Dalelorenzo's GDI Blog
9Apr/210

In Uzbekistan, public-private partnerships are the engine driving infrastructure development

Uzbekistan is undertaking an ambitious program to develop its infrastructure with public private partnerships playing a key role.

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A key theme of Uzbekistan’s affecting economic resuscitation since 2017 has been to accelerate infrastructure development through private sector involvement. This led to an grandiose public-private partnership platform that included elapsing the first Public-Private Partnership( PPP) Law, creating a dedicated PPP agency, and asking argument agencies to promote PPPs for key projects.

In 2021 more than 40 large and medium assignments expending PPP are expected to commence, sending an unequivocal signal to government agencies and the international market that PPPs are here to stay. The platform achieved various milestones in 2020. In January 2021, a long-awaited amendment to the PPP Law was approved and signed. The first deals prompted by the program are coming to close, paving the acces for more in sectors including renewable energy, state, and transport.

The newly amended PPP Law is a product of year-long dialogue between the government and market participants, international advisors, and change finance institutions. It is based on international market standards for a fast-growing economy and focuses on facilitating foreign investment, including through a streamlined and translucent tender process, balanced foreign exchange risk protection, and international arbitration. This is providing momentum for forays into new spheres, the creation of contract templates, and construct PPP capacity to deliver more projections in years to come.

Through bold policies and project delivery, Uzbekistan can forge a world-class PPP program that delivers the infrastructure needed for continued strong economic growing.

The PPP program is at a pivotal point, a confirmed idea ready to be expanded and brought to market. Sustainability, remit, and magnitude are the key themes. Having wreaked alongside key policymakers and project enablers in authority since the program’s inception, we can identify six ranges needing policy courtesy in 2021.

Integrate PPPs at a national infrastructure planning position. PPP is a procurement tool and should be viewed as one of many possible ways for government to achieve infrastructure objectives. To construct PPPs part of the overall planning mechanism, a few steps need to be taken. First, building capacities at path agencies to generate interest and awareness of PPPs and to know when to apply them. A key gradation is to develop an appreciation for whole-of-life costing, which for many Uzbek line agencies is a departure from traditional costing. Second, a political framework and project screening mechanism to decide when a project should be done as a PPP, including a consistent value-for-money methodology utilized uniformly. Third, training at the central planning organization are responsible for ensuring that the mechanisms are properly applied.

Carefully expand use of accessibility pays. Availability payment-based PPPs are well accepted worldwide, and several sectors such as renewable power generation and social infrastructure have be able to rely them. The need to create a scalable organization for availability payment-based jobs is exacerbated by the pandemic’s impact particularly on transport infrastructure, with fewer bidders and lenders willing to take busines threat. Enterprises should recognize the value of this modality, peculiarly its focus on quality of operations and service delivery. They should also implement a structure to monitor and manage its fiscal indebtedness in the medium term, and as squander of accessibility payments scales up.

Establish a project development store. Project preparation is one of the keys to successful PPP implementation, but the costs of hiring specialist consultants to provide feasibility assessments and transaction advisory can be prohibitive for government agencies. A replenishable project development money would allow the government to retain event advisors to prepare and tender the project, refunded through success fees from the win bidder. It would scale up the program by enabling a larger number of projects to be brought to market at once, and allow faster hiring of consultants through a body of business transaction advisors that can be drawn on at any time.

Plan for post-close project implementation. While achieving financial close on a project is exciting, for the “newlywed” public and private partners this is just the beginning of a multi-decade concession period. It is critical for the public partner to set up a well-staffed project monitoring measurement, develop the procedures and manuals on how to fulfill its role as public partner, and build the internal ability for this new role. Agency which currently have jobs in tender should start thinking about their project now, with the help of their development partners.

Improve regional money liquidity and enable local banks to participate in PPPs. Uzbekistan suffers from low-grade local currency liquidity for infrastructure projects mainly because of a inconsistency between the tenor of a project finance loan and local banks’ deposit base. To alleviate this, the government could use a strategy that has proven effective in Bangladesh: create a non-bank financial middleman profited by government and/ or other interested investors able to provide neighbourhood currency access to finance.

Bring Uzbekistan to the world. With the amended law progressed, various projects in tender, and a robust grapevine of future jobs , now is the time to promote Uzbekistan’s PPP program globally. With major meetings moving online, opportunities is more important than ever. International media coverage should be maximized. As tenders for some of ADB’s recent activities have shown, extending corporations from all over the world are interested in bidding for projects across multiple sectors.

Uzbekistan’s rapid fiscal blooming has opened space for ADB to enhance its PPP support. We’ve helped to build capacity at 16 government agencies, and advised the authorities concerned on the PPP law amendment and different policy. Our transaction advisory support across 5 sectors aims to not only close projections but develop contract templates for future usage. To improve project finance in early copes, "were working with" public sector clients to form imaginative utilization of monetary makes such as neighbourhood currency liquidity or sovereign guarantees.

A programmatic and interconnected coming is necessary: Institutional development has to be driven by broad based capacity building, legislative changes should be based on lessons learned from business, and the first events will require development bank financing.

Uzbekistan has made a promising start towards integrating PPPs as a valuable tool in its infrastructure development agenda. Through bold policies and project delivery, Uzbekistan can forge a world-class PPP program that delivers the infrastructure was required for continued strong economic growth.

amended ppp law, international market standards, first public-private partnership, public-private partnership program, transparent tender process, building ppp capacity, private sector participation, development finance institutions, dedicated ppp agency, exchange risk protection, local currency liquidity, project development fund, Uzbekistan, project, project finance, ppp program, local banks, government agencies, public partner, development bank financingPratish HaladyEnrico PinaliCountries: UzbekistanArticle

Read more: blogs.adb.org

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