18 August 2008
The IFIs are set to invest billions of dollars in transportation infrastructure in Central Asia, primarily under the Central Asia Regional Economic Cooperation (CAREC).
CAREC
Led by the Asian Development Bank (ADB), CAREC promotes economic cooperation among its participating countries – Afghanistan, Azerbaijan, China, Kazakhstan, Kyrgyz Republic, Mongolia, Tajikistan, and Uzbekistan. Besides ADB, the alliance includes all the major international financial institutions (IFIs) active in the region, such as the International Monetary Fund (IMF), European Bank for Reconstruction and Development (EBRD), and World Bank, as well as the United Nations Development Program and the Islamic Development Bank. Between 2006 and 2008, these institutions have provided more than $2.3 billion for over 40 projects in transport, energy, and trade.
Although energy often receives the attention, transport has been a major target of IFI assistance. In line with the Paris Declaration on Aid Effectiveness, the CAREC transport sector aims to harmonize transport procedures and regulations and develop transport infrastructure between the Central Asian countries. Integral to this strategy is cooperation between the IFIs, countries, and other multilateral organizations, like the Shanghai Cooperation Organization and the Eurasian Economic Community, in transport sector projects. The combined IFI projects form a web of road networks, weaving through Central Asia. It is difficult to envision the extent of these projects, but the ADB has put together a map to help visualize part of the network.
Central Asian Road Projects
In the summer of 2008 alone, the EBRD and World Bank have disclosed over $1 billion in loans for the South-West corridor road project, running from Shymkent to the Russian border in Kazakhstan. In the first phase, the World Bank will finance the upgrade of a 564 km road from Kyzylorda to Aktobe, followed by a 461 km stretch from Kyzylorda to Shymkent. The remaining portion, 102 km from Aktobe to the Russian border, will be funded by the EBRD, pending approval, at $180 million. Though it may seem difficult to top the World Bank’s $848 million for a single loan to Kazakhstan, the ADB has proposed $986 million for two loans and two technical assistance projects for roads in the Zhambyl Oblast of Kazakhstan, including a $650 million loan for a 500 km road from Almaty to Shymkent.
On the Kyrgyz side, the World Bank has proposed a $20 million Bank-funded repair and construction project for the road extending from Osh to Isfana, which passes through Tajik and Uzbek territory as well. Another $20 million from the ADB will go toward the Bishkek-Torugart road, connecting the Kyrgyz Republic to China. ADB has also financed two phases of the Dushanbe-Kyrgyz border road and a technical assistance project for the Dushanbe-Uzbekistan border road. An additional $75.6 million from the ADB has been approved for a loan and technical assistance to improve Uzbekistan’s road network. Azerbaijan, on the other hand, has received over $1.4 billion from the World Bank and ADB for the Highway 2 and Southern and Central Road Corridor projects.
Further east, in Mongolia, just over $40 million in ADB grants and technical assistance has been allocated to the Western Regional Corridor Development Project to link Mongolia with the Xinjiang Uygur Autonomous Region in China and Siberia in Russia. In the Xinjiang region, the Korla-Kuqa roadway is the target of $150 million in ADB assistance.
Transport Trend
These examples represent only a sampling of IFI financing for Central Asian roadways. Perhaps even more interesting, the majority of these projects date from the end of 2007 to August 2008, exhibiting what appears to be an emerging major transport infrastructural trend among the IFIs. Transport lines are intended to facilitate trade, but the trend favors highways, encouraging automotive transport and raising concerns from civil society over the carbon intensity of these projects. Additionally, earlier projects, such as the EBRD’s Atyrau-Aktau road project disclosed in 2003, often connected oil-rich areas. While the IFIs appear to be branching out beyond oil, recent projects have not abandoned the sector. The major World Bank-financed South-West corridor project in Kazakhstan runs from Shymkent, the location of a major PetroKazakhstan oil refinery, to Kyzylorda, the site of PetroKazakhstan’s main oil fields, to Aktobe, another oil hub with substantial involvement from China National Petroleum Cooperation (CNPC), the partial owner of PetroKazakhstan. This also reflects Kazakhstan’s economic focus and the growth of oil cities in the west, where current transport links are not sufficient. Nevertheless, at least in the case of Kazakhstan, China’s energy interests are sure to benefit.
CAREC Information:
CAREC Regional Transport Sector Road Map Update, Asian Development Bank, August 2006 (ADB website, Acrobat pdf)
Central Asia Regional Economic Cooperation - CAREC (ADB website)
CAREC Transport (ADB website)
Project Documents:
South-West Corridor Road Project, Project Summary Document, EBRD, disclosed August 13, 2008 (EBRD website)
South-West Corridor Road Project (WB website)
South-West Corridor Road Project, Project Information Document Appraisal Stage, World Bank, June 8, 2008 (WB website, Acrobat pdf)
Kazakhstan and World Bank agree on a plan for a $2.5 billion road project, World Bank press release, June 20, 2008 (WB website)
Highway 2 Azerbaijan, World Bank, approved January 17, 2006 (WB website)
Highway 2 - Additional Financing, World Bank, approved April 29, 2008 (WB website)
National Road Rehabilitation (Osh-Isfana) Project (WB website)
National Road Rehabilitation (Osh-Isfana) Project, Project Information Document Concept Stage, World Bank, December 5, 2007 (WB website, Acrobat pdf)
Road Maintenance Development Project Tajikistan, EBRD, disclosed October 9, 2007 (EBRD website)
Baku to Samur, Project Summary Document, EBRD, disclosed March 2005 (EBRD website)
Kazakhstan Road Sector Development Project, Project Summary Document, EBRD, disclosed September 2000 (EBRD website)
Western Regional Road Corridor Development Project - Phase I: Mongolia, approved July 2008 (ADB website)
Xinjiang Regional Road Development, approved December 2007 (ADB website)
CAREC Transport Corridor I (Bishkek-Torugart Road) Project, Phase I: Kyrgyz Republic, approval expected September 2008 (ADB website)
CAREC Transport Corridor III (Dushanbe-Uzbekistan Border Road): Tajikistan, Rep. of, approved May 2008 (ADB website)
Regional Infrastructure (Roads): Uzbekistan, approved December 2007 (ADB website)
Regional Road Project (ADB website)
Dushanbe-Kyrgyz Border Road Rehabilitation Project, Phase I, approved December 2003 (ADB website)
Dushanbe-Kyrgyz Border Road Rehabilitation Project, Phase II, approved November 2005 (ADB website)
North-South Corridor Project Afghanistan, approved September 2006 (ADB website)
Southern Road Corridor Improvement Project Azerbaijan (ADB website)
Central Corridor Roads Improvement I (ADB website)