IsDB, Uzbekistan sign agreements to boost sustainable economic growth

Islamic Development Bank (IsDB) President and Group Chairman, Dr. Muhammad Al Jasser, and Uzbekistan Minister of Investments, Industry, and Trade, Laziz Kudratov, have signed three financing agreements to support the development of critical infrastructure and social services in Uzbekistan.

These agreements aim to promote sustainable economic growth, enhance rural development, and improve early childhood education in the country.

Under the first agreement, IsDB will provide $260 million in financing for the Integrated Rural Development Project, which is being implemented under the IsDB Group’s Food Security Response Program (FSRP).

The project will empower local communities, improve their access to quality and resilient infrastructure, and strengthen knowledge of climate-smart agriculture practices.

By reducing rural poverty and increasing the resilience of the target population, this project will contribute to achieving sustainable development in the country.

The second financing agreement, worth $106.7 million, is to support the reconstruction and upgrading of the M39 road in Uzbekistan. This project will improve the efficiency of the road transport infrastructure and ensure the safe movement of goods and people along the project road section. This will not only benefit the local economy but also promote regional integration and trade.

The third agreement provides $30 million in financing for Enhancing Access to Quality Early Childhood Education Project which will support the Government of Uzbekistan’s target of achieving universal pre-school enrollment.

It aims to enhance access to quality early childhood education facilities and improve the quality of early learning environments in Uzbekistan.

The IsDB Group and Uzbekistan have been partners since 2003, and to date, the Group has financed several projects in the country across various sectors, including agriculture, energy, education, and transport worth more than $3.46 billion approvals. The IsDB Group remains committed to supporting Uzbekistan’s development priorities and promoting inclusive and sustainable growth in the country.

Meanwhile the Islamic Development Bank is set to raise $2 billion from a sale of Islamic bonds, or sukuk, maturing in five years, a bank document showed earlier in March.

The spread on the sukuk was set at 55 basis points over secured overnight financing rate mid-swaps, tightened 2 basis points from guidance.

Demand for the debt sale was over $2.2 billion, including $175 million of interest from joint lead managers.

BNP Paribas, Citi, Dukhan Bank, Emirates NBD Capital, HSBC, The Islamic Corporation for the Development of the Private Sector, SMBC Nikko, Societe Generale and Standard Chartered are joint lead managers and bookrunners for the sukuk sale.

Meanwhile the Abu Dhabi Future Energy Company (Masdar) announced that it has achieved financial close on three solar photovoltaic (PV) projects it is developing in the Republic of Uzbekistan.

Construction will begin imminently on the plants, which will have a combined capacity of around 900 megawatts — the largest solar development programme in the region.

Financing for the projects is being provided by the Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB), the European Bank for Reconstruction and Development (EBRD), and the European Investment Bank (EIB). The Dutch Entrepreneurial Development Bank, FMO, and ILX are acting as B loan participants.

Niall Hannigan, Chief Financial Officer, Masdar, said, “Reaching this milestone for all three projects is a proud moment for Masdar and a key stage for Uzbekistan’s clean energy journey.

Masdar is already playing a significant role in supporting the Government of Uzbekistan’s ambitious renewable energy objectives, and we look forward to continuing to grow our portfolio of projects in this key strategic market.

This achievement would not have been possible without the support of the Government of Uzbekistan, and the International Renewable Energy Agency, and the financial partners, he added.

Masdar signed an agreement during last year’s COP27 climate conference to join IRENA’s Energy Transition Accelerator Financing (ETAF) platform, with the intention of potentially deploying up to $200 million equity investment on renewable energy projects. Masdar and AIIB have committed capital to the Uzbekistan projects under the ETAF initiative.

ETAF is a multi-stakeholder climate finance platform, targeting the deployment of 5 gigawatts of new renewable power in developing countries by 2030. In 2021, Masdar signed agreements with Uzbekistan’s Ministry of Investments, Industry, and Trade, and the JSC National Electric Grid to design, finance, build and operate three utility-scale solar projects — the 457 MW Sherabad Solar Project, and the Samarkand and Jizzakh solar projects, which have a capacity of 220 MW each. Combined, the projects will produce enough electricity to power more than 1 million homes, while displacing more than 1 million tonnes of CO2 emissions each year.