Technical Assistance Consultant’s Report

Project Number: 48414-001/TA 8950-UZB November 2016

Uzbekistan: Third CAREC Corridor Road Investment Program (Financed by the Technical Assistance Special Fund)

Prepared by SHELADIA Associates Inc. USA in association with

Infrastruktura Lohiya Byurosi LLC (CBI)

For Government of Uzbekistan Republican Road Fund of Uzbekistan

This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design.

ADB TA No. 8950-UZB PPTA FOR THIRD CAREC CORRIDOR ROAD INVESTMENT PROGRAM, PHASE 1

Funded by: Executing Agency:

Asian Development Bank Republican Road Fund of Uzbekistan

Consultant’s Final Report for Kashkadarya Regional Road Project

November 2016

SHELADIA Associates Inc. USA in association with

Infrastruktura Loyiha Byurosi LLC, Uzbekistan (CBI)

Consultant’s Final Report for Kashkadarya Regional Road Project, November 2016 TA No. 8950-UZBEKISTAN: PPTA for Third CAREC Corridor Road Investment Program, Phase 1

ADB TA 8950 – UZBEKISTAN

PROJECT PREPARATORY TECHNICAL ASSISTANCE FOR THIRD CAREC CORRIDOR ROAD INVESTMENT PROGRAM, PHASE 1

CONSULTANT’S FINAL REPORT FOR KASHAKADARYA REGIONAL ROAD PROJECT NOVEMBER 11, 2016

This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. It was solely provided for the project purpose and its terms of reference. This and other project reports should not be distributed without written authorization from ADB.

SHELADIA Associates Inc. USA in association with

Infrastruktura Loyiha Byurosi LLC, Uzbekistan (CBI)

2 SHELADIA (USA)/ CBI Consultant’s Final Report for Kashkadarya Regional Road Project, November 2016 TA No. 8950-UZBEKISTAN: PPTA for Third CAREC Corridor Road Investment Program, Phase 1

REPORT ISSUE RECORD

Project Title: PPTA for Third CAREC Corridor Road Investment Program, Phase 1

Project Number: TA 8950-UZB

Report Title: Consultant’s Final Report for Kashkadarya Regional Road Project

Revision History

Version Date Prepared by Modification

Initial Report 11 November 2016 Thomas Voigt

1. Revision

2. Revision

3. Revision

4. Revision

3 SHELADIA (USA)/ CBI Consultant’s Final Report for Kashkadarya Regional Road Project, November 2016 TA No. 8950-UZBEKISTAN: PPTA for Third CAREC Corridor Road Investment Program, Phase 1

CONTENTS

A. Executive Summary ...... 10 B. Introduction ...... 11 B.1 Background and Objectives ...... 11 B.2 General Description of the Route ...... 12 B.3 Major Nodes ...... 12 B.4 Performance of the Study ...... 15 B.4.1 Staff Mobilization ...... 15 B.5 Structure of the Report ...... 15 C. Description of the and its Growth Prospects ...... 16 C.1 General Features ...... 16 C.2 Demographics ...... 16 C.3 Economy ...... 16 C.4 Government’s Development Program and Medium Term Strategy ...... 19 C.5 Economic and Traffic Growth Rates ...... 20 D. Socio-Economic Profile of the Kashkadarya Region ...... 20 E. Road Development and Road Sustainability ...... 22 E.1 Road Development ...... 22 E.2 Road Sustainability ...... 23 F. Detailed Design and Cost of Kashkadarya Regional Road ...... 24 F.1 Description of ADB Design Road Sections ...... 24 F.2 Traffic Studies ...... 26 F.2.1 Potential for Traffic Diversion, Generated Traffic and Induced Traffic ...... 26 F.2.2 Traffic on Homogenous Sections of the Project road ...... 27 F.2.3 Traffic Projection ...... 27 F.3 Topographical Survey ...... 29 F.4 Geotechnical Investigations ...... 29 F.4.1 Geological Overview ...... 29 F.4.2 Natural Conditions in the Region of Construction Works ...... 29 F.4.3 Sources for Road Construction Materials ...... 30 F.5 Road Inventory and Surface Condition Survey ...... 33 F.5.1 Investigation Period ...... 33 F.5.2 Scope of Investigations ...... 33 F.5.3 Results of Investigations ...... 33 F.6 Pavement Design ...... 35 F.6.1 Design Parameters...... 35 F.6.2 Proposed Pavement Structures ...... 35 F.6.3 Calculations ...... 36

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F.6.4 Design Life ...... 36 F.7 Hydrology and Drainage ...... 36 F.7.1 Overview ...... 36 F.7.2 Type, Number and Condition of existing Culverts ...... 36 F.7.3 Proposals for Rehabilitation, Reconstruction and new Culverts ...... 38 F.7.4 Discharge Calculations ...... 38 F.7.5 Flow Velocities ...... 38 F.7.6 Recommendations and Final List of Culverts with Details ...... 38 F.8 Bridges ...... 38 F.8.1 Design Standard in Force ...... 38 F.8.2 Existing Bridges...... 39 F.8.3 Design Solutions ...... 39 F.9 Road Design...... 40 F.9.1 Design Standard in Force ...... 40 F.9.2 Geometrical Design Parameters ...... 40 F.9.3 Transition Curves ...... 40 F.9.4 Widening of curves ...... 40 F.9.5 Cross Section Parameters ...... 41 F.9.6 Cross Fall ...... 44 F.9.7 Deviation from Standard ...... 45 F.9.8 Junctions ...... 45 F.9.9 Street Lighting, Bus Stops, Sidewalks, Parking and Road Furniture ...... 46 F.9.10 Road Safety, Signs and marking Plans ...... 46 F.9.11 Utility Lines ...... 46 F.9.12 Plan and Profile Drawings ...... 47 F.9.13 Translation and Update of Drawings ...... 47 F.10 Bills of Quantities and Project Costing ...... 47 F.10.1 Review of BoQ ...... 47 F.10.2 Review of Costing ...... 48 F.11 Technical Specifications ...... 49 F.11.1 Review of Technical Specifications used in previous Projects ...... 49 F.11.2 Review of Technical Specifications developed by ADB Consultant ...... 49 F.11.3 Update of Technical Specifications for the Project ...... 49 F.12 Preliminary Project Implementation Plan ...... 50 F.12.1 Construction Scheduling ...... 50 F.12.2 Project Implementation Plan ...... 51 G. Economic and Financial Analysis ...... 52 G.1 General ...... 52 G.2 Demand Analysis ...... 53

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G.3 Economic Costs ...... 54 G.4 Economic Benefits ...... 55 G.5 Results of Economic Analysis ...... 56 G.6 Financial Analysis ...... 58 H. Financial Management and Plan...... 59 H.1 Financial Management Assessment ...... 59 H.2 Disbursement ...... 63 H.2.1 Disbursement Arrangements for ADB Funds ...... 63 H.2.2 Disbursement Arrangements for Counterpart Funds ...... 63 H.3 Accounting ...... 63 H.4 Auditing and Public Disclosure ...... 64 I. Preliminary Project Implementation Arrangements ...... 65 I.1 Construction Scheduling ...... 65 J. Procurement Plan ...... 66 J.1 Methods, Thresholds, Review and 18-Month Procurement Plan ...... 66 J.1.1 Procurement and Consulting Methods and Thresholds ...... 66 J.1.2 Goods and Works Contracts Estimated to Cost $1 Million or More ...... 66 J.1.3 Consulting Services Contracts Estimated to Cost $100,000 or More ...... 67 J.1.4 Goods and Works Contracts Estimated to Cost Less than $1 Million and Consulting Services Contracts Less than $100,000 (Smaller Value Contracts) ...... 68 J.2 Indicative List of Packages Required Under the Project ...... 68 J.3 List of Awarded and On-going, and Completed Contracts ...... 69 J.4 National Competitive Bidding ...... 69 K. Road Sector Assessment ...... 70 K.1 Background ...... 70 K.1.1 Key Challenges in the Road Sector ...... 70 K.1.2 Status of Reforms in the Road Sector...... 72 K.1.3 Recommended Institutional and Policy Reforms ...... 73 L. Design and Monitoring Framework ...... 76 L.1 Project Objectives ...... 76 L.2 Design and Monitoring Framework for the Project...... 76 M. Lessons Learnt ...... 79 M.1 The Consultant ...... 79 M.2 ADB ...... 79 M.3 Road Fund / PMU ...... 79 M.4 Design Institute ...... 80

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List of Figures

Figure 1: Physical map of the Republic of Uzbekistan ...... 13 Figure 2: Overview of road sections to be financed by Republican Road Fund and ADB ...... 14 Figure 3: Overview of roads in Kashkadarya Regional Road Project ...... 25 Figure 4: Typical cross section for a category Ib road outside settlements (4 lanes) ...... 42 Figure 5: Typical cross section for a category Ib road inside settlements (6 lanes) ...... 43

List of Tables

Table 1: Major junctions in ADB sections ...... 12 Table 2. Gross Development Product (2011-2015) ...... 17 Table 3. Selected Economic Indicators and Baseline Projections for 2016-2018, % ...... 19 Table 4: Summary of GDP growth rates (based on above), % p.a...... 20 Table 5: Summary of Traffic Counts from Feasibility Study ...... 26 Table 6: Average annual daily traffic observed on 4R79 and M39 ...... 26 Table 7: Base year (2016) AADT on project road sections ...... 27 Table 8: Adopted Growth Rates (%) for Traffic Projection ...... 28 Table 9: Traffic Forecast for homogenous sections of the project road ...... 28 Table 10: Soil borrow pits ...... 31 Table 11: Table of Bridges ...... 39 Table 12: Main design parameters for Category Ib Road ...... 40 Table 13: Length of transition curves ...... 40 Table 14: Curve Widening...... 41 Table 15: Cross fall depending on road category ...... 45 Table 16: Major junctions in ADB sections ...... 45 Table 17: Estimated Cost of Kashkadarya Regional Road Project ...... 48 Table 18: Gantt Chart of Implementation Activities ...... 51 Table 19: Base Year Traffic Volume along Project Road Sections ...... 53 Table 20: Adopted Growth Rates (%) for Traffic ...... 54 Table 21: Adopted Values of Passenger Working and Non-Working Time ...... 55 Table 22: Results of Economic Analysis ...... 56 Table 23: Costs and benefits streams ...... 56 Table 24: Sensitivity Analysis Results ...... 58 Table 25: Summary of the Financial Management Assessment ...... 59 Table 26: Risk Assessment and Mitigation Measures ...... 61 Table 27: Control Risk ...... 61 Table 28: Basic Data ...... 66 Table 29: Threshold for procurement of goods and works ...... 66

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Table 30: Threshold for consulting services ...... 66 Table 31: Civil works packages...... 67 Table 32: Consulting services contracts ...... 67 Table 33: Smaller value goods and works ...... 68 Table 34: Smaller value consulting services contracts ...... 68 Table 35: Goods and works over the life of the project ...... 68 Table 36: Consulting services over the life of the project ...... 68 Table 37: Awarded and ongoing contracts for goods and works ...... 69 Table 38: Awarded and ongoing contracts for consulting services ...... 69 Table 39: Design and Monitoring Framework ...... 77

Appendices

Appendix 1: Design Review Report Appendix 2: Initial Environmental Examination Appendix 3: Social Due Diligence Report Appendix 4: Summary Poverty Reduction and Social Strategy (SPRSS) Appendix 5: Road Sector Assessment Report Appendix 6: Road Safety Audit Report Appendix 7: Financial Management Assessment Appendix 8: Project Administration Manual

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List of Abbreviations

AASHTO American Association of State Highway Transport Officials AC Asphalt Concrete ADB Asian Development Bank ASTM American Standard Testing Methods BOQ Bill of Quantities BS British Standards CBI Consulting Bureau for Infrastructure (Infrastruktura Loyiha Byurosi LLC) CBR California Bearing Ratio CDO Central Design Office DI Design Institute (Yul Loyikhasi Byurosi LLC) DPR Detailed Project Report EA Executing Agency EIRR Economic Internal Rate of Return FS Feasibility Study GCS Granular Coarse Sub base IA Implementing Agency IEE Initial Environmental Examination LHS Left Hand Side LTP Lead Technical Professional MFF Multi-tranche Financing Facilityl NH National Highway NPV Net Present Value NSDP Net State Domestic Product PCU Passenger Car Unit PPTA Project Preparatory Technical Assistance QA Quality Assurance QAR Quality Assurance Reviewer RHS Right Hand Side ROW Right of Way RRF Republican Road Fund of the Republic of Uzbekistan SH State Highway SPRSS Summary Poverty Reduction and Social Strategy SPS ADB's Safeguard Policy Statement (2009) SHELADIA Sheladia Associates, Inc. TOR Terms of Reference URM Uzbekistan Resident Mission VC Video Conference VDF Vehicle Damage Factor

9 SHELADIA (USA)/ CBI Consultant’s Final Report for Kashkadarya Regional Road Project, November 2016 TA No. 8950-UZBEKISTAN: PPTA for Third CAREC Corridor Road Investment Program, Phase 1

A. Executive Summary

1. With the objective of promoting regional integration and boosting economic activity, the Asian Development Bank (ADB) proposed Multi-tranche Financing Facility (MFF) for the Third Central Asia Regional Economic Cooperation (CAREC) Corridor Road Investment Program. The MFF would rehabilitate 364 km of international corridor highways in the Republic of Karakalpakstan, Khorezm and Kashkadarya regions of Uzbekistan. A critical step in the development of the CAREC Corridor initiative, the Investment Program would provide the last “missing link” in connecting the CAREC corridors to the international border with Kazakhstan.

2. The initial MFF program contained three tranches. Due to the envisaged implementation schedule for Tranche 1 it was agreed between ADB and the Government of Uzbekistan, that Tranche 1 will be implemented as a standalone project and the MFF may consist of the remaining two Tranches. Thus, the new project title for this project road is Kashkadarya Regional Road Project.

3. The PPTA covers technical, economic and financial, governance and social and environmental safeguards aspects. Technical due diligence activities were undertaken based on the detailed design documentation made available by the RRF. The main goal was to ensure that the technical design solutions comply with design guidelines in force in Uzbekistan and reflect good international practice. Environmental and social safeguard studies were undertaken to ensure that the project would comply with ADB safeguard policies and national laws. Governance and institutional arrangement aspects studied including proposals for possible revisions shall lead to sustainable improvements in the procurement of civil works. The following documents were prepared for the Kashkadarya Regional Road:

• Initial Environmental Examination including EMP • Summary Poverty Reduction and Social Strategy • Social Due Diligence Report • Procurement Assessment Report • Financial Management Assessment Report • Road Safety Audit Report • Road Sector Assessment Report • Design Review Report

4. The Kashkadarya Regional Road is located in Kashkadarya district and has a total length of 127 km. It starts in the city of Karshi and runs towards Shahrisabz and Kitab. The following roads form part of it: 4R79 road from km 0 to 64 km, 4K319 road from km 12 to km 30, 4R84 road from km 14 to km 19 and M39 from km 1144 to km 1184. Related to funding the 127 km length are divided into 4 sub-sections out of which 2 are foreseen for ADB funding and the other 2 under RRF funding. The sections proposed for ADB financing are from design km 28 to design km 76 (km 28 to km 64 of 4R79 and km 18 to km 30 of 4K319) and from design km 98 to design km 127 (km 1144 to km 1173 on M39) thus having a total length of 77 km.

5. An individual consultant was hired by ADB to improve the quality of tender and design documents, by building higher capacity of the Tashkent Design Institute. He held trainings and workshops related to the preparation of BoQ and Specifications according to international standards. His main task was to develop a master BoQ and Specifications, which can be used as a basis in future projects.

6. The executing agency is the Republican Road Fund under the Ministry of Finance of the Republic of Uzbekistan. A Project Management Unit was established to coordinate and manage the PPTA activities.

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B. Introduction

B.1 Background and Objectives

7. The Government of Uzbekistan requested for a project preparatory assistance (PPTA) to carry out due diligence and prepare a comprehensive design under the Third CAREC Corridor 2 Road Investment Program. The Asian Development Bank (ADB) finances the PPTA. The investment program was initially proposed as a Multi-tranche Financing Facility (MFF), which would rehabilitate 364 km of international highways in the Republic of Karakalpakstan and the Khorezm and Kashkadarya regions of Uzbekistan. The initial MFF program contained three tranches. In June 2016, the decision was approved to implement the Kashkadarya Regional Road Project (former tranche I) as stand-alone project to expedite its implementation. It shall be suitable for financing by ADB as well as the remaining two tranches and where possible by other co-financiers. The proposed stand-alone project will make available approximately $200 Million in ADB ordinary capital resources, and the Government of the Republic of Uzbekistan will provide approximately $67 Million to finance the Program. 8. An overview of the location of the Kashkadarya Regional Road subject to the PPTA is given at the end of chapter 2 below. 9. The PPTA will (i) develop an investment program bankable by ADB loan; (ii) conduct due diligence for technical, economic, financial, social and environmental viability of each project under the program; (iii) assist the Executing Agency in developing required documentation for country resource allocation; (iv) assist the Executing Agency in procuring contracts and managing safeguard issues for the stand-alone project; and (v) carry out capacity development activities to initiative institutional reforms and improve construction standards. 10. The PPTA is divided into 2 phases: Phase 1 for conducting due diligence for the selected projects including the preparation of bidding documents for the two ADB financed sections of the Kashkadarya Regional Road Project; and Phase 2 for assistance in procurement leading up to contract award for the first tranche project. This report deals with Phase 1 of the PPTA. 11. Identified by the Government as a priority road development program (Resolution of the President of the Republic of Uzbekistan No 2313 on the Program of Development and Modernization of the Engineering‐Communication and Road and Transport Infrastructure for the period 2015‐2019, dated March 6, 2015), the output anticipated for the Kashkadarya Regional Road Project is the upgrading/construction of a regional road section connecting Karshi and Kitab (77km), providing a shorter high capacity link between these two centers on A380 and M39 along 4R79, 4K319, 4R84 and M39 roads. The totally 127 km long design road sections will be constructed to a category I road in accordance with the design guideline ShNK 2.05.02-07. 12. The executing agency (EA) for the Third CAREC Corridor 2 Road Investment Program is the Republican Road Fund, subordinated to the Ministry of Finance of the Republic of Uzbekistan. A Project Management Unit (PMU) has been established as implementing agency. After ADB’s approval of the Kashkadarya Regional Road the proposed road sections shall be implemented by the implementation agency, the PMU. 13. To assist the Executing Agency in the preparation of the Third CAREC Corridor 2 Road Investment Program, ADB has engaged SHELADIA Associates, Inc. (SHELADIA), in association with the Consulting Bureau for Infrastructure (CBI) to provide the required consulting services under the PPTA. A consultancy contract was signed on 24th February 2016 following contract negotiations in the period 23-24 February 2016. The notice to commence the consulting services was received on March 15, 2016. According to the implementation schedule, all deliverables for the Kashkadarya Regional Road are due first and the MFF tranches would follow. However, the consultant’s activities for all three project roads could not be carried out simultaneously as scheduled due to the lack of the FS documentation to be made available by RRF for tranches 2 and 3. Thus, the document in hand is limited to the Kashkadarya Regional Road Project. 14. In addition to the SHELADIA team, ADB has engaged an individual consultant with expertise in preparation of Bills of Quantities, Cost Estimates and Specifications in accordance to international standards, who undertook the related studies and prepared a master BoQ and Standard Specifications

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for road construction works. Based on these documents DI developed the project BoQ’s and Specifications. The consultant added special provisions to allow for special needs of the project.

B.2 General Description of the Route

15. The overall 127 km long project road Karshi – Shahrisabz – Kitab consists of road 4R79 km 0 – km 64, road 4K319 km 30 – km 12, road 4R84 km 19 – km 14 and road M-39 km 1184-1144 km (in direction from Karshi to Kitab)", thereby contributing to the growth of internal and external transport in the region. This will ensure better economic and regional cooperation with neighboring countries. 16. Start of the project road is in the city of Karshi. Further, it passes through Karshi, Guzar, Kamashi, Yakkabag, Shakhrisabz and Kitab regions of the Kashkadarya province. 17. The 77 km of road sections to be financed by international financiers (ADB) are as follows:  Section 1, design km 28 to design km 76 (48 km) • Road 4R79 “Karshi city – Khanabad village – Chirokchi – Shakhrisabz city”, km 28 – km 64 (36 km) • Road K319 “railway station Tanhoz – Yakkabog city – Esat village – Kazak village”, km 18 – km 30 (12 km)  Section 2, design km 98 to design km 127 (29 km) • Road M39 “Almaty – Bishkek – Tashkent – Shakhrisabz - Termez” km 1144 – km 1173. (29 km) 18. The first two of the above mentioned road sections form a coherent design section of 48 km length. The second design section of 29 km length is the one located on M39. Both roads were built in the 70s and 80s of the last century.

B.3 Major Nodes

19. There is a number of major junctions in the two ADB sections. They have been designed according to local standard and the layout drawings for them are contained in the FS of DI. The major junctions are shown in the following table. Table 1: Major junctions in ADB sections Chainage Type of Junction Section 1, design km 28 to design km 76 km 38.4 Cross Road km 52.5 Cross Road km 64.0 T-Junction Section 2, design km 98 to design km 127 km 100.34 Cross Road km 101.54 Cross Road km 101.98 Cross Road km 112.94 T-Junction

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Project area

Figure 1: Physical map of the Republic of Uzbekistan

13 SHELADIA (USA)/ CBI

Consultant’s Final Report for Kashkadarya Regional Road Project, November 2016 TA No. 8950-UZBEKISTAN: PPTA for Third CAREC Corridor Road Investment Program, Phase 1

ADB – 29 km

RRF – 22 km

ADB – 48 km

RRF – 28 km

Figure 2: Overview of road sections to be financed by Republican Road Fund and ADB

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B.4 Performance of the Study

B.4.1 Staff Mobilization

20. The SHELADIA Team was mobilized on March 17, 2016 as agreed with the ADB. A project kick- off meeting was held with ADB and PMU officials on March 22. The staff schedule has been planned assuming that all related FS and DD documents for the three tranches of the MFF are readily available. In April the consultant was informed that tranche 1 of the MFF is likely to be implemented as a stand-alone project. The schedule for deliverables was adjusted to assure timely submission to advertise the project in the last quarter of 2016. 21. ADB issued two variation orders to include the translation and update of the DD drawings for the Kashkadarya Regional Road Project into the scope of works of the consultant in September. Accordingly, Sheladia team made necessary adjustments to the working and staff schedules to meet the revised deadlines and hired additional staff with the required expertise.

B.5 Structure of the Report

22. This Final Report comprises of eleven chapters. A brief description of the content of each chapter is given below: Chapter A: Executive Summary – gives a general overview of the tasks carried out under the PPTA. Chapter B: Introduction – gives a brief introduction on project background and performance of the study. Chapter C: Brief overview of the Economy of Uzbekistan – provides some major data of Uzbekistan’s economy. Chapter D: Socio-Economic Profile of the Kashkadarya Region – explains the socio-economic profile of the project area. Chapter E: Road Development and Road Sustainability – describes the expected outputs of the road improvement. Chapter F: Detailed Design and Cost of Kashkadarya Regional Road – review of the DD documentation, assessment of design standards and horizontal and vertical alignment, material investigations, pavement design and cross drainage structures are presented in this chapter. Chapter G: Economic analysis – provides information about economic viability of the project. Chapter H: Financial Management and Plan – describes the financial arrangements and risks to implement the project. Chapter I: Preliminary Project Implementation Arrangements – outlines the schedule to implement the project. Chapter J: Procurement Plan – in this chapter the packaging and procurement procedures are discussed. Chapter K: Design and Monitoring Framework – analyses the project impact, outcome and expected outputs.

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C. Description of the Economy of Uzbekistan and its Growth Prospects

C.1 General Features

23. Uzbekistan is a doubly landlocked country in Central Asia with a land area of 448,978 sq km (172,742 sq mi), a population of 31.3 million (2015) and a GDP of $66.7 billion, corresponding to a per capita GDP of $2,200 in 2015 (the GDP based on Purchasing Power Parity – PPP – was estimated at $184 billion, corresponding to a GDP per capita of $6,000). 24. The country is divided into 12 provinces and the Republic of Karakalpakstan, which represents about a third of the country in land area in the northern part of Uzbekistan. Due to its location within a series of endorheic basins, none of its rivers lead to the sea with the two largest emptying into the Aral Sea. The country is bordered by five countries: Kazakhstan in the north, Tajikistan to the south-east, Kyrgyzstan to the northeast, Afghanistan to the south and Turkmenistan to the southwest. 25. Uzbekistan has a continental climate, with a relatively short winter season and a long growing season with adequate water resources for most part of the country. The average summer temperature tends to be about 40C (104F), while the average winter low temperature is around - 23C (-(9F).

C.2 Demographics

26. Uzbekistan is Central Asia’s most populous country with 31.3 million inhabitants. According to official sources, Uzbeks comprise the majority (80%) of the population. Other ethnic groups include Russians, 5.5%, Tajiks, 5% (official estimate, but disputed), Kazakhs, 3%, Karakalpaks, 2.5% and Tatars, 1.5%, as well as Koreans and Armenians and many other nationalities, relocated to Uzbekistan in the 1940s. 27. At least 10% of the Uzbekistan’s labor force worked abroad around 2010, mainly in Russia and Kazakhstan. This percentage may have since declined due to economic problems in these two countries and strong growth in Uzbekistan. 28. Uzbekistan has a 99.3 % literacy rate among adults older than 15, which is attributable to the free and universal education system of the Soviet Union.

C.3 Economy

29. Agriculture accounted for about 40% of the country’s economic output until the independence in the early 1990s, with cotton representing 40% of this output being the main export crop. Other crops include fruit and vegetables, which are increasing their share (also of exports), cereals, rice, alfalfa, wine grapes, sesame, tobacco and sugar cane. Uzbekistan also produces Karakul sheep pelts. Traditional crafts, such as silk dying and carpet weaving have enjoyed resurgence after independence. 30. With the economy diversifying, agriculture represents less than 20% of the GDP, while the share of industry increasing to 25% of the economy today. As an example of industrialization and production of road transport vehicles, the Government acquired a 50% stake in , a Korean car maker in 2005. In May 2007 this new company, UzDaewooAuto, signed a strategic agreement with -Daewoo Auto and Technology (GMDAT). Following a change in ownership of Daewoo, the facility was renamed GM Uzbekistan in 2008 to continue to produce Uz-Daewoo branded vehicles (with 75% of the shares owned by the Uzbek OJSC UzAvtosanaot). The annual production of GM Uzbekistan is 250,000 unites of Spark M300. 31. Another plant is producing 200,000 units of front-, rear- and side windows for the vehicles of the Uz-DaewooAvto and the Chevrolet Lacetti. A third production facility was opened in 2014 in Pitnak, Khorezm, manufacturing Damas/Labo micro-vans and the minivan. 32. In 2012, the and were added to the production line, followed by the revised Gentra model in 2013, the Chevrolet Orlando in 2014 and the Chevrolet Nexia T250 in 2015.

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33. Uzbekistan has become GM’s eighth-largest market with its products also exported to Russia and other CIS countries. 34. The Government bought later a stake in Turkey’s Koc in SamKochAvto, a producer of small buses and trucks. The Government has also signed an agreement with Isuzu Motors of Japan to produce Izuzu buses and trucks. 35. Uzbekistan is the main producer of machinery and heavy equipment in Central Asia. The country manufactures machines and equipment for cotton cultivation, harvesting and processing and for use in the textile industry, irrigation and road construction. This emphasis on making machinery also makes ferrous and nonferrous metallurgy important. Light industry includes tea-packing plants