Environmental Standards in PPP and Investment Projects in Uzbekistan

Introduction

Uzbekistan is witnessing rapid infrastructure development and increased investment through public-private partnership (PPP) mechanisms. The number of PPP projects is growing fast — for example, in 2021 alone, the PPP Development Agency implemented 183 projects worth approximately $2.6 billion[1]. At the same time, there is growing attention to the environmental sustainability of such projects, as industrial modernization leads to increased pressure on the environment. Environmental expertise and environmental impact assessment (EIA) have become key tools for ensuring a balance between economic development and environmental preservation. Their effectiveness directly depends on the quality, transparency, and compliance with environmental standards during the planning and implementation of projects.

In 2025, a new Law “On Environmental Expertise, Environmental Impact Assessment, and Strategic Environmental Assessment”[2] was adopted, aimed at improving the transparency and effectiveness of environmental reviews. Its development was based on international experience (USA, EU, Japan, Russia, etc.) and recommendations from the World Bank (WB), the UN, EBRD, OSCE, and other organizations. All of this highlights Uzbekistan’s commitment to integrating international environmental standards into national practice.

Environmental Standards from International Practice

In the context of investment and infrastructure projects, environmental standards refer to a set of norms, requirements, and practices aimed at minimizing the negative impact of projects on the environment. These standards can be enshrined in national legislation (e.g., maximum permissible emissions, EIA requirements, etc.), as well as in international guidelines and the policies of financial institutions. For instance, the European Bank for Reconstruction and Development (EBRD), when financing projects, requires clients to comply not only with national legislation but also with EU directives[3], international environmental conventions, as well as the standards of the International Finance Corporation (IFC)[4] and the World Bank.

European Union Practice (EU). The EU has a well-developed system of environmental regulations for projects, with the Environmental Impact Assessment (EIA) Directive[5] at its core. This directive mandates the conduct of EIAs for a broad range of public and private projects.

- Projects listed in Annex I (e.g., large power plants, highways, airports with runways >2100 m, large waste disposal sites, etc.) are automatically considered to have a significant environmental impact and are subject to mandatory Environmental Impact Assessment (EIA).[6]

- Projects under Annex II undergo a screening procedure[7], where the competent authority decides whether an EIA is required based on the project’s scale and criteria defined in Annex III.

The EU Directive also sets out minimum requirements for public information and participation:

i.    consultations with the public and relevant authorities,

ii.   publication of a non-technical summary, and

iii.  the right to appeal project-related decisions.

Significant influence on the development of these norms came from the Aarhus Convention (the right of the public to access information and participate)[8] and the Espoo Convention (transboundary EIA)[9]. The 1997 and 2003 amendments aligned the Directive with these international agreements. As a result, the EU currently operates a strict system of environmental project assessment: no major infrastructure project can be implemented without a prior evaluation of environmental impacts and incorporation of mitigation or prevention measures.

World Bank (WB) Standards. Since 2018, the World Bank has adopted a new Environmental and Social Policy, set out in the Environmental and Social Framework (ESF).

The ESF includes 10 Environmental and Social Standards (ESS) that must be followed by borrowers when implementing projects financed by the World Bank. These standards cover:

i.     assessment and management of environmental and social risks (ESS1),

ii.    labor and working conditions (ESS2),

iii.   resource efficiency and pollution prevention (ESS3),

iv.   community health and safety (ESS4),

v.    land acquisition and involuntary resettlement (ESS5),

vi.   biodiversity conservation (ESS6),

vii.  indigenous peoples (ESS7),

viii. cultural heritage (ESS8),

ix.   financial intermediaries (ESS9),

x.    stakeholder engagement and information disclosure (ESS10), etc.[10]

The ESF requires that each project undergo an environmental assessment proportional to its risk level — from screening and environmental reviews for low-risk projects to full-scale Environmental and Social Impact Assessment (ESIA, equivalent to EIA) for high-risk projects.

A key feature of the World Bank’s policy is the emphasis on stakeholder engagement — the borrower is required to conduct consultations with local communities and disclose information about project impacts. For example, in Uzbekistan, implementation of WB-supported projects requires public hearings on EIA materials, their translation into an accessible language, and consideration of public feedback.

International Finance Corporation (IFC) Standards. The IFC (a member of the World Bank Group responsible for private sector projects) has developed the Performance Standards on Environmental and Social Sustainability[11] — effectively a global benchmark[12] for private sector projects.

There are 8 IFC Performance Standards:

• Performance Standard 1 – Assessment and Management of Environmental and Social Risks and Impacts (includes conducting ESIA and implementing an Environmental and Social Management Plan);
• Performance Standard 2 – Labor and Working Conditions;
• Performance Standard 3 – Resource Efficiency and Pollution Prevention;
• Performance Standard 4 – Community Health, Safety, and Security;
• Performance Standard 5 – Land Acquisition and Involuntary Resettlement;
• Performance Standard 6 – Biodiversity Conservation and Sustainable Management of Living Natural Resources;
• Performance Standard 7 – Indigenous Peoples;
• Performance Standard 8 – Cultural Heritage.

IFC clients are required to comply with these standards throughout the entire project lifecycle.

To implement the standards, an Environmental and Social Action Plan (ESAP)[13] and monitoring system are often developed. For example, Performance Standard 1 requires the borrowing company to establish an Environmental and Social Management System (ESMS), conduct an impact assessment, develop risk mitigation measures, and establish a stakeholder engagement mechanism (including a grievance mechanism).

EBRD Policy. The European Bank for Reconstruction and Development (EBRD) has its own Environmental and Social Policy (latest edition – 2019), which includes a set of Performance Requirements (PRs)[14] for project implementation. These requirements are largely similar to IFC standards:

PR 1 – Assessment and management of environmental and social risks,

PR 2 – Labour and working conditions,

PR 3 – Pollution prevention and resource efficiency,

PR 4 – Health and safety,

PR 5 – Land acquisition and resettlement,

PR 6 – Biodiversity conservation,

PR 7 – Indigenous peoples,

PR 8 – Cultural heritage,

PR 9 – Financial intermediaries,

PR 10 – Stakeholder information and engagement.

EBRD classifies projects into categories A, B, and C depending on their potential impact.

– Category A projects require a comprehensive Environmental and Social Impact Assessment (ESIA) and mandatory information disclosure at least 120 days before project approval (including publication of a non-technical summary on the EBRD website and public consultations).

– Category B projects require a limited assessment and an Environmental and Social Action Plan (ESAP).

As mentioned earlier, the EBRD requires clients to comply not only with national laws, but also with relevant EU directives, international conventions, and World Bank/IFC standards.

In practice, for EBRD-financed projects in Uzbekistan, independent environmental consultants are engaged to carry out Environmental and Social Due Diligence (ESDD) – a comprehensive environmental and social review of the project. For example, for the first PPP solar project “Nur Navoi” (100 MW), such a review confirmed the project's compliance with Uzbek law and its potential to be structured in accordance with EBRD and IFC requirements, provided an ESAP is implemented. Thus, EBRD standards effectively “build upon” national requirements, raising the bar to align with best international practices.

Environmental Requirements in PPP and Investment Projects in Uzbekistan

Regulatory framework. Environmental requirements for investment and public-private partnership (PPP) projects in Uzbekistan are primarily enshrined in the Law “On Environmental Expertise, Environmental Impact Assessment and Strategic Environmental Assessment” dated February 24, 2025, No. ZRU-1036.[15]

Until recently, the main framework was the Law “On Environmental Expertise” (2000)[16], which established the obligation to undergo state environmental expertise (SEE) for projects potentially affecting the environment.

Since September 1, 2018[17], a revised Environmental Impact Assessment (EIA) procedure has been implemented in the country, regulated by Cabinet of Ministers Resolution No. 949 (dated November 22, 2018) and subsequently No. 541 (dated September 7, 2020) “On Further Improvement of the EIA Mechanism”[18].

According to these legal acts, all planned economic activities with potential environmental impact are classified into four categories based on impact level:

Category I – highest, of national importance;

Category II – high impact;

Category III – moderate impact;

Category IV – local impact.

For Categories I–III, conducting EIA and SEE is mandatory, while Category IV was subject to a simplified procedure. In 2024, a decision was made to exclude Category IV from state environmental expertise, leaving only three categories, in order to reduce bureaucratic burden on small businesses.

Thus, all significant investment projects are required to undergo the EIA procedure and obtain a positive conclusion of state environmental expertise.

Specifically for PPP projects, the sectoral PPP Law (ZRU-537 of 2019) contains a principle stating that a PPP project must comply with environmental safety requirements and promote the introduction of clean technologies. Although the implementation mechanism refers to general environmental legislation, the very inclusion of this principle emphasizes the importance of environmental standards in the PPP field.

In addition, standard bidding documents for selecting private partners typically include sections on environmental protection requirements and the investor's obligation to comply with environmental regulations. In other words, from a legal standpoint, PPP projects in Uzbekistan are subject to the same environmental requirements as any other investment projects.

Environmental Impact Assessment (EIA) and State Environmental Expertise (SEE) Procedure. In Uzbekistan, the Environmental Impact Assessment (EIA) procedure is multi-stage. A national EIA methodology has been developed, under which materials are prepared in several phases. Accordingly, the following stages are distinguished:

Preliminary/Project Environmental Impact Statement (PEIS/PZVOS) – the initial report,

Environmental Impact Statement (EIS/ZVOS) – the main EIA report,

Environmental Consequences Statement (ECS/ZEP) – the final document submitted before project commissioning.

According to the new Law of 2025[19], PZVOS must be submitted before the start of project financing, ZVOS – before approval of the feasibility study (FS) or project design, and ZEP – before the project is accepted for operation.

PEI Statement (PZVOS) includes baseline data on the planned activity, description of the proposed technology, analysis of potential environmental impacts, and proposed mitigation measures at the earliest planning stage.

EI Statement (ZVOS) is developed at the stage of a completed FS or project and includes engineering survey results, a detailed environmental analysis considering the characteristics of the selected site, public consultation outcomes, and justification of environmental protection measures.

ECS (ZEP), submitted after the EIA materials are reviewed by SEE and public feedback is considered, records any adjustments to the project design and sets out final environmental conditions for implementation.

SEE evaluates the completeness and reliability of the submitted information, checks the proposed measures for compliance with environmental safety standards, and issues a positive conclusion (project approval) or a negative one. A positive SEE conclusion is typically valid for 3–5 years, and the project must be implemented in accordance with the conditions outlined in the conclusion (e.g., execution of all mitigation measures described in the ZVOS and ZEP).

The national EIA methodology requires public consultations. Cabinet of Ministers Resolution No. 541 approved the procedure for public disclosure and hearings on EIA projects. The project proponent must publish the key EIA materials (often a non-technical summary) and conduct a meeting with local residents, NGOs, and other stakeholders. The ZVOS must include information about the public consultations and how feedback was addressed. This process ensures transparency and community engagement, aligning with international principles such as the Aarhus Convention, which Uzbekistan has joined.

Environmental Standards. In addition to assessment procedures, investment projects must comply with specific environmental quality and emission standards. New facilities must prepare:

• Maximum Permissible Emissions (MPE) into the atmosphere,
• Maximum Permissible Discharges (MPD) into water bodies,
• Waste generation and disposal standards,
• Sanitary protection zone (SPZ).

These documents undergo separate approval by environmental authorities in parallel with the EIA.

PPP projects, especially in the energy sector (e.g., new thermal power plants or major roads), are required to implement Best Available Technologies (BAT) to reduce emissions. For example, new solar and wind plants developed under PPP programs apply IFC biodiversity and waste management standards, since their financial partners include IFC, EBRD, and ADB.

Uzbekistan's national legislation requires enterprises to conduct monitoring and reporting on emissions. In a PPP project, the private investor is typically responsible for equipping the facility with proper treatment, monitoring, and reporting systems that feed into the State Environmental Expertise Center.

Differences between PEIS, EIS, ECS (ZVOS, ZEP, and PZVOS)

The three acronyms — PEIS, EIS, ECS (PZVOS, ZEP, and ZVOS) — often cause confusion, so here is a comparative overview in table format:

Challenges, Risks, and Improvement Areas

Despite notable progress, serious challenges and risks remain in the application of environmental standards in Uzbekistan. The main issues and improvement areas are outlined below:

1. Institutional and personnel challenges. The quality of environmental expertise and OVOS largely depends on the professionalism of practitioners. Historically, the country faced a shortage of qualified environmental experts and independent consultants. Many OVOS reports from the past decade were criticized for being templated, poorly substantiated, or copied, undermining trust in the system.

The new 2025 law aims to address this by introducing a certification system for OVOS developers and a rating mechanism. This should eliminate unscrupulous providers and improve accountability.

Further cooperation with international experts, training on modern assessment techniques (e.g., cumulative impact assessment, life-cycle analysis), is also key. Training programs with the World Bank and EBRD are already being conducted for staff of the Environmental Expertise Center and design institutes.

2. Formality and lack of enforcement. A major risk is formal compliance without actual environmental benefits. There are cases where OVOS reports were prepared merely as a formality. Public hearings were sometimes held with low attendance and no real input from the population. Environmental conditions in SEE conclusions were occasionally neglected during construction.

This results from the previously mentioned personnel gaps and weak enforcement mechanisms. While the law allows for penalties (including suspension or annulment of SEE conclusions) for non-compliance, such actions are rare.

Enhanced monitoring post-approval is essential — regular inspections during construction and early operation phases should be introduced.

3. Public participation and information access. Although the legislative base for public involvement has improved (a dedicated chapter on public hearings was added; Uzbekistan committed to the Aarhus Convention), transparency challenges remain. OVOS materials are not always easily accessible — only brief announcements are published. Public awareness is limited, and hearings may be held at inconvenient times or with poor notification. To address this, the new policy envisions an integrated electronic platform for OVOS submissions and tracking. If implemented, this system will make all project data publicly available, simplifying oversight.

4. Corporate responsibility of investors. The attitude of private partners and investors plays a critical role. If the investor views environmental requirements as obstacles and focuses only on cost-saving, ecological efforts may be minimized. However, more companies now value ESG (Environmental, Social, and Governance) principles and adhere to them voluntarily. International strategic investors (e.g., from the EU, Japan) often enforce internal environmental standards stricter than national regulations. Uzbekistan should actively promote such "responsible" investors. The state could incentivize exemplary compliance (e.g., fast-track approvals, public recognition, or awarding "green" certificates).

Conclusions and Recommendations

Several key conclusions can be drawn: Environmental standards are now an integral part of the investment process in Uzbekistan. No major PPP project proceeds without OVOS and environmental expertise. The national regulatory framework is actively evolving and integrating international best practices (from the EU, World Bank, EBRD, IFC) through legislation updates and new institutions (e.g., electronic OVOS system, strategic assessments, expert councils). International standards have proven effective in Uzbekistan. Projects aligned with IFC/EBRD standards demonstrated stronger sustainability and fewer social conflicts, while ignoring such standards led to project failures and reputational risks.