EBRD lends Kazakhstan $180mn for irrigation systems upgrade

By bne IntelliNews May 10, 2017

The European Bank of Reconstruction and Development (EBRD) has signed loan agreements worth $180mn at the bank’s annual meeting in Cyprus to support a strategic programme to upgrade irrigation systems in Kazakhstan, the EBRD said in a press release released on May 10.  

Kazakhstan’s climate and geography mean it is impossible to sustain any rural developments, including rural agriculture, without irrigation and water services. The country's irrigation systems have been in decline since national independence was declared in 1991 and have become highly inefficient, leading to significant water losses.

Only 55% of the country’s developed areas have access to Kazakhstan’s water network, where two-thirds of all water is used for irrigation. Changing precipitation patterns and reduced water availability due to climate change are expected to worsen the situation.

The EBRD - which has declared that it wishes to be a key partner in Kazakhstan's new economic modernisation reform programme - is providing funding which, along with a supplemental $21.4mn grant from the state budget, will be provided to Kazakhstan’s state-run water operator Kazvodkhoz. The irrigation project will cover the Aktobe, Zhambyl and South Kazakhstan regions of the country. The bank is also working with the authorities on a tariff reform to help make the new irrigation systems financially sustainable over the long term.

The financing will go towards installing new water connections and water meters and facilitate the use of modern drip irrigation technologies. It is estimated that resulting improvements will lead to annual water efficiency savings of at least 180mn cubic metres. Increased water access could help create up to 40,000 rural jobs across the country, the press release noted.  

The agreements were signed by EBRD First Vice President Phil Bennett and Kazakh Minister of Economic Affairs and Budget Planning Bakyt Sultanov.

The project is part of the bank’s Green Energy Transition approach under which the bank has been ratcheting up its lending in Kazakhstan.

The EBRD is also aiming to assess the potential for developing a “green financial system” meant to boost funding for green projects in the country and beyond. It plans to incorporate the system in the Astana International Financial Centre (AIFC) after it is launched as part of the green energy-themed EXPO 2017 showcase in June.

“Green and resilient are two of the qualities of a modern economy according to the new EBRD transition concept. Providing sustainable and climate resilient irrigation to rural areas in Kazakhstan will allow some of those places quite literally to blossom and create tens of thousands of jobs, including  in small and medium-sized businesses. I am proud that we are involved in this vitally important programme with both our financial and policy engagement,” Bennett said during the loan signing.

To date, the EBRD has invested over $7.5bn in various sectors of Kazakhstan’s hydrocarbon-led economy, with a focus on diversification away from oil and gas.

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