BEIJING, July 25, 2022

Quenching the Thirst for Safely Managed Water Services in Uzbekistan

Although located right along a river, Bukhara, an ancient region in south-central Uzbekistan, is in a water crisis. Access to safe, clean water must be improved if the region is to move toward the future.

In Central Asia, water is the key factor for socioeconomic development. Nowhere is this truer than in Uzbekistan, a landlocked country surrounded by five other landlocked countries. Virtually all the water resources in Central Asia come from the year-round snow and glaciers in the Kyrgyz Republic and Tajikistan. Water flows through the Amudarya and Syrdarya rivers to irrigate crops in Kazakhstan, Turkmenistan and Uzbekistan.

Having the largest irrigated land area and highest population density in the region, Uzbekistan relies heavily on cross-boundary water from its upstream neighbors. The World Resources Institute has identified the country as among the most water-stressed globally until 2040 and it is expected to endure droughts, on average, every five years.

Uzbekistan has taken strides to upgrade its water supply and sanitation infrastructure. However, despite making some progress, 41 percent of Uzbekistan’s population of 35 million people do not have access to safely managed water services and most households do not have access to centralized sewerage systems. Water infrastructures across the country are old and severely degraded. The World Health Organization reported that waterborne diseases have a large impact on the people's health. In addition, the effects of climate change are expected to place even more burden on Uzbekistan's water system.

Located over 200 kilometers from Samarkand, the Bukhara region is home to the ancient city of the same name, the fifth largest in Uzbekistan. The city of Bukhara, whose center is a UNESCO World Heritage Site, is a place of global cultural and historical significance.

The water supply of the Bukhara region is based on surface and ground water. Surface water from the Amudarya river must be treated for pollution, salinity and hardness. With a population of 1.9 million people, Bukhara was identified as a priority region for developing water and sanitation infrastructure as well as tourism.

The Government of Uzbekistan aims to increase regional access to water supply from 54 percent to universal access and sought the support of the Asian Infrastructure Investment Bank (AIIB). In April 2020, AIIB approved USD385.1 million in sovereign-backed financing for the Bukhara Region Water Supply and Sewerage Project, an amount equivalent to almost 90 percent of the total project cost of USD437.6 million, with the Government financing the remainder.

AIIB Senior Investment Specialist Zacharias Ziegelhöfer, who leads the project team, tells us how the project came to be, how it will impact the people of Bukhara and the latest developments on the project.

How did your experience in the sector and addressing green infrastructure contribute to making this project more sustainable?

When the government first approached AIIB, the project was at an incredibly early stage. It was an ambitious project yet the objectives were clear: to extend access to safely-managed water supply services to all in Bukhara region and to rollout activities as quickly as possible. Our team stood ready with substantial advice throughout the project preparation process to develop technically sound investments with high environmental and social standards. We engaged in a close dialogue with the government at the national level and the water company at the local level.

The project design aims to improve the efficiency of water use and sustainable water management in the Bukhara region in two ways. First, the project is designed in an effective way (pumps, pipelines etc.) to reduce energy consumption and water losses. Measures to improve the energy efficiency will reduce greenhouse gas emissions during operation. Second, the beneficiaries will be incentivized to economize water due to revised tariffs. These measures are expected to help the communities in this region to better adapt to the scarcity of water resources, exacerbated through climate change, and enables the utility to operate and maintain the infrastructure adequately. In addition, the water scarcity could be further relieved if tertiary treatment is applied in the activities of sewage treatment plants and the treated effluent is reused. This option will be assessed during detailed design.

To rollout the activities quickly and manage implementation complexity, we developed a phased approach whereby activities were prioritized according to need and technical readiness. The first phase was approved in April 2020 and is currently under implementation. The second phase was approved two years later in April 2022. The two Bukhara projects will support the government in achieving close to universal access to piped water supply in Bukhara region and roll-out sewerage systems for district centers.

What does this project mean to the community, the country, and Central Asia, in general?

Water is a key issue in Central Asia and Uzbekistan. This project is AIIB’s first standalone project in Uzbekistan. AIIB also cofinances water and sanitation activities as part of integrated urban or rural development projects. As of today, AIIB has approved USD815.5 million of sovereign-backed financing in water and municipal infrastructure in Uzbekistan, with another USD430 million of financing for water and sanitation investments in Khorezm and Karakalpakstan under preparation. AIIB stands ready to support the government in modernizing the sector, extending access to those who are not yet connected and improving service quality for households, which are already connected.

The project is expected to benefit 1.2 million residents in the Bukhara region and has strong socioeconomic benefits as households gain access to piped water and benefit from improved service quality. Households that do not have access to piped water connections often rely on purchasing water from tanker trucks, which are unreliable, and charge more for water of uncertain quality. They also need to transport the water from a nearby pickup point to their home, treat it to prevent water-related disease and store it adequately in their home. The lack of access to piped water comes with significant coping costs to the households, including additional expenditures and time spent to treat and handle water as well as sick days due to water-related disease.

As a result of the project, the newly connected households will save costs. They no longer need to purchase expensive, yet unsafe water from tanker trucks, which are also unreliable. With a piped water connection to their homes, the residents will enjoy safe water at a lower cost, leading to health benefits, saving them time, which they can use for productive purposes. The water company also benefits—technical water losses will be reduced; energy efficiency will be improved, and its financial performance will be strengthened as a result.

How does this project help address one of AIIB's four thematic priorities under Infrastructure for Tomorrow or climate change?

The project builds Infrastructure for Tomorrow, which is environmentally, economically and socially sustainable and financially sound. It contributes to AIIB’s thematic priority of green infrastructure. The project improves energy efficiency and reduces water losses, which help the communities to better adapt to the scarcity of water resources, exacerbated through climate change. The project also addresses water supply and sanitation in a comprehensive and integrated approach. More water consumption leads to more wastewater. Hence, sewage infrastructure is rolled out to adequately address the impact of the resulting increase in wastewater. This is essential for public health and environmental protection.

In the second Phase project, we support the water company to develop technology-enabled infrastructure, which is another thematic priority of AIIB. The Phase II project introduces smart meters for water production and distribution, which will enable the company to establish a water balance and conduct water loss reduction campaigns. The installation of mechanical meters for residential users enables the transition to the billing and collection of water tariffs on a volumetric basis. Together, the reduction of technical losses and commercial losses is expected to significantly decrease Non-Revenue Water and improve the financial performance of the water company.

What have been the major developments to this project since last year?

The project implementation has commenced, albeit with delays due to the outbreak of the global pandemic, which has strongly affected Uzbekistan and Bukhara region. A project coordination unit has been formed and experts in the areas of engineering, procurement, environmental and social safeguards, financial management and monitoring have been onboarded. Critical procurement actions under the project have started and specialized engineering firms are working on the detailed design to prepare for the construction activities.

During the same period, the government has undertaken significant reforms to modernize the water sector and to improve its financial performance. We welcome the achieved milestones in the ongoing water sector reform process, which include advances in the rollout of water metering, adjustments in water tariffs and the creation of a national water company, the Uzsuvtaminot, which is responsible for the preparation of investments, implementation of investment projects and service provision to the end-user in one organization.

Contact

Zacharias Ziegelhöfer

Senior Investment Specialist - Water & Urban, AIIB

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