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Turkmenistan infrastructure strengthened by two-fold EBRD financing
To address critical infrastructure bottlenecks in Turkmenistan, the European Bank for Reconstruction and Development (EBRD) is providing two loans totalling US$ 80 million (ECU 73.4 million) to assist Turkmenistan in the development of its road system and the Turkmenbashi port on the Caspian Sea. With the focus on rehabilitation and institutional development, this represents the EBRD's first public sector commitment in Turkmenistan.
"It is important that the EBRD assists countries still in the early stages of transition with the development of their infrastructure," said Stijn Albregts, Director of the EBRD's Turkmenistan team. "Restructuring the road network will not only link the most important industrial centres of Turkmenistan, but will also connect them to the port of Turkmenbashi, an important gateway to the east-west international trading route. This will greatly improve the ability of Turkmenistan and its Central Asian neighbours to gain access to western markets, thereby expanding international trade."
The US$ 80 million commitment consists of two separate sovereign loans. The first amounts to a US$ 50 million (ECU 45.9 million) loan to Turkmenautoellari, the state road authority. This will be used to make improvements to 350 km of main road linking Ashghabat, the capital, with the major industrial centre of Mary, which lies on the country's main transit route to the east.
Recognising the importance that an efficient road system plays in the growth of an economy, the EBRD intends to assist the Government of Turkmenistan in its rationalisation of road sector funding, which will lead to a more effective use of its financial resources. In preparation for eventual privatisation, the project will also enable the road authority to carry out the restructuring of road construction and maintenance units.
The second loan for US$ 30 million (ECU 27.5 million) will help land-locked Turkmenistan to improve and diversify its access to international markets. Focusing on the port of Turkmenbashi, the project will assist the Turkmen Sea Administration (TSA) to make improvements to the main port, which includes a general cargo and dry bulk terminal and a ferry terminal. Additional benefits will include helping TSA prepare its transformation into a commercially operated company as well as improving the legal and administrative environment in which the port operates.
Both projects will involve internationally tendered civil works, which will give the country its first experience in open tendering in the construction sector. This will provide a valuable demonstration of how tendering lowers costs and improve quality from contractors.
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