Turkmenistan’s government is investing in the country’s rail and road transport infrastructure and has started to digitalise border procedures to strengthen its role as a transit hub on the Trans-Caspian Transport Corridor, alongside Kazakhstan. New impetus is also observed among the private sector, where transport and logistics services are growing. Easier visa issuance, lighter documentation requirements and lower tariffs for foreign firms could help Turkmenistan realise its potential on the TCTC. Furthermore, the declining level of the Caspian Sea poses challenges to existing port infrastructure. Addressing this issue will require collaborative, long-term and science-based solutions at the regional level.
Enhancing the Competitiveness of the Trans‑Caspian Transport Corridor in Central Asia
Abstract
This chapter first provides an overview of Turkmenistan's recent economic trends. Drawing from comprehensive desktop research, a private-sector survey involving local and EU firms, and the government's responses to an OECD questionnaire, the rest of the chapter then provides an updated picture of latest developments on the TCTC in Turkmenistan. The analysis focuses on areas crucial to the corridor's development, including advancements in hard infrastructure, progress in trade facilitation measures, initiatives supporting private sector growth, and climate change impacts and related policies affecting connectivity. By examining these interconnected aspects, the chapter offers insights into Turkmenistan's evolving economic landscape and its efforts to enhance both domestic and international connectivity.
Turkmenistan’s economy is growing, but is under potential
IMF estimates suggest that the economy contracted in 2019-2020, but growth resumed in 2021 and peaked following the lifting of COVID-19 restrictions in 2022.The structure of Turkmenistan’s economy remains moderately diversified, with services accounting for about half of GDP, followed by industry, agriculture, and construction (Figure 6.2). Growth has been driven mainly by gas exports and public investment in infrastructure. Some 90% of Turkmenistan’s gas exports go to China, which leaves the country largely dependent on the health of China’s economy (Figure 6.3;Figure 6.4) (Economist Intelligence Unit, 2024[1]). However, evidence from OECD work in the country also points to growing SME exports, particularly in agriculture, transport, logistics and manufacturing, supported by the reopening of borders in 2022 and state programmes and subsidies
Source: (IMF, 2024[2])
Note: World Bank calculations based on official data.
Source: (World Bank, 2024[3])
Note 1: Data on Turkmenistan is subject to qualitative limitations.
Note 2: Russia has not published its trade statistics since 2022.
Improving trade and transport connectivity can support the government’s diversification agenda
Turkmenistan is working to diversify its production and exports away from hydrocarbons to increase resilience to external shocks and foster the creation of more high-productivity employment. Diversification initiatives have focused on developing the renewable energy and processing industry sectors, supporting the development of an export-oriented private sector and widening the transport network. The development of new international transport routes and trade facilitation in particular can support the diversification of trade partners and increase the country’s integration in the global economy, in line with Turkmenistan’s ambition to join the World Trade Organisation (WTO).
The country has been playing a more active role in several international transport corridors in recent years
The government is increasingly leveraging the country’s transit potential on both the North-South and East-West axes. Turkmenistan adopted a Programme for the Development of Transport Diplomacy for 2022-2025 which foresees the strengthening of the country’s position as a regional hub for international transport and transit corridors (Ministry of Foreign Affairs of Turkmenistan, 2022[7]). For instance, as a member of ECO and of the Asian Development Bank’s CAREC programme, Turkmenistan participates in transport- and transit-linked initiatives within these frameworks. Turkmenistan officially joined the INSTC (International North-South Transport Corridor) in July 2023, and TRACECA (Transport Corridor Europe-Caucasus-Asia) in November of the same year. Since July 2024, the country also serves as a transit corridor for shipments between Iran and China. The Turkmen section of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline was completed in 2024 and should contribute to diversifying Turkmenistan’s gas exports destinations in the medium-term (Economist Intelligence Unit, 2024[1]) (Energy News, 2024[8]).
Turkmenistan’s location makes it a critical node of the Trans-Caspian Transport Corridor
The country’s strategic position on the corridor makes it an essential part of the route. Turkmenistan has been playing an active role in the region to develop the Trans-Caspian Transport Corridor (TCTC) and hosted together with the EU the high-level launch of the Co-ordination Platform of the Trans-Caspian Transport Corridor in Ashgabat in October 2024 (Delegation of the European Union to Turkmenistan, 2024[9]). Development of the corridor is aligned with the country’s strategy to diversify its economy and trade partners, and in recent years it has invested substantially in the development of Turkmenbashi Port. The strategy seems to be bearing fruit, as the port authorities reported a 28.6% increase of cargo traffic to 1.5mn tons through the port of Turkmenbashi in the first eight months of 2023 (Daryo, 2023[10]). Cargo and passenger transport more than doubled in the first half of 2024, thanks to significant infrastructure improvements (EBRD, 2024[11]). As cargo transit increases, there is scope to fulfil the potential of Turkmenbashi port, currently underutilised, with a throughput capacity of 17mn tons (Turkmenbashi International Seaport, 2024[12]).
Source: OECD and Pictoris (2025)
Hard infrastructure
The Kyrgyzstan-Uzbekistan-Turkmenistan branch of the TCTC holds potential
Respondents to the OECD survey of private-sector firms have high expectations of the Kyrgyzstan-Uzbekistan-Turkmenistan route, particularly in the context of the construction of the China-Kyrgyzstan-Uzbekistan (CKU) railway. Respondents mention in particular that Uzbek and Tajik firms trading with Russia or Azerbaijan prefer transiting through the three countries to Turkmenbashi port rather than through Kazakhstan, due to lower tariffs and less traffic in the former. Recent road and cross-border checkpoint upgrades in Uzbekistan have also smoothed transit, with the addition of lanes at the borders on the Uzbek side. Difficulties obtaining a visa from Kazakhstan also explain the preference of some respondents for using the route through Uzbekistan.
There is no consensus among respondents on which route is more competitive. While respondents mentioned that port tariffs are higher and visa obtention challenging in Kazakhstan, this route involves fewer multimodal changes and border crossings. At the same time, the ferry crossing time between Baku and Turkmenbashi is half that between Baku and Aktau or Kuryk. On the other hand, respondents mentioned that the route through Kyrgyzstan is less well-known and requires more systematised processes. Kyrgyz respondents also mentioned the high tariffs applied on road transit in Turkmenistan. More terminals for containers to be transloaded onto trucks are needed for the second route to become more competitive. Respondents’ answers point to the relative competitiveness of one or the other route depending on whether priority is given to speed or cost of the delivery. Going forward, the construction of the CKU railway should foster healthy competition on the different routes of the TCTC and offer an alternative to the route through Kazakhstan.
The road network is expanding across the country to the borders with Uzbekistan
The government is developing road links to improve connectivity both within the country and with its neighbours. This includes the renovation or extension of a three-section highway linking Ashgabat to Tejen, Tejen to Mary, and Mary to Turkmenabad, with the first two sections already completed. Once completed, the last section of the highway will significantly cut travel time to the border with Uzbekistan (EBRD, 2024[11]). Works are also underway to better link Turkmenistan with Kazakhstan through the Garabogaz Bay with the renovation of a bridge and road expansion to facilitate the transport of mineral fertilisers. Road renovations and constructions at border control points at the Turkmen Uzbek border and nearby, such as the construction of the Atamyrat-Kerkichi automobile bridge near the Karshi-Kerki border control point, and similar projects in Uzbekistan have also served to handle the increasing traffic. On the border with Afghanistan, the government has launched works on the extension and modernisation of the Serhetabat border crossing (Logistan, 2025[13]).
Railway development is pending
Firms surveyed mentioned that railways could provide a more predictable transport solution than road transport in the context of increasing road traffic. Rail transport holds potential, but significant investments are needed in signalling, electrification and rolling-stock upgrade. At the time of writing, the obsolescence of railway infrastructure in some parts of the country requires trains to reduce speed to 20-30km per hour, which reduces the competitiveness of rail. Respondents further pointed out the need to purchase additional wagons as well as inland loading platforms to increase loading capacity. The government is aware of the issue and is planning a two-phase railway project to be undertaken by Turkmenistan Railways Agency (the Ministry of Railway Transport since July 2025) and the Asian Development Bank (ADB) to modernise the 1,147-km railway line between Turkmenabad, Mary, Ashgabat and Turkmenbashi. The electrification of the Ashgabat-Mary section should contribute to the decarbonisation and reduction of greenhouse gas emissions from rail transport, which currently runs on diesel (News Central Asia, 2024[14]). Together with the electrification of the railway network, the government ought to consider the acquisition of rolling stock fit to work with the upgraded infrastructure, as current wagons are designed to operate on a railway network powered by diesel locomotives.
Private sector respondents express satisfaction with port infrastructure but report that more vessels are needed
Respondents to the survey commended infrastructure improvements to the port of Turkmenbashi. The upgrades carried out in 2018 expanded the port’s throughput capacity to 17-18 million tonnes per year, the highest among the ports of the Caspian Sea. In response to renewed interest in the TCTC, Turkmenbashi port authorities have actively been promoting the port as a regional transit hub and reported a 23.8% y-o-y increase in cargo traffic from January to October 2023 and a 265.9% increase in container handling (Daryo, 2023[15]) (EBRD, 2024[11]).
Firms highlighted improvements in transloading infrastructure from road to sea and faster procedures but pointed to the lack of vessels as a bottleneck, in addition to challenging weather conditions. With only two Turkmen vessels (Berkarar and Bakhtiyar) currently available for transit across the Caspian Sea, firms experience significant shipment and delivery delays. The government started addressing the situation with the conclusion of a contract between the state-owned ‘’Balkan’’ shipbuilding and repair company and the Korean Koryo Shipbuilding Industry Technology Company. The project foresees the joint construction of two dry cargo ships with a carrying capacity of 6,100 tons (Turkmendenizderyayollary, 2023[16]).
Along with the lack of vessels, long waiting times at Azerbaijan’s port are also mentioned by respondents as a reason for delays. While firms find the processing of documents and declarations to be rather smooth in Azerbaijan, they experience significant queues and delays in the port of Alyat, mainly due to a lack of vessels. The lack of information on vessel availability also delays delivery, sales, and payments. Respondents reported that it is more predictable to transit via land through Iran rather than by sea through Azerbaijan, although payment difficulties frequently arise with the former.
Infrastructure financing
Infrastructure projects are financed from the state budget with limited PPP experience
Turkmenistan enacted a Public-Private Partnership (PPP) law in 2021, but there are no ongoing PPP infrastructure projects in the country. Given the absence of Turkmenistan from the World Bank’s analysis of the PPP regulatory landscape, it is hard to assess the regulatory framework in place, but the ADB has an on-going technical assistance project to create a PPP roadmap, while the UN is providing training and support to develop PPP capabilities among civil servants (ADB, 2024[17]) (United Nations, 2023[18]). It remains unclear whether the government intends to turn to PPPs for a transport infrastructure projects in the near future. The ADB and the government are currently in discussions regarding the funding of a significant railway modernisation project, which would be one of the rare instances of an IFI financing a major infrastructure project in the country.
Recommendation
Purchase new vessels and rolling stock to accompany port and rail infrastructure upgrades
As Turkmenistan expands its infrastructure capacity, it is crucial to ensure that rolling stock and ferry capacity keep pace with increasing traffic. Private sector stakeholders in Turkmenistan and neighbouring countries consistently report a shortage of vessels for crossing the Caspian Sea. Given the specific technical requirements, substantial costs, and lengthy construction times associated with acquiring new vessels, the government should prioritise this investment. This decision should also take into account the challenges posed by decreasing sea levels and strong winds in the Caspian Sea.
Furthermore, as the rail network undergoes modernisation, it will require upgrades to the signalling system, electrification of the network, and the acquisition of compatible rolling stock. The government should aim for full electrification of the rail network to eliminate the need for locomotive switches along the routes and to reduce the environmental impact of its transport network.
Trade facilitation
Key bottlenecks relate to visa obtention for drivers, cabotage restrictions and the procedure for changing haulers
Respondents overwhelmingly mentioned the issue of visa obtention for drivers as a key bottleneck for trade along the TCTC, although a simplified visa process should in theory apply between Turkmenistan and Azerbaijan for international transit throughout the former. Foreign drivers face long visa processing delays, high fees, and short validity periods, creating unnecessary administrative burden as drivers need to re-apply for new visas frequently. Regardless of the visa, cabotage is restricted in Turkmenistan (EBRD, 2023[20]). Road cabotage rules, which regulate the transport of goods by road between two points within the same country by a foreign carrier, are not easily accessible in the public domain. In addition, a compulsory procedure of hauler change requires to switch the head of the trailer and the driver before entering Turkmenistan in case of the absence of visa. This procedure, introduced during COVID-19 on sanitary grounds, is still in place and increases transit time and cost.
Firms report that obtaining transit permits is challenging
According to most respondents, a major bottleneck for the development of road transport relates to the obtention of a trucking permit. Transit permits (”dozvoly”) are compulsory for road transit both for domestic and international operations. Such permits are issued sparingly, at a rising cost, and may not be issued by Turkmen authorities if the truck is not fully loaded. For instance, a firm planning to send an empty truck to pick up cargo may not be issued a permit. In addition, permit issuance is discretionary, as it is not subject to bilateral agreements between the countries of Central Asia – with the exception of Uzbekistan and Tajikistan who recently ratified an agreement on the abolition of such permits (Asia-Plus, 2024[21]). Turkmen firms reported that the issuance of permits can be particularly challenging in Uzbekistan. In the absence of such a document, loaded cargo cannot cross the border. As a result, the shipment must go through a hauler change (c.f. above), and a driver from the transit country must replace the driver from the departure country. This unhitch-and-hook procedure generates traffic jams. Additionally, it has been reported that some drivers in debt to transit brokers attempt to change their number plates to evade payment. This adds a layer of administrative checks to screen the driver’s payment record.
Sanctions require firms to reconsider trade routes and exert caution
Unsurprisingly, respondents to the survey shared their concerns about the impact of sanctions on trade. Several respondents prefer using road transport through Iran rather than the maritime route through the Caspian Sea. However, payment difficulties with Iranian partners prevent them from using this route more often. The sanctions imposed on Russia following its full-scale invasion of Ukraine have also diverted trade through the Georgian port of Poti, which now experiences significant transit delays. In this rapidly changing context, firms seem to rely more on cargo insurance, but Turkmen insurance companies are few and do not provide quality services, according to respondents. On the upside, firms mentioned that sanctions have made Turkmenistan a more attractive alternative route for transit.
Digitalisation
A single window system for export and import operations was recently launched
The government launched an electronic single window system in December 2023. The establishment of single windows are a key aspect of improving cross-border co-operation and trade facilitation, in line with the WTO Trade Facilitation Agreement (TFA) (OECD, 2018[22]). Whilst Turkmenistan has not adopted the TFA yet, the State Customs Service has implemented a single-window system, which allows users to submit information about goods or vehicles crossing the border at a single point, simplifying the registration process for both exports and imports. The government reported that by mid-2024, around 5,000 companies had registered in the system, and the number of applications submitted in electronic form and processed by the authorities had exceeded 20,000 (State Customs Service of Turkmenistan, 2024[23]). This positive dynamic continued in the first half of 2025, as the number of registered companies reached 10,395, and the number of electronic permits processed amounted to 132,786. It is, however, worth noting that none of the companies surveyed by the OECD in November 2024 mentioned the existence of such a single window system, suggesting that there is still little awareness of it. Instead, several of them gave the example of Georgia, which was mentioned as having an efficient customs clearance system that allows processing in 10 minutes if all required documents are in order.
The digitalisation of border and goods transport procedures is making headways
Since 2020, the government of Turkmenistan has embarked on the digitalisation of several border and customs procedures. The Turkmen authorities recently introduced ASYCUDA (Automated System for Customs Data) at customs checkpoints, which has allowed to automate customs procedures and documentation. Respondents welcomed this initiative, emphasising that ASYCUDA has reduced paperwork and waiting times. In 2023, Turkmenistan also agreed on steps to accelerate the interconnection of its national customs system with the e-TIR international system (UNECE, 2023[24]). In addition, in June 2024, it implemented the TIR electronic pre-declaration (EPD), including several consignments which can be processed through the TIR-EPD (IRU, 2024[25]). The TIR-EPD allows TIR carnet holders to submit advance information about their cargo to customs before they arrive at the BCP. All BCPs have a separate lane for cargo transported with advance information submitted through the TIR-EPD system. The electronic exchange of customs data is currently being carried out with Uzbekistan, and similar procedures are planned in the near future with other neighbouring countries. The authorities are also working with international partners on the introduction of ’’green lanes’’ on the basis of the e-TIR system to prioritise vehicles carrying goods under the TIR system. While these developments demonstrate clear progress, the e-TIR international system is not yet fully implemented. Nevertheless, the State Customs Service is actively preparing for the system’s implementation, and the necessary technical and organisational measures are being taken, including staff training and IT system integration. According to the authorities, the system should be fully operational in the near term. There are plans to organise test shipments with international partners in November 2025.
Procedures for goods transport are also being digitalised. Turkmenistan acceded to the e-CMR protocol at the end of 2022, marking a move towards the use of electronic consignment notes and the replacement of paper-based documents. It serves as a contract of carriage between the carrier, the shipper and the freight forwarder, and provides a proof of delivery. However, firms reported that the e-CMR system is not operational yet, and paper documents are still required. The government is studying the potential implementation of the e-permit to streamline the process of applying for, approving, and issuing trade-related permits. It is also investing in cybersecurity measures, promoting the use of e-commerce platforms to optimise supply chains, and providing basic digital skills trainings.
The traceability of cargo is improving. Transport companies have been tracking their own fleets by GPS, and logistics companies offer their clients the possibility to track vehicles. Respondents also commended the possibility to track ships in the public domain at no cost. Traceability services were also mentioned for rail transport; however, it was mentioned that such an option is available for a fee. Other less “conventional” tracking methods include message groups on social media where information is shared on the vehicle’s status (has it been loaded, where it is located, etc.). However, it was reported that the absence of internet or Wi-Fi in remote areas challenges traceability.
Digitalisation does not necessarily mean simplification, as firms mentioned the duplication of document requirements induced by the partial digitalisation of processes. For instance, it seems that digital processes do not necessarily apply to goods exiting Turkmenistan, although digital documents are accepted when they enter the country. In addition, several procedures like e-signature or e-identification are not yet in use in Turkmenistan. Limited internet coverage across the country more broadly prevents the full implementation of digital trade procedures.
Tariff policy
Tariffs are easily accessible but tariff-setting mechanisms are opaque
A majority of respondents to the survey easily locate tariff information in Turkmenistan. However, the accessibility of these details varies significantly. For instance, railway tariffs are available on the national railway company’s website. Port tariffs, previously available online, now require direct communication with the port authorities. Similarly, tariffs for road transport are available upon request. Respondents also reported that tariffs vary according to the destination, the type of cargo and season, with winters experiencing tariff increases. Logistics and transport companies rely on direct human interactions to obtain quotes for a specific load, allowing room for negotiation.
Although tariffs are accessible, tariff-setting mechanisms are not publicly disclosed. Turkmenistan is a member of the Organisation for Co-operation between Railways (OSJD); however, it is not a party to the Agreement on Uniform Transit Tariffs (ETT), unlike the other four countries of Central Asia. The agreement establishes uniform tariff rates for the transit of goods across members by railway transport. While providing a consistent pricing across participating railways, it also offers some flexibility to grant discounts for specific transport operations. Turkmenistan could consider ratifying this agreement. By improving tariff-setting mechanisms, the authorities would bring more transparency to users, better reflect sector developments in prices, and ensure a more effective allocation of resources with the removal of cross-subsidisation. The EBRD has recommended the reassessment of tariffs levels and the removal of cross-subsidisation between passenger and freight tariffs (EBRD, 2023[20]), but OECD analysis in 2024 found little progress in these areas.
Inter-operability
Inter-operability has improved but gaps challenge regional trade efficiency
Turkmenistan has taken steps to improve the consistency and predictability of customs procedures. A major improvement in this regard relates to the introduction of ASYCUDA, which allows for the integration of the national customs system with international standards. Work is also underway to harmonise technical standards and procedures, including the introduction of e-TIR and the standardisation of vehicle requirements with other Central Asian countries. Turkmenistan is actively cooperating with international organisations to further harmonise safety standards and technical regulations, which will contribute to the development of transit transport and reduce border crossing times.
Discrepancies in customs automation remain and cause border congestion. Firms most frequently mentioned issues related to the adoption and implementation of ASYCUDA (see above). While Turkmenistan, Kazakhstan and Tajikistan already use or are implementing the customs automation system, Uzbekistan has undertaken distinct customs modernisation efforts. Some respondents report congestion at border crossings, as Uzbekistan does not recognise their ASYCUDA documentation; others have opted for costlier alternative routes to bypass Uzbek territory.
Varying standards and regulations undermine the enforcement of better road safety standards. Turkmenistan’s standards for truck weights and dimensions are aligned with other Central Asian countries (with the exception of Uzbekistan), they differ from EU standards (EBRD, 2023[20]). It is also unclear whether those standards are effectively implemented, as some respondents mentioned variations in weight requirements with neighbouring Kazakhstan. Effective implementation makes it possible to prevent the overloading of trucks, which accelerates asset damage. Turkmenistan has not ratified the Agreement concerning the International Carriage of Dangerous Goods by Road (ADR), which would serve to standardise the safety and documentation requirements for the transport of hazardous materials through its territory.
Inconsistent customs procedures affect the predictability of border crossings. Firms report that customs requirements lack predictability, as they vary from one border crossing to another. This observation is coherent with the OECD TFIs’ first findings for Turkmenistan, which point to weak internal and external border agency co-operation, as well as insufficient information available to firms on documentation procedures (OECD, 2023[26]).
Recommendations
Providing cargo insurance, driver training and criteria for the issuance of trucking permits can ease business operations
The government could foster the development of cargo insurance offering to respond to firms’ feedback on the lack of national insurance solutions. Many goods transported in Central Asia remain uninsured or have insufficient insurance coverage (MIG, 2024[27]), and there are currently no requirements for cargo insurance or cargo storage safety. The Turkmen authorities should co-ordinate with other countries of Central Asia to support the development of insurance products which would ensure the safety of cargo and protection of consumers’ interests. Developing the initiative at the regional level would prevent regulatory variations.
Several respondents mentioned that drivers lack the skills needed to handle transport documentation and communicate with border officials. The government could subsidise training to drivers on various aspects of cargo transport, including safety regulations, vehicle operation, and specific certifications like ADR. Language courses could be provided as well in English, Russian and Farsi. Similar initiatives are under way elsewhere in the region: a European logistics company established offices in Kazakhstan and Kyrgyzstan to recruit and train drivers locally.
Criteria for the issuance of trucking permits (dozvoly) should be disclosed. Firms have complained about the unpredictability of permit delivery and mentioned that permits are not issued if the truck is sent empty to pick up cargo or not fully loaded. Transport authorities should publish a list of requirements, such as: carrier registration, vehicle information, compliance with international safety and environmental standards, type of transport and country of destination.
Streamlining the visa process for drivers will support the logistics sector and reduce border crossing times
The most frequently mentioned issue for private firms engaging in trade with neighbouring countries relates to difficulties obtaining a visa. The government should assess whether the system could be simplified for drivers, in particular. Visa fees and issuance times could also be reduced. Turkmenistan and Uzbekistan have been working on an agreement to simplify visa procedures for international cargo carriers, which could be used as a model for broader regional adoption. Turkmenistan could also learn from Uzbekistan’s e-permit system to deliver real-time permits and reduce paperwork. Such initiatives would encourage mutual recognition and could eventually allow Turkmen drivers to obtain visas from neighbouring countries more easily.
Harmonisation of standards will allow more efficient cross-border movements
Turkmenistan and other governments of the region should ensure the standardisation, digitalisation and implementation of common requirements. Turkmenistan could ratify the Agreement concerning the International Carriage of Dangerous Goods by Road (ADR), which all other countries of Central Asia have joined (or are in the process of joining in the case of the Kyrgyz Republic).
Improve internet access at major BCPs
Recent OECD research finds that digitalising border processes and trade documents has an important effect on exports, with additional gains where documents and processes are streamlined (OECD, 2025[28]). As the government intends to boost exports, it should improve internet infrastructure at major border‑crossing points and in remote regions of the country to enable the use of digital border processes. Inadequate digital infrastructure is a major barrier to the adoption of paperless trade measures, electronic transit systems, and modern border‑management tools. Without sufficient coverage and bandwidth, firms, customs agencies and transport operators cannot effectively implement systems such as e‑CMR, electronic data interchange, or risk‑based border controls, thereby slowing trade flows and raising costs.
Sustainability and climate change
The falling level of the Caspian Sea calls for immediate action and long-term measures
Recent research suggests that the level of the Caspian Sea level, which has been falling since 1995, could drop between about 8 and 14m by the end of the century (Commun Earth Environment, 2023[29]). Evaporation has accelerated as a result of temperature increase and changes in wind patterns, while rainfall and river inflows, which are themselves affected by both changing weather patterns and national water-use policies, are insufficient to mitigate this drop. The situation is already affecting costal infrastructure, such as ports and oil platforms (Financial Times, 2024[30]) and it puts long-term vessel investment plans in question. COP29 highlighted that some ships can only be loaded to 50% of their capacity (News Central Asia, 2024[31]). The Deputy Chairman of the Azerbaijan Caspian Shipping Company (ASCO) recently stated that as a result of the decrease in the water level in the ports of Aktau and Turkmenbashi, transportation by Ro-PAX ferries between the latter and Baku port has decreased (APA.AZ, 2025[32]). Kazakh port authorities have already finalised dredging works in the port of Kuryk and recently started the works in the port of Aktau. The Agency (State Service) for Maritime and River Transport of Turkmenistan, Turkmen Denizderyollary, has been in talks with Chinese and Dutch companies for the delivery and production of small dredgers, suitable more for rivers than open sea (Dredging Today, 2024[33]). While dredging makes it possible to deepen the sea level and handle larger ships in ports, it will not halt the declining level of the Caspian Sea, which will affect the northern part of the sea particularly severely. The issue requires a more comprehensive approach involving climate change mitigation measures, improved water management of inflowing rivers and continued co-operation among littoral states to embed environmental considerations into transport infrastructure development.
National legislation requires firms to assess their environmental impact
Since 2020, firms owning polluting vehicles or facilities are required to apply for environmental information passports. These aim to assess and manage companies’ environmental impact, with the goal of monitoring and minimising environmental harm by setting permissible emission limits and implementing waste management strategies. Companies are required to submit an application reviewed by the Ministry of Environmental Protection which then conducts checks twice a year. The passport is granted for a period of five years and can be renewed. Several survey respondents in the manufacturing and production sectors reported having such passports.
Environmental considerations are largely driven by EU requirements
Sustainability is not (yet) a key matter of concern for Turkmen firms. However, firms mentioned that working with EU companies has required them to adapt to international standards, including those related to sustainability. For instance, companies reported selling their old car fleet to switch to less-emissive vehicles that match Euro-6 requirements and welcomed the fact that these vehicles consume less fuel. One European firm also mentioned having a dedicated department in charge of reporting and mitigating emissions at the company level. Others have expressed concerns about the decreasing levels of the Caspian Sea and its impact on vessels’ loading capacities (see above).
Firms would welcome government support to obtain internationally recognised certifications and adapt to climate change. They mentioned that incentives or financial support would help them adapt to European and other international standards such as ISO standards. Business representatives also highlighted the need to adopt cooling systems to cope with Turkmenistan’s extreme summer heat (OECD, forthcoming[34]). Overall, these observations point to the need for the government to integrate climate considerations in its future support measures for private sector development.
Private sector development
The market of local logistics and transport companies is booming
Respondents reported an increase in the supply of transport and logistics services on the Turkmen market. While in the past foreign companies dominated the local market, the past two years have witnessed an increase in domestic logistics and freight-forwarding companies. The increase in the number of market players has resulted in better-quality service, such as timelier delivery, less damaged cargo, and lower prices. Turkmen firms more frequently attend regional trade forums and exhibitions. This seems to reflect a more active co-operation between Turkmen and Central Asian firms. The former stated that these events have enabled them to expand their client base and establish new partnerships.
The transport sector would benefit from regional peer-learning. Respondents mentioned that local operators often lack familiarity with international standards and requirements. This knowledge gap can lead to implementation errors, causing bottlenecks at border crossings. Another OECD study on Turkmenistan found that there is a lack of specialists in transport and multimodal logistics, particularly to handle hazardous materials (OECD, forthcoming[34]). In addition, several firms highlighted the lack of cargo insurance solutions in Turkmenistan, as well as the need to provide training for drivers, especially to handle transport documentation and speak foreign languages.
Public-private sector dialogue
Firms positively described the government’s integration of their concerns, but few engage directly with the authorities
Most respondents do not directly engage with the government to provide feedback or recommendations on how to smooth trade operations. However, firms positively described the state of dialogue with the government, which typically takes place through the Logistics Association and the Union of Industrialists and Entrepreneurs, where matters are discussed in regular meetings. Larger firms also reported engaging in direct consultations with the government. No respondent reported involvement in initiatives to harmonise border-crossing documentation across the region of Central Asia.
Recommendations
Conduct an environmental impact assessment to evaluate dredging needs in Turkmenbashi port
Water depth in Turkmenbashi port is not sufficient to ensure the safe and continued transport of cargo. The private sector is already expressing concerns, with oil tankers causing environmental risks in case of spill and potential crash. Azerbaijani vessel captains have become reluctant to operate in Turkmenbashi waters. A private sector respondent reported ongoing discussions on the acquisition of dredging equipment by the government but expressed concerns that the scale of works envisaged would not solve the problem: in the past 5 years dredging works were performed in Turkmenbashi with small dredgers unsuited for open seas, managing to solve the port’s sedimentation issue but without addressing the long-term problem of dropping sea levels. The port of Turkmenbashi has an access channel of more than 20km and the estimate volume of dredging necessary for the safe passage of oil tankers and cargo vessels is more than 10 million cubic meters. The government should decide on a correct solution and implement a swift emergency intervention, first identifying the port’s dredging and disposal needs and then conducting an Environmental Impact Assessment for the intervention projects. It should also define a clear timeline to implement the study’s recommendations and consult with Kuryk Port authorities and the government of Kazakhstan to discuss their recent dredging experience.
A long-term strategy to address the Caspian Sea’s declining water levels is needed
Turkmen authorities should implement a concerted long-term strategy to mitigate the decreasing level of the Caspian Sea, with a focus on sustainable transport infrastructure. While dredging is currently being considered, it is at best a short-term solution, which will not solve falling water levels. Caspian littoral states need to further intensify co-operation to regulate the use of water from rivers feeding the sea and to ensure that infrastructure and transport development support the long-term health of the Caspian ecosystem. Several regional initiatives currently exist, such as the Tehran Convention of 2006 and the 2018 Convention on the Legal Status of the Caspian Sea. Caspian Sea coastal countries could for instance agree in the framework of those initiatives on a common assessment of the environmental impacts of their infrastructure investments and how to transition to less-emissive vessels.
Support firms’ sustainability journey
A mix of financial instruments, regulatory measures, training and awareness-raising measures can support the private sector’s efforts to reduce its environmental footprint. In the context of the adoption of a three-year Plan of Transition to Green Energy (EBRD, 2024[11]), Turkmenistan government could provide:
Financial instruments such as grants or tax breaks to promote the use of green technologies, products and practices. Loans at favourable tax rates can be provided to firms undertaking environmental improvements and energy efficient projects (Crishna Morgado and Lasfargues, 2017[35]). The authorities could also encourage the switch to more fuel-efficient transportation and production in the vein of Uzbekistan, which implemented several incentives to promote cleaner business activities. These include a 50% reduction in corporate income tax and property tax rates for legal entities producing solar installations, wind power plants and small hydroelectric plants for a period of three years (UNCTAD, 2022[36]).
Regulatory measures could be considered in the longer run to bring prices of energy in line with their costs and encourage energy efficiency and savings. Given the current low tariffs of energy in Turkmenistan, firms and individuals do not have the incentive to save on their consumption.
Training can be provided in partnership with international certification companies to support the private sector’s adoption of internationally recognised standards and certificates. This need was expressed by several respondents of the survey.
The Ministry of Energy could provide awareness-raising activities to promote reduced energy consumption and improved energy efficiency among firms. It could take the example of Uzenergeoinspeksiya, which already provides such type of support (Ministry of Energy of the Republic of Uzbekistan, 2019[37]).
The table below summarises the findings described in the chapter and suggests a set of measures to address the challenges identified.
Source: OECD analysis
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