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EBRD helps Indorama introduce advanced cotton farming technologies in Uzbekistan

By Anton Usov

  • EBRD providing financial package of up to US$ 70 million to Indorama Agro
  • Introduction of new farming technologies
  • Parallel loan by IFC, support by FINTECC

The European Bank for Reconstruction and Development (EBRD) is supporting the modernisation of agriculture and enhanced economic opportunities for the local population in Uzbekistan with a financing package of up to US$ 70 million to Indorama Agro (Indorama).

The package will consist of a US$ 60 million capital expenditure loan and a US$ 10 million working capital loan in Uzbek sum equivalent. It will support the operations of Indorama, an established cotton industry player engaged in rotational crop farming, a systematic approach to selecting locations and cycles of crop planting.

Following the political transformation in the country, the Uzbek government decided to introduce cotton farming “clusters”, which are designed to attract local and international private investment and best business practices into this state-dominated sector. The approach is supported by the International Labour Organization and international lenders such as the EBRD and the International Finance Corporation (IFC), which have been supporting the initiative through technical assistance and lending programmes.

The EBRD financing will be accompanied by a parallel loan of the same size from the IFC, a member of the World Bank Group.

The EBRD loan is also supported by the EBRD’s Finance and Technology Transfer Centre for Climate Change (FINTECC) programme, which helps companies in participating EBRD economies to implement innovate climate technologies and is financed by the Global Environment Facility Trust Fund. A grant of US$ 140,800 will contribute to the introduction of GPS/laser levelling technology,  that is used to address the issue of uneven soil surfaces, which can affect the yield of crops, the use of water and associated resources.

Indorama Agro will be the first company to introduce this technology that is widely recognised as a good agronomic and crop management practice but which is a novelty to Uzbekistan’s agricultural sector.  

Technical assistance of around €305,000 is provided by the government of Japan, Indorama Corporation and the EBRD Shareholder Special Fund . It will be used to promote gender and economic inclusion activities such as training programmes for women and the rural population. The funds will also be used to assess the environmental and social impacts of the project.

In 2020 the EBRD responded to the coronavirus pandemic in Uzbekistan by pledging US$ 521 million (€429 million) through 18 projects in various sectors of the national economy. The EBRD resources were used to support the country’s banking sector, maintain access to finance for small and medium-sized enterprises, upgrade key infrastructure and promote renewable energy.

Indorama Agro is a subsidiary of the Singapore-headquartered Indorama Corporation, a global chemicals group manufacturing petrochemicals products, fertilisers, medical gloves and spun yarns.

To date, the EBRD has invested over €2 billion through 92 projects in the economy of Uzbekistan.

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