The World Bank Group and the State Investment Committee of Uzbekistan signed an agreement on comprehensive advisory services to support the modernization of the civil aviation sector in Uzbekistan in August 2018. It is the first ever Reimbursable Advisory Services Agreement between the World Bank Group and the Government of Uzbekistan, the World Bank said.
Unlike lending products, Reimbursable Advisory Services (RAS) are programs offered by the World Bank to its clients to deliver specific assistance requiring services that cannot be fully funded from the Bank’s country program. Under RAS programs, the World Bank works with countries at their request, providing technical advice, analytical services, and implementation support. The Bank is then reimbursed for the costs of delivering these advisory services.
According to the RAS Agreement with Uzbekistan, the World Bank Group will develop recommendations for establishing a civil aviation sector policy and improving several aspects of the sector’s operations including institutional, financing, and organizational structure, as well as attracting private sector participation in airport infrastructure development and operations. To carry out this work, the Bank will be working in close coordination with the national air carrier, National Air Company Uzbekistan Airways, relevant government ministries and agencies, as well as the private sector.
Capacity constraints and high airport infrastructure costs make flying to and from Uzbekistan very expensive for passengers and do not facilitate the entry of foreign air carriers. Since 2010, Uzbekistan’s air transport sector has grown by only 2 percent per year. This rate is the lowest in the region, compared to neighboring countries such as Kazakhstan whose air transport has been growing by 10 percent annually. 15 international carriers serve Uzbekistan, but the national air carrier accounts for 75 percent of passenger seats.
To benefit from its strategic location at the heart of Central Asia, Uzbekistan will need to significantly improve its accessibility and connectivity. High transportation costs and long distances to reach major economic centers have limited Uzbekistan’s ability to develop its vast agriculture potential and export to large consumer markets in Europe and China.
Despite country’s size and the attractiveness of its ancient historical sites, the tourism sector is performing below potential in part because of the lack of an efficient airline system that can bring tourists from around the world in a cost-effective and convenient manner. Uzbekistan received only about 2.8 million visitors by air in 2017. In comparison, Georgia with only 3.5 million inhabitants, about one-ninth of Uzbekistan’s population, receives the same number of visitors annually by air as Uzbekistan.
“The aviation sector is one of the highest priorities for the Government of Uzbekistan, given its potential role to stimulate economic growth and unlock the country’s tourism potential. With visa restrictions lifted for many countries, the hospitality industry is expected to expand. The country is also opening to trade and commerce. However, currently air transport supply is not able to cope with this growing demand due to lack of a competitive environment,” said Hideki Mori, World Bank Country Manager for Uzbekistan. “The first RAS Agreement indicates the Government’s strong commitment to bring the country’s civil aviation sector in line with international standards.”
In Uzbekistan, the World Bank is supporting the implementation of 18 projects, totaling over US$ 3.3 billion. These projects contribute to the improvement of macroeconomic management, agriculture and water resources management, energy, transport, healthcare, education, urban development, water supply, and sanitation services, which support the country’s economic growth and higher living standards.
