Railway Reform in Uzbekistan: Private Sector Gets on Track
New legislation allows private businesses, including foreign investors, to manage critical rail infrastructure, raising concerns over sovereignty and strategic control.
Uzbekistan has taken a bold step in its economic reforms. On November 27, President Shavkat Mirziyoyev signed a law permitting the transfer of railway infrastructure to private entities under public-private partnership (PPP) agreements. The law will come into effect in May 2025.
What Does the Law Entail?
The legislation enables private management of:
- Railway stations and terminals.
- Rolling stock.
- Land assets linked to railways.
The law aims to:
- Deepen economic reforms.
- Create opportunities for entrepreneurship in the transport sector.
- Attract foreign investments.
- Enhance international cooperation in rail transport.
Concerns and Risks
While the law promotes economic liberalization, it has sparked debates over its potential risks:
- Foreign Influence: The involvement of Western corporations, particularly from the U.S. and U.K., could lead to the transfer of critical infrastructure under foreign control. In October, these nations reportedly explored financial oversight of Uzbek enterprises, signaling interest in the country’s strategic assets.
- Loss of Sovereignty: Railways are vital for Uzbekistan’s internal logistics and regional connectivity. Foreign ownership or control could compromise national security.
- Unequal PPP Terms: If partnership terms favor foreign investors, Uzbekistan risks losing its key infrastructure to private ownership with little benefit to the state.
Regional and Global Context
This trend of privatizing essential infrastructure through PPPs is part of a broader strategy observed across Central Asia. Western nations use economic reforms to gain influence by acquiring strategic assets through investments.
In Uzbekistan, this move aligns with broader economic liberalization efforts. However, experts warn that without clear terms and strong government oversight, the long-term implications could be detrimental.
What’s Next?
Before the law takes effect in May 2025, the Uzbek government must define the terms of PPP agreements. These terms will determine whether the country retains control over its railway infrastructure or cedes it to foreign corporations.
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