American-Uzbekistan Chamber of Commerce
Week in Review:
September 21, 2012 - September 28, 2012

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In This Issue:
Uzbekistan to Join Free Trade Zone by Yearend
Uzbekistan plans to attract South Korean company to implement projects in coal industry
Afghan-bound cargo through Uzbekistan to double in 2012
Central Asia: Regional Developments and Implications for U.S. Interests
Tashkent begins exporting gas to China
PV interest in Uzbekistan increases

Established in 1993, the American-Uzbekistan Chamber of Commerce (AUCC) is a private, non-profit trade association representing interests of U.S. businesses ranging in size from small private enterprises to large, multinational corporations conducting business in Uzbekistan.

Our Mission: To advocate the views of the business community to ensure that private sector positions are considered during the development of key policies that impact American businesses and the future of U.S.-Uzbekistan relations.

Our Objective: To serve the needs of its members by strengthening commercial relations between the United States and Uzbekistan.   


Uzbekistan will join a CIS free trade zone by the end of this year, CIS steering committee head Sergei Lebedev said on Friday at a CIS heads of government meeting in the Crimean city of Yalta.

"The decision has been made that Uzbekistan will become the ninth participant in the free trade zone by the end of the year," Lebedev said, summing up the first stage of the congress.

The CIS free trade zone agreement was signed on October 18, 2011 by eight nations including Armenia, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan and Ukraine. Azerbaijan, Turkmenistan and Uzbekistan said they wished to discuss some issues further before joining.

Moldova ratified the agreement on Thursday. Five other nations (Armenia, Belarus, Russia and Ukraine) have already ratified the deal.

The agreement is designed to guarantee conditions for free trade in the CIS space and create favorable conditions for further economic integration on the basis of WTO norms. It replaces previously existing bilateral and multilateral agreements on free trade between the member states.   


Uzbekistan plans to attract South Korean Posco company to implement the projects in the Uzbek coal industry, a source in Uzbekenergo told Trend on Wednesday.

The interlocutor of the agency said that the possibility of implementing the joint projects in the Uzbek coal industry was discussed with Posco president Chung Jung Young during Uzbek President Islam Karimov's recent visit to South Korea.

In particular, the Korean company was proposed to consider the participation in the modernization of "Apartak" mine in Angren brown coal deposit (Tashkent region).

The project's estimated cost is 100 million. A foreign investor plans to participate in the purchase of the necessary equipment, and the construction of a technological complex for sorting and loading coal into railroad cars.

It is estimated that coal extraction in the mine will increase by 7.3 times -- up to 1.82 million tons by 2016 during the modernization operations.

The implementation of the project will provide the raw material base for the plant on diesel fuel synthesis from alternative lignite with a preliminary cost of 641 million (the coal to liquid process), to be built by 2018.

"Uzbekenergo" plans to attract a foreign partner to implement a joint project to build a plant with a capacity of 700,000 tons of brown coal.

Today, the company is negotiating with South Africa's Clean Coal Technology, German Alphakat Avermann, Caterpillar and Takraf.

The project with a preliminary cost of 640 million is planned to be financed by loans from foreign financial institutions, the loan of the Uzbek Reconstruction and Development Fund and the project participants.

Uzbekistan has the proven coal reserves to the amount of 1.9 billion tons, including brown -- 1.85 billion tons, coal -- 47 million tons.

The predicted resources amount to over 5.7 billion tons of coal. Large coal reserves are concentrated in the southern regions of the country -- Surkhandarya and Kashkadarya regions.

Currently, coal is extracted in three fields -- Angren brown coal deposit, Shargun and Baysun coal deposits.

Uzbekistan produces more than 3 million tons of coal annually. According to the official statistics, coal production increased by 5.9 percent -- to 3.844 million tons in 2011.

The main consumer of coal is the power sector. Over 85 percent of total coal consumption falls to it.   


The amount of Afghan-bound cargo passing through Uzbekistan will grow to 5m tonnes in 2012, compared to 2.5m tonnes in 2011, Biznes-TASS reported September 26.  Uzbekistan is building a 230km railway segment that also will serve Pakistan and Afghanistan, said Achilbai Ramatov, executive chairman of Uzbekistan Railway, adding that the country will invest US $4 billion (7.8 trillion UZS) in its railway sector by 2015.

Uzbekistan largely ships food to Afghanistan and supplies construction services, Biznes-TASS reported.

A newly updated "Central Asia: Regional Developments and Implications for U.S. Interests" prepared by the Congressional Research Service is available here. The report includes US foreign assistance to Central Asian countries from FY1992 to FY2011, and the FY2012 Request.
According to the report, "U.S. policy toward the Central Asian states has aimed at facilitating their cooperation with U.S. and NATO stabilization efforts in Afghanistan and their efforts to combat terrorism; proliferation; and trafficking in arms, drugs, and persons. Other U.S. objectives have included promoting free markets, democratization, human rights, energy development, and the forging of East-West and Central Asia-South Asia trade links. Such policies aim to help the states become what various U.S. administrations have considered to be responsible members of the international community rather than to degenerate into xenophobic, extremist, and anti-Western regimes that contribute to wider regional conflict and instability." [Read full report]

The agreement with Beijing is the first step out of the economic crisis and escape from hegemony of Moscow, the main buyer of Uzbek gas. 25 billion cubic meters of gas a year by 2015. In 2011, about 63 million cubic meters extracted, only 12 million exported. The former Soviet republic will contribute to the development of the gas pipeline in Central Asia sponsored by China.
To emerge from the economic crisis and escape the control of Moscow, Uzbekistan has begun exporting natural gas to China. Signed in August, the agreement was only revealed on September 12 during a visit to Tashkent by Chinese Deputy Prime Minister Hui Liagyu. Relations between the two countries were born in June 2010 with the signing of a contract which provided for the intermediate export of 10 billion cubic meters of gas a year. Under the new agreement Uzbekistan will export from 2 to 5 billion cubic meters of fuel in 2012, increasing to 10 billion in 2013 and stabilizing at about 25 billion in 2016.
The former Soviet republic is the largest producer and consumer of natural gas in Central Asia, but its exports are very limited. Of 63 billion cubic meters of material extracted in 2011, the companies exported only  12 billion. To date, the main customer is Russia, followed by Kazakhstan, Tajikistan and Kyrgyzstan.
Exports will be piped to Beijing through the Central Asia and China pipeline, which starts from Turkmenistan and reaches the Chinese border through Uzbekistan and Kazakhstan. It has an annual capacity of 30 billion cubic meters, but the Chinese authorities plan to increase the amount up to 55 billion cubic meters by 2015.
The start of gas exports to China will allow Uzbekistan to diversify exports in the energy sector and to acquire new customers and counter the economic crisis that afflicts the country. The agreement with Beijing allows the ex-Soviet republic to break away from the orbit of Moscow, which controls its former satellite countries by imposing prices for the purchase of raw materials and the exclusive rights for export. In 2009 Russia contributed to the severe economic crisis of Turkmenistan reducing the purchase of gas.
The advantages for Beijing are countless. By accessing the Chinese pipeline, Tashkent will force other Asian republics to make the same choice, introducing a high level of competition in the sector, with huge savings for China. In recent years the Asian giant has become one of the main partners in the energy sector in Central Asia because of its appetite for energy and raw materials to maintain economic growth. To counter the hegemony of Moscow, Beijing has contributed to the construction of a huge pipeline that will connect all the countries of the region, allowing exports throughout Asia.

Several large photovoltaic power plants are expected to be built in Uzbekistan soon, with the participation of both local and foreign investors.

The country's largest energy producer, state-owned Uzbekenergo, has told pv magazine it is planning to install a series of photovoltaic power plants totaling 2 GW over the next several years. The majority of funds for the project will be allocated from the company's own sources, as well as the Asian Development Bank.

According to Muzaffar Mukhiddinov, head of Uzbekenergo's department of development, the first plant is expected to be built in the Tashkent region and will have a capacity of 50 MW. Around $250 million is expected to be invested in the project. Construction of the other photovoltaic plants, meanwhile, will be commenced later.

In addition to domestic companies, local media has reported that foreign investors have also expressed an interest in installing photovoltaic plants in Uzbekistan, including Norway's REC, India-based BHEL and Russia's Lukoil. Reportedly, the capacity of each plant is expected to be 100 MW. The companies declined to reveal any further details to pv magazine, however.

Uzbekistan has favorable climatic conditions for the development of photovoltaic power, with around 2,000 hours of sunshine annually in the northern part of the country, and more than 3000 hours in the south.

In an interview with pv magazine this March, Seethapathy Chander, from the Asian Development Bank (ADB) said that the bank is working with the Uzbekistan government to re-write the existing regulatory regime, and to compile a comprehensive study of the solar possibilities, in order to help project developers in the future.

"We are in the process of identifying  six areas in Uzbekistan where it is possible to develop 1,000 MW on each," explained Chander. While the country, to date, has a negligible cumulative installed solar capacity, he believes that over the next five years, these areas have the potential to be fitted out with six GW worth of photovoltaic systems.

The American-Uzbekistan
Chamber of Commerce
1300 I Street, N.W.,
Suite 720W
Washington, DC 20005
phone: 202.509.3744