Investments Under Control: How Uzbekistan is Strengthening its PPP Architecture
ect portfolio and the current state of the organizational, regulatory, and managerial framework.
One of the key factors constraining the development of PPPs in Uzbekistan remains the need for further improvement of the institutional and legal framework, particularly in terms of clearer and more predictable risk management in PPP projects.[1] In other words, the number of PPP projects is growing faster than the improvement of project selection, support, and oversight processes, which may potentially lead to inefficiencies and financial risks.
The lack of a full-fledged institutional structure and the necessary operational readiness to implement PPP projects limits investor engagement and the volume of infrastructure investments. The European Bank for Reconstruction and Development (EBRD) notes that Uzbekistan has yet to establish an adequate PPP governance system, and a shortage of professional competencies hampers private sector participation in infrastructure initiatives.[2]
Moreover, the absence of a unified and transparent system for prioritizing and selecting PPP projects increases the risk of launching inefficient or secondary initiatives. Experts from the International Monetary Fund (IMF) recommend establishing a centralized project appraisal and selection process, as the current lack of a unified mechanism may result in suboptimal project efficiency.[3]
Due to weak risk guarantee mechanisms, 80% of PPP projects face difficulties in raising capital. Analyses have shown that the core issue lies in the financial viability of the projects themselves, as there are insufficient guarantees for investors, and most projects are unable to secure bank or venture financing.[4]
During PPP implementation, there is no “one-stop-shop” mechanism for project coordination, and permitting procedures are often duplicated, which significantly complicates project execution. This means that investors must navigate complex approval procedures across multiple agencies, delaying contract initiation and execution.[5]
The energy sector accounts for approximately 93% of the country's total PPP portfolio.[6] The government often purchases electricity or services under these projects, creating significant contingent liabilities for the budget. Experts warn that while PPPs may reduce direct budget expenditures in the short term, they can pose a substantial fiscal burden in the long term, particularly through payment obligations if actual demand for electricity falls short of projections (fiscal risk).
Weak contract frameworks and insufficient preparation of projects at the early stages may lead to subsequent renegotiation of contract terms. International experience shows that PPP agreements are often subject to revisions; IMF experts explicitly state that Uzbekistan should be prepared for potential renegotiations of certain project terms in the future.[7] This reflects the likely instability of contracts where risks are ineffectively allocated from the outset.
Current Relevance of the Issue
The scale and pace of PPP development in Uzbekistan make the above-mentioned problems particularly pressing. Within a short period, the PPP project portfolio has surged to USD 31 billion (approximately 27% of GDP) by the end of 2024.[8] For comparison, in 2021 the PPP portfolio was valued at only USD 6.2 billion.[9] Moreover, under the national development strategy “Uzbekistan – 2030,” the government plans to attract no less than USD 30 billion in private investment into PPP projects by 2030.[10] Priority PPP project programs have already been approved, including major infrastructure initiatives. These include the construction and modernization of 1,000 km of toll roads (see article on toll roads), the transfer of all electricity and gas distribution networks to private operators, modernization of irrigation pumping stations, engagement of private companies in water supply management, and—starting from 2026—the annual construction of 100 schools and 100 kindergartens under PPP mechanisms. In other words, the implementation of key projects in the transport, energy, utilities, and social infrastructure sectors is directly tied to the PPP framework. Given this context, the importance of PPP for national development is immense, and thus, any systemic flaws in this domain become highly critical.
If institutional and legal gaps are not addressed, there is a risk that some PPP projects may prove inefficient or face difficulties during implementation. The IMF warns about the phenomenon of “fiscal illusion”: the government may underestimate future costs by approving projects now (outside of the current budget), while obligations under these projects (e.g., payment for purchased electricity or services) could become a heavy burden in the coming years. Already in the 2025 budget, Uzbekistan was forced to introduce a cap on new PPP commitments (around USD 6.5 billion, or ~6% of GDP), but analysts consider this ceiling too high and recommend lowering it.[11] This illustrates the delicate balancing act the authorities face between the need for investment and the risk of debt overload. Without improving project selection systems, unprofitable initiatives may be included in the portfolio, later requiring refinancing or contract renegotiation - undermining trust in the PPP mechanism itself.
Efforts are being made to address this challenge, which highlights its urgency. In August 2024, pursuant to Presidential Decree No. PP-308 “On Measures for the Development of Public-Private Partnerships in the Republic of Uzbekistan for 2024–2030,” and considering institutional reforms outlined in Presidential Decree No. PP-307 dated 14 September 2023 “On Measures to Create a PPP Project Development Fund in Uzbekistan,” a new Project Office - “PPP Project Center” - was established under the Ministry of Economy and Finance. This specialized structure is tasked with supporting PPP projects, managing resources from the PPP Support Fund, and strengthening human capacity in the field of public-private partnerships.[12] Regular roundtables and training sessions are held; specialists are sent abroad for internships; and the practice of obtaining international PPP certifications is being adopted. These measures aim to enhance the state's institutional capacity to effectively build partnerships with the private sector.
In addition, the current PPP legislation continues to evolve. International financial institutions recommend addressing remaining legal gaps and fully standardizing processes under the Law of the Republic of Uzbekistan No. ZRU-537 dated May 10, 2019, “On Public-Private Partnership.” This push to improve the legal and organizational framework confirms that the issue is recognized at the highest levels.
Finally, the expert community emphasizes the urgency of systemic solutions. Specialists note that PPP is a “delicate instrument” requiring skilled professionals, well-established procedures, and sound legal mechanisms. If PPPs are developed in an unsystematic manner—without proper legal, institutional, human, and financial preparation—there is a risk of discrediting the very concept of partnership in the eyes of the state, business, and society. That is why the current focus is on strengthening PPP institutions and risk management. Addressing this challenge is considered one of the most pressing tasks, as it will determine the success of Uzbekistan’s ambitious plans to modernize its infrastructure through public-private partnerships.
Conclusion
Over the past two years, the most pressing issue in the development of PPPs in Uzbekistan has been the improvement of the institutional and legal framework, as well as the mechanisms for project implementation. Eliminating legal gaps, strengthening institutions, ensuring transparent project selection, and providing professional project support are essential steps to reduce risks and enable effective partnerships. Analytical reports, official documents, and expert opinions unanimously indicate that without addressing these challenges, further expansion of the PPP portfolio may pose significant risks and threaten the long-term sustainability of the national economy.
References:
1. European Bank for Reconstruction and Development. Country Strategy: Uzbekistan 2024–2029. - London: EBRD, 2024. Available at: https://www.ebrd.com/content/dam/ebrd_dxp/assets/pdfs/country-strategies/uzbekistan/EBRD-Latest-Uzbekistan-Strategy-Russian.pdf
2. Ashurov R., Ruziyev K. Assessing Institutional Readiness for Public-Private Partnerships in Uzbekistan // Economics and Ecology. — 2025. — No. 2(210). — pp. 18–32.: https://ea21journal.world/wp-content/uploads/2025/04/ea-V210-02.pdf
3. Frank Media.
IMF highlights key risks in Uzbekistan’s PPP projects. — Frank.uz, October 3, 2024.
Available at: https://frank.uz/news/mvf-nazval-klyuchevye-riski-gchp-proektov-v-uzbekistane
4. Xabarchi News.
Between 2021 and 2024, Uzbekistan’s PPP portfolio increased fivefold. — Xabarchi.com, October 7, 2024.
Available at: https://www.xabarchi.com/en/news/127843
5. Norma.uz.
Which projects will be implemented through PPP. — Norma.uz, August 12, 2024.
Available at: https://www.norma.uz/novoe_v_zakonodatelstve/kakie_proekty_budut_realizovany_na_osnove_gchp
[1] International Monetary Fund (IMF), Республика Узбекистан: Отдельные вопросы (Статистический отчёт № 25/144, 30 мая 2025 г.) Доступно по ссылке: https://www.imf.org/-/media/files/publications/cr/2025/russian/1uzbra2025002-source-pdf.pdf
[2] Европейский банк реконструкции и развития. Страновая стратегия: Узбекистан 2024–2029. Лондон: ЕБРР, 2024. URL: https://www.ebrd.com/content/dam/ebrd_dxp/assets/pdfs/country-strategies/uzbekistan/EBRD-Latest-Uzbekistan-Strategy-Russian.pdf (дата обращения: 21.10.2025)
[3] Frank Media. «МВФ назвал ключевые риски ГЧП-проектов в Узбекистане». Frank.uz, 3 октября 2024 года. Доступно по ссылке: https://frank.uz/news/mvf-nazval-klyuchevye-riski-gchp-proektov-v-uzbekistane
[4] Ashurov, R. & Ruziev, K. (2025). Assessing Institutional Readiness for Public-Private Partnerships in Uzbekistan. Economics and Ecology, 2(210), 18–32. Доступно по ссылке: https://ea21journal.world/wp-content/uploads/2025/04/ea-V210-02.pdf
[5] Ashurov, R. & Ruziev, K. (2025). Assessing Institutional Readiness for Public-Private Partnerships in Uzbekistan. Economics and Ecology, 2(210), 18–32. Доступно по ссылке: https://ea21journal.world/wp-content/uploads/2025/04/ea-V210-02.pdf
[6] Xabarchi News. «Between 2021 and 2024, Uzbekistan’s PPP portfolio increased fivefold». Xabarchi.com, 7 октября 2024 года. URL: https://www.xabarchi.com/en/news/127843 (дата обращения: 21.10.2025)
[7] Frank Media. «МВФ назвал ключевые риски ГЧП-проектов в Узбекистане». Frank.uz, 3 октября 2024 года. URL: https://frank.uz/news/mvf-nazval-klyuchevye-riski-gchp-proektov-v-uzbekistane
[8] Xabarchi News. «Between 2021 and 2024, Uzbekistan’s PPP portfolio increased fivefold». Xabarchi.com, 7 октября 2024 года. URL: https://www.xabarchi.com/en/news/127843 (дата обращения: 21.10.2025)
[9] Xabarchi News. «Between 2021 and 2024, Uzbekistan’s PPP portfolio increased fivefold». Xabarchi.com, 7 октября 2024 года. URL: https://www.xabarchi.com/en/news/127843 (дата обращения: 21.10.2025)
[10] Norma.uz. «Какие проекты будут реализованы на основе ГЧП». Norma.uz, 12 августа 2024 года. URL: https://www.norma.uz/novoe_v_zakonodatelstve/kakie_proekty_budut_realizovany_na_osnove_gchp (дата обращения: 21.10.2025)
[11] Frank Media. «МВФ назвал ключевые риски ГЧП-проектов в Узбекистане». Frank.uz, 3 октября 2024 года. URL: https://frank.uz/news/mvf-nazval-klyuchevye-riski-gchp-proektov-v-uzbekistane (дата обращения: 21.10.2025)
[12] Постановление Президента Республики Узбекистан от 14 сентября 2023 года № ПП-307 «О мерах по дальнейшему реформированию системы управления проектами государственно-частного партнерства»
