ADB approves $400m for Uzbek petrochemical plant

The Asian Development Bank (ADB) has approved a $400m loan and political risk guarantee for the construction of a petrochemical plant in the Karakalpakstan region of Uzbekistan.

The Surgil Natural Gas Chemicals Project will be developed and operated by Uz-Kor Gas Chemical, a joint venture of state-controlled Uzbekneftegaz and a consortium of Korean firms including Honam Petrochemical Corp, Korea Gas Corporation and STX Energy.

The facility, which is said to be Uzbekistan’s largest-ever petrochemical plant, will produce gas for commercial use and for conversion into chemical intermediates used in the plastics and textiles industries. The project covers pipelines, production wells, an ethylene cracker, polymer plants and on-site power generation. The petrochemical plant will begin operations in early 2016 and will have annual supply capacity of approximately 4.5 billion cubic metres of natural gas.

The total cost of the project is $4bn and ADB will provide a 13-year loan of up to $125m and a 13-year guarantee of up to $275m. Further financing will come from the Export Import Bank of Korea, Korea Trade Insurance, China Development Bank, National Bank of Uzbekistan, European export credit agencies and international commercial lenders.

Thomas Minnich, senior investment specialist of ADB’s private sector operations department, said that ADB’s provision of a partial risk guarantee has helped draw in commercial lenders to the project, which could spur further foreign investment in this key sector.