Transport Sector of Uzbekistan as a factor of economic transformation in a long-term

Center for Economic Research, Tashkent, 2015

Transport Sector in 1991-2015: Main results

• Freight traffic volume has doubled since 2005.

• This growth is mainly provided by the transport sector, which is represented by 85% of private freight carriers.

• Since 2005, the transport sector has become one of the priority areas of investment.

• A new network of highways has been formed.

Freight traffic volume (mln tons) Investments in Transport Sector

Transport Infrastructure (1990 = 100%)

Public roads with hard surface Public Railways

Transportation of passengers Freight

Share of sectors in freight turnover, %

Automobile Railway

Freight traffic volume Automobile

%, to GDP (right scale)

Investments in transport sector (bln.soum)

Transport – one of the key sectors of the economy

• Transport sector accounts for 9% of GDP, and 4% of total employment.

• Transport is one of the key sectors with high multiplier effect for the economy.

• Transport sector is among the leading recipients of investments. Almost $7 billion were allocated for developing transport infrastructure in 2011-2015.

Transport

Mid-term Prospects (2015-2019)

Program for development and modernization of industrial infrastructure in 2015-2019, of the total value of 10 billion USD:

Main directions:

1. Further development of Uzbekistan national highways - 2,400 km.

2. Public Roads - 299,5 km.

3. The newest equipment for road maintenance – 993 units; 38 sets of road-

construction equipment.

4. Development and electrification of railway communications -13 investment

projects.

Objectives for Long-term Development

Forecast of freight traffic until 2030, mln. tons Changes in GDP structure, %

Investments in Transport Sector until 2030 Distribution of investments by sectors, %

If GDP growth is 8% If GDP growth is 6%

If GDP growth is 4%

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Automobile Railways

Airways

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Challenge 1. Reduction of prices for freight transportation (1)

• The relatively high cost of road and rail transportations.

• Transport sector needs investments and effective institutions.

Rise in prices for goods and services of the economy sectors in 2005-2013, times

Tariffs – road freight transportation Tariffs – rail trucking

Turkmenistan

Tajikistan

Kyrgyzstan

Kazakhstan

Uzbekistan

Turkmenistan

Tajikistan

Kyrgyzstan

Kazakhstan

Uzbekistan

Airway transport

Automobile Roads

Railways

Goods

Non-goods, Services

Challenge 1. Reduction of prices for freight transportation (2)

The goal is to decrease the dynamics of price growth for freight services for business and population

• Road Transport Sector:

– Upgrade of truck fleet, increasing their number from 37 to at least 120 thousand

– Increasing carrying capacity of vehicles

– Optimization and reduction of the number of licenses for road transport companies

– Creating conditions for consolidation of transport companies.

• Railway Sector:

– Changing the principles of tariff formation for rail trucking

– Expanding access of forwarding companies to railway infrastructure

– Gradual reduction of cross-subsidies for rail trucking.

Challenge 2. Efficiency and reliability of freight transportation (1)

Min Max Uzbekistan 60 70 Russia 70 110 EU 90 100

Export procedures, days Number of documents for export and import

Traverse speed on railways

Need for high-quality roads and rolling stock.

Increase the level of electrification of the railways.

To develop multimodal transportation it is necessary to increase container traffic.

Kazakhstan

Iran

Russia

China

Uzbekistan

Iran

Turkey

Uzbekistan

Pakistan

Egypt

Uzbekistan

Iran

Turkey

Uzbekistan

Tex

tile

C

ott

on

G

oo

ds

Max

Import

M I n

Export

Challenge 2. Efficiency and reliability of freight transportation (2)

The goal is to improve operational efficiency and reliability and to provide "network effect" - the transport connectivity of the country. • The development of the road network and road infrastructure.

• The growth of rail trucking through:

– The development of railway infrastructure (electrification, loading and unloading facilities, etc).

– Upgrading the rail rolling stock, increasing the share of electric locomotives by 3 times.

– Increasing the share of container traffic up to 25-30%.

• The expansion of air transport through:

– Updating the flight fleet.

– Modernization of air transportation infrastructure.

• The improvement of logistics systems through:

– Optimizing the layouts of the national TLC network with the level of transportation and logistics operations to a level 3 PL, at least.

– Creating 5-6 large terminals (intermodal logistics centers) in the cross-border traffic centers of the country (in the format of "dry port").

Challenge 3. Diversification of transport routes (1)

• The competition of transport routes is increasing in Central Asia

– Part of the routes bypasses Uzbekistan that threatens to decline in revenues from transit in the short term.

– The more alternative routes, the better for Uzbekistan in the long-term.

• It is necessary to further develop the infrastructure of transport corridors through Uzbekistan.

• It is necessary to reduce/improve customs procedures of export-import and transit of goods, but not to the detriment of safety.

Challenge 3. Diversification of transport routes (2)

Countries/projects Initiative Construction work Commodity flows

China

• MTC «China-Kyrgyzstan-Uzbekistan» 1996 - -

• Autocorridor «Western Europe-Western

China» 2003 2009 +

• Railway through Central Asia to Iran 2003 2009 -

• Railway and highway from Kashgar through

Badakhshan (Tajikistan) to Afghanistan

2010 - -

• 6 corridors of ADB-CAREC 1997 + +

• Kashgar-Ghvadar economic corridor End of 1990s + +/-

Iran

• Railway corridor «North-South» 2000 2009 until now +

• Caspian transport corridor «Uzen-Kizilkiya-

Bereket-Estrek-Gorgan»

2007 2009 until now -

• Kolkhozabad-Low Pyanj-Kunduz-Mazar-i-

Sharif-Herat-Meshkhed

2007 2011 until now -

Russia

• Development of Transsiberian highway Mid. of 1990s + +

• Railway «Russia-Kazakhstan-

KyrgyzstanTajikistan (Chuy-Gerghana) 2013 - -

Afghanistan (Tajikistan)

• Railway from Ashgabat to Dushanbe through

Afghanistan 2013 - -

USA (India)

New Silk Road 2011 - -

Евросоюз

TRACECA(Europe-the Caucasus-Central Asia) 1993 Not provided +

Challenge 3. Diversification of transport routes (3)

• In the long-term, Uzbekistan will move from "inside" policy to the “outside” policies.

– Export-oriented economy, the prevalence of high-tech export

– Competitive domestic transport and logistics sector

– Alternative transport corridors

i) Integration of the national transport system with international transport corridors by-passing Uzbekistan by means of formation of the new transport corridors: «Termez - Mazar-i-Sharif - Andhoi - Herat - Iran»; «Heart-Andhoi - Mazar-i-Sharif»; «Europe-Uzbekistan-China»; «Uzbekistan-Kyrgyzstan-China»

• Improvement and simplification of the customs procedures on the basis of the wide introduction of information and communication technologies.

Rout by-passing Uzbekistan Projects for integration of routes

Name Length Cost

«Western Europe- Western China» Modernization of the road section «Tashkent – Chimkent»

150 km 300 mln. USD

Caspian Sea regional transport corridor Uzen- Kizilkiya-Bereket-Etrek-Gorgan

Implementation of the Project of transport corridor «Uzbekistan-Turkmenistan-Iran-Oman»

2800 km On the stage of determination

Railway line from Turkmenistan though Afghanistan «Imamnazar-Atamyrat-Andhoi- Herat»

Construction of the railway line Mazar-i-Sharif – Andhoi by the State Joint Stock Railway Company Uzbekistan Temir Yullari

120 km 170 mln. USD

Railway line and road from Kashgar through Kirgizstan, Tajikistan and Afghanistan to Iran

Construction of electrified railway line Angren – Pap, which will create the basis for implementation of the project of construction of the railway line Uzbekistan – Kirgizstan – China

150 km 2,7 mln. USD

Integration directions of the transport system in Uzbekistan with individual transport corridors

Priorities for Transport Sector Development by 2030

The key objective of transport policy is to provide conditions for balanced spatial development of the country.

• By 2030, transport sector of Uzbekistan should provide economy with transport services, which are:

– relatively cheap

– efficient and reliable in time constraints

– diversified by geographic areas and types of freight traffic

• Priorities for investments in Transport Sector (in infrastructure and vehicles) until 2030 should consider: – Outstripping growth in demand for automobile transportation

services – Increased demand for combined transportations – Growing demand for transportations within the country with

simultaneous growth of exports and imports, as well as transit.

Thank you!

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