neighbouring countries such as Turkmenistan.
The Tashguzar-Kumkurgan line takes a roundabout route: from southern Uzbekistan across the border to Turkmenistan and then back into Uzbekistan. Delays are almost routine occurrence because of time-consuming customs procedures, the changing of locomotives and uncoupling of cars at the frontier stations.
Furthermore, the rail transport route to Afghanistan via this line has gained importance in recent years in the face of growing demand for humanitarian aid and reconstruction work in Afghanistan.
The construction of the shortcut, which avoids entering Turkmenistan, will help reduce transport costs for the line connecting Uzbekistan and neighbouring area, reduce the overall distance to travel and eliminate procedures for crossing national borders. It will also allow for a greater volume of transport and ensure more reliable services.
In addition, Special Terms for Economic Partnership (STEP) will be applied to this project.
As is the case with other Central Asian countries, Uzbekistan’s economic and social infrastructure, mostly built during the Soviet era, has been suffering from a great deal of deterioration. Upgrading such infrastructure is an important issue on the country’s development agenda.
JBIC has thus supported transport, telecommunications and other economic and social infrastructure development by financing expansion and updating of railway lines, airports and regional telecommunication networks.