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Important aspects of project finance in Uzbekistan

Tuesday, 05 March 2019

This legal highlight covers some important aspects of project finance in Uzbekistan, outlining its main features. Uzbek law does not prohibit or limit receipt of foreign funds from abroad, but remains to be underdeveloped in many transactional aspects. This is even more so in case of project finance deals, where more sophisticated financial mechanisms and collaterals are used.

Several main features of project finance in Uzbekistan may be distinguished. The first feature is participation of multiple foreign lenders, including regional development banks, large investment banks and regular commercial banks of a particular foreign state. This requires elaborating more flexible and thought-through structures of financing for rapid reallocation of rights and responsibilities. The second feature is active involvement of the Uzbek state, acting through numerous state-owned entities as project sponsors and/or offering investment agreements that provide additional incentives and benefits or set a specific regulatory regime for an investment project.

The overview below outlines the main Uzbek law elements of a possible project finance arrangement and singles out the most important issues.