This chapter explores how public-private partnerships could help Uzbekistan address its water-financing needs. It analyses the current PPP framework and pipeline, highlights the reforms needed to strengthen implementation in water sectors and considers the conditions under which PPPs in irrigation could be feasible and effective.
Strengthening the Economic, Financial and Technological Dimensions of Water Efficiency in Uzbekistan
4. Deploying Public-Private Partnerships for water security in Uzbekistan
Copy link to 4. Deploying Public-Private Partnerships for water security in UzbekistanAbstract
Uzbekistan is facing an urgent need to mobilise financing to ensure water security. The country is experiencing growing demand for water for municipal needs associated with projected population growth and for agriculture, in addition to the need to upgrade and replace the existing network (ADB, 2023). The government aims to use public-private partnerships as a key tool to mobilise the required investments.
As an illustration, the government of Uzbekistan aims to expand public-private partnership agreements to a value of USD 14 billion across all sectors by 2026. In 2021, private participation in the infrastructure of Uzbekistan was the second highest in the world as a percentage of GDP at 3.6%, behind Mozambique at 4.7% (Asian Development Bank, 2025[1]).
The application of the OECD Scorecard for assessing the enabling environment for investment in water security, as summarised in Chapter 3, identified a set of barriers for the introduction of public-private partnerships in Uzbekistan in water-related sectors. This chapter focuses specifically on the conditions required for successful public-private partnership implementation in water-related sectors in Uzbekistan, based on an overview of the status of public-private partnerships in the country and the Scorecard results.
Based on the government’s request, the potential for private sector investment via public-private partnerships in the irrigation sector was specifically assessed. This section also provides an overview of international best practices for implementing public-private partnerships in irrigation to inform recommendations on how the approach to irrigation public-private partnerships could be strengthened in the country.
4.1. Barriers and opportunities for scaling up public-private partnerships in water-related sectors
Copy link to 4.1. Barriers and opportunities for scaling up public-private partnerships in water-related sectorsThe OECD defines a public-private partnership as a long-term contractual agreement between the government and a private-sector partner, with the latter traditionally financing and delivering public services using a capital asset and sharing the associated risks with the government (OECD, 2019[2]). The private party is traditionally responsible for the design, construction, financing, operation, management and delivery of the service for a pre-determined period of time, receiving compensation from fixed payments or tolls charged to service-end users (OECD/ADB, 2019[3]).
In the case of water, public-private partnerships and other types of blended-finance mechanisms are being used to bridge the financing gap, identified as a key barrier to achieving the targets of achieving access to safe drinking water and sanitation for all by 2030. As an illustration, in 2024, Multilateral Development Banks deployed USD 14.4 billion in water-related investments to low- and middle-income countries (World Bank, 2024[4]). The structure of water-related sectors allows the implementation of public-private partnerships across several parts of the supply chain, from operation to financing. Further details on international public-private partnerships are provided in Annex A.
Uzbekistan has adopted an ambitious public-private partnership programme, including in water-related sectors, agriculture, healthcare, education, construction and transportation, as part of the country's economic revitalisation efforts, with a primary focus on accelerating infrastructure development.
In Uzbekistan, however, all forms of private sector participation are considered to constitute a public-private partnership, including operations and management contracts, irrespective of whether the private sector effectively contributes private investment. In this report, this broader definition is used, even though it will be important going forward to review the definition of contract types and to clarify what may or may not constitute a public-private partnership with actual investment obligations in Uzbekistan.
According to the Centre for Public-Private Partnership Projects (formerly the Agency for Development of Public-Private Partnerships) under the Ministry of Economy and Finance, project costs of public-private-partnerships projects vary significantly between sectors. Water management straddles between low and medium project-cost categories in terms of public-private partnership investments. Figure 4.1 shows the distribution of project costs per sector.1 It is important to note that certain projects categorised under ecology and environmental protection may also include water-related PPPs.
Figure 4.1. Project costs for public-private partnerships are highly variable across industries
Copy link to Figure 4.1. Project costs for public-private partnerships are highly variable across industries
Note: This excludes major outliers from both ends of the spectrum. The category “communal” was removed, with an average value of over USD 1.3 million, as well as “construction”, “sports” and “craftmanship”, all of which were below USD 5 000. PPPs recorded as having been cancelled on the Centre for Public-Private Partnership Projects (formerly PPPDA) website were removed from the scope of the analysis.
Source: Centre for Public Private Partnership Projects registry (formerly PPPDA registry).
4.1.1. Numerous small public-private partnerships have been signed for the operation of pumping stations
As of July 2024, according to the Centre for Public-Private Partnerships Projects database, there were over 462 public-private partnerships active in Uzbekistan for water-related projects.2 Most public-private partnerships were small in scale, with the vast majority dedicated to the operation of small-scale pumping stations, with the breakdown detailed in Figure 4.2 below.
The value of pumping-station public-private partnerships ranged from UZS 20 million (approximately USD 1 544) to UZS 69.5 billion (approximately USD 5.39 million). However, the latter represents a significant outlier, encompassing all pumping stations under the Amu-Surkhan Irrigation Systems Basin Department and the Jaykhun pumping station in the Muzrabot District, implemented under public-private-partnership terms.
Excluding outliers, the average value of public-private partnerships in pumping stations was equivalent to UZS 773.81 million, equivalent to approximately USD 59 636.3 However, while contract structures are still under development, several private companies have positioned themselves to establish large-scale PPP contracts.
Figure 4.2. Distribution of public-private partnerships in water-related sectors in Uzbekistan
Copy link to Figure 4.2. Distribution of public-private partnerships in water-related sectors in Uzbekistan
Source: Centre for Public Private Partnership Projects database (formerly PPPDA database, as of August 2024).
Uzbekistan is actively developing a pipeline of infrastructure projects for water sectors, with a significant concentration of projects in Tashkent. The main private operators currently include Metito, Abu Dhabi Sustainable Water Solutions, Suez and Stantec, all of which are engaged in project implementation, as indicated in Table 4.1 below.
Table 4.1. Private-sector participation in drinking-water and wastewater services in urban areas in Uzbekistan: key contracts
Copy link to Table 4.1. Private-sector participation in drinking-water and wastewater services in urban areas in Uzbekistan: key contracts|
Project |
Private partner |
Capacity/ project type |
Contract period |
Status |
Contract details |
|---|---|---|---|---|---|
|
Tashkent City Wastewater Treatment Plant (WWTP) |
Abu Dhabi SWS |
100 000 m3/d |
2023-2049 |
The construction of the WWTP is expected to commence in 2026, with operational capacity expected to be reached in 2030. |
|
|
Wastewater treatment engineering consultancy in the Tashkent Region |
Stantec |
392 000 m3/d |
2024-2029 |
Project under scoping. |
Stantec will provide design review, construction supervision and construction-management services for the third phase of the Development of Sewerage Systems in the Tashkent region. The project includes nine contracts encompassing sewerage networks, pumping stations and wastewater treatment plants. |
|
Tashkent Water and Wastewater Systems Improvement |
Suez |
Performance-based contract |
2023-2030 |
Suez’s contract came into effect in August 2023 and will run until 2030. |
Suez signed a PPP in the Surkhandarya province with the aim of improving access to water, focusing on increasing connection rates for residents, improving water quality and minimising water losses. |
|
Tashkent City Urban Heating Network O&M contract |
Veolia |
Operation, maintenance and management |
2021-2051 |
|
Veolia oversees the operation and maintenance of the urban heating network and hot-water installations, evaluates the condition of these facilities, identifies required investments, funds the operational assets programme and manages related projects. |
|
Namangan Wastewater Treatment Plant |
Metito |
100 000 m3/d |
2 + 23 years |
Project details are still being scoped with project partners |
The project aims to rehabilitate and expand the water and wastewater infrastructure in the Namangan region, enhancing access to safe water and fostering community sustainability. |
Source: (Global Water Intelligence, 2024[5]).
4.1.2. Current strategy for the implementation of water-related public-private partnerships in Uzbekistan
In 2024, in line with the “Uzbekistan 2030” strategy, the Government of Uzbekistan issued Presidential Decree No. PP- 308, which sets out a strategic roadmap for the development of public-private partnerships. This roadmap is designed to attract USD 30 billion in private investment into public-private-partnership projects by 2030.
Among several commitments, the decree also sets out specific measures in the field of water and wastewater services. These include specific commitments to modernise and manage both the water-supply and sewerage networks in each region by the end of 2028, ensuring coverage of up to 87% of the population with clean and uninterrupted drinking water and up to 30% with centralised wastewater services. The decree also commits to modernising the sewerage system in Namangan (the second-largest city in Uzbekistan) and to eliminating discrepancies between European and national standards for wastewater-treatment facilities. In addition, it includes commitments to modernise all obsolete irrigation pumping stations by 2028.
Further strategy regarding the introduction of public-private partnerships has also been included in the Presidential Decree on the Approval of the Concept of Development of the Water Management Sector of the Republic of Uzbekistan for 2020-2030. This decree highlights that Uzbekistan is advancing reforms in water management by integrating public-private partnerships and outsourcing mechanisms to enhance efficiency and introduce market-driven principles. The approach includes partially transferring water-management responsibilities to stakeholders such as farmer associations, Water Consumer Associations and agricultural clusters.
In 2024, responsibility for public-private partnerships development in Uzbekistan was consolidated under the Ministry of Economy and Finance. The Public-Private Partnership Development Agency (PPDA) was abolished by Cabinet of Ministers Resolution No. 720 (30 October 2024). Under Presidential Resolution No. PP-308 (30 August 2024), a dedicated Centre for Public Private Partnership Projects was established as a state institution within the Ministry. The Centre operates within the Ministry’s existing staffing structure and is tasked, among other functions, with managing funds from the public-private-partnerships fund (Government of Uzbekistan, 2024[6]).
The adopted Water Code aims to introduce the foundations for expanding public-private partnerships in water management. In the Code, public-private partnerships are defined as long-term contractual partnerships between public water agencies and the private sector, with the aim of developing, implementing and financing water-infrastructure projects. The operation and maintenance of water facilities, as well as the repair, construction and modernisation of water management facilities alongside other water services, are all highlighted as areas that can be transferred to the private sector. The Code also explicitly incorporates public-private partnerships for irrigation system canals, allowing private entities to participate in the operation and management of irrigation infrastructure.
4.1.3. Two routes of market entry for public-private partnerships
According to the adopted Water Code, public-private partnerships are to be executed entirely on a competitive basis using transparent procedures. Two routes of market entry are currently in place for private investors in public-private partnership projects. The first route involves a standard tender, which is predominantly supported by international finance institutions. This process is the typical route used for public-private partnerships and has demonstrated success in ensuring the lowest price and optimal technical conditions. However, this method traditionally takes longer to implement.
The second route is the unsolicited-proposal route (USP), commonly referred to as Swiss Challenge proposals, which has been the model used to implement both the Tashkent City Wastewater Treatment Plant and the Tashkent Water and Wastewater Systems Improvement.4 This model refers to a procurement method in which a private-sector entity, the proposal initiator, submits an unsolicited infrastructure proposal either directly or with government support. If deemed viable, the government issues a request for proposals inviting alternative bids from other interested parties within a fixed number of days. Typically, the proposal initiator is granted the right of first refusal, allowing them to either match or challenge the most competitive offer. Should the initiator fail to do so, the contract is awarded to the most competitive challenger.
Given Uzbekistan’s acceptance of unsolicited proposals, the public sector may find itself in a weak negotiating position without access to expert advisory support. In other countries, public-private-partnerships promoters engage advisory services with both legal and technical expertise, including international experience, to ensure balanced public-private-partnerships design and avoid poorly allocated risks (World Bank Group, 2022[7]). Private firms often possess stronger legal and financial capacity than public agencies, making professional guidance essential throughout the public-private-partnerships process.
Governments tend to struggle with reputational risks related to USPs, including perceptions of opaque structures, lack of competition, corruption and political patronage.
4.1.4. Addressing the commercial risk associated with low tariffs
Drinking-water and wastewater tariffs are generally low and vary considerably across users and regions. This has limited the private sector’s appetite for entering the water and wastewater sector via public-private-partnerships projects. Presidential Resolution No. 309, adopted in 2019, sought to address this issue by regulating the procedure for setting tariffs for drinking-water and wastewater services. It required tariffs to cover service costs as well as expenses for development and modernising networks.
Household tariffs currently range from UZS 1 300 to 8 000 per m3 (approximately USD 0.10 to USD 0.63/m³), with notably low rates in Karakalpakstan at around USD 0.26 /m³. In contrast, non-household users face substantially higher tariffs, from UZS 3 000 to 15 000/m³ (USD 0.24 to 1.18/m³), reflecting differentiated pricing for commercial and industrial consumption. These regional and user-based differences stem from tariffs being set locally, based on specific economic, infrastructural and environmental conditions. Recent adjustments, including a 26-36% increase in Tashkent Region in July 2025, signal a broader trend of tariff reform underway from 2024 through mid-2025.
In Uzbekistan, responsibility for setting drinking-water and wastewater tariffs is decentralised, despite the presence of a national operator, Uzsuvtaminot JSC. Under the 2022 Law “On Drinking Water Supply and Wastewater Disposal”, regional water-supply organisations are mandated to develop cost-reflective tariffs. These proposed tariffs are then subject to approval by local authorities rather than a central regulatory body. Final decisions rest with subnational governments, resulting in significant regional variation in tariff levels and periodic adjustments based on local economic and infrastructural conditions. Such low tariffs reduce the sector’s financial sustainability and dampen investor confidence.
In response to the challenges posed by low tariffs, the government of Uzbekistan has implemented measures to foster private-sector involvement. These include providing revenue guarantees, subsidies to cover operational expenditures and various tax incentives.
For wastewater-treatment plant public-private partnerships, the compensation model has primarily relied on availability payments with full foreign-exchange compensation. This means that the government pays the private company a fixed amount regularly if the plant is operating, rather than the payment being dependent on how much the treatment plant is used. Under this structure, the private partner assumes no risk related to tariff collection (Global Water Intelligence, 2024[5]). However, this structure of subsidy provision is not systematically entrenched in the public-private-partnership legislation and is applied differently across projects.
4.2. Public-private partnerships in irrigation: a national priority requiring further support
Copy link to 4.2. Public-private partnerships in irrigation: a national priority requiring further supportDuring Uzbekistan’s 2023 presidential election campaign, the incumbent president pledged to implement water-saving technologies across all irrigated land by 2030. This commitment focuses on modernising irrigation through advanced techniques such as drip irrigation and laser land-levelling.5 Since then, the government has broadened its objectives to include the introduction of public-private partnerships.
Building on this, Presidential Decree No. UP/DP-16 of 30 January 2025 mandates the Ministry of Water Resources to attract private-sector investment into the irrigation sector through public-private partnerships. The decree targets a 30% reduction in electricity consumption by implementing management improvements across 200 pumping stations, financed through system organisations under the Ministry in collaboration with private partners.
The potential for introducing public-private partnerships for the management of irrigation channels varies depending on the types of channels under consideration:
Primary (main) channels carry bulk water from reservoirs or rivers to secondary off-takes. They are strategic assets managed by the Basin Irrigation System Authorities and account for the highest energy costs (large pumping stations) and conveyance losses. Current public-private-partnership pilots concentrate on this level, pairing rehabilitation with performance-based operation and maintenance and energy-saving guarantees.
Secondary (inter-farm) channels distribute water from the primary network to multiple farm clusters. Responsibility rests with district Irrigation System Authorities. Public-private partnerships options here include bundled operation and maintenance contracts linked to digital flow-monitoring, but revenue recovery is harder because water charges (the water use tax) are still collected upstream.
Tertiary (on-farm) channels deliver water from secondary canals to individual fields. They are usually operated by agricultural clusters or irrigation-water delivery services. Private participation is most feasible through service contracts that couple tertiary-level metering and maintenance with cluster-supply agreements.
Matching public-private-partnership design to channel level is therefore critical: primary-channel projects can sustain long-term availability payments backed by energy savings, whereas secondary- and tertiary-channel public-private partnerships need clear volumetric-billing rules or anchor-off-taker agreements to be bankable, as well as government support to address affordability challenges depending on the farmers’ revenue.
There is a clear need for funding to introduce water-saving and efficient technologies and measures into Uzbekistan’s irrigation networks, particularly in view of meeting the President’s ambitions. However, given the heterogeneity of the irrigation networks in place, the current subsidy structure for farmers and the cost of advanced technologies, introducing public-private partnerships in irrigation as a solution to address the funding gap will require further assessment. Such an assessment should distinguish between different channel types and seek to engage stakeholders who may be impacted.
It remains important to acknowledge that public-private partnerships in irrigation are not a “fix all” solution for issues such as poorly managed irrigation schemes or under-resourcing for new development. Public-private partnerships should be used in irrigation as an additional tool, exercised with caution and only when specific conditions are met.
Based on the enabling-environment assessment, several components, such as contractual arrangements as well as the conditions for their introduction, may benefit from strengthening. Negative early experiences can undermine the credibility of public-private partnerships as a long-term policy tool, making careful project design and stakeholder alignment essential.
Given the social component of irrigation services and the economic sensitivity of rural areas, Uzbekistan may face socio-political challenges in introducing public-private partnerships for irrigation. Irrigation is typically a more sensitive sector for public-private partnerships, and such an approach can only be pursued in countries with a strong track record of successful public-private partnerships and a robust enabling framework. The complexity of risk allocation in irrigation further justifies the need to strengthen Uzbekistan’s public-private partnership framework before moving forward with this option.
Uzbekistan could benefit from gradual private-sector engagement through targeted contractual mechanisms. Public-private partnerships are not the sole mechanisms for involving the private sector in irrigation. Various contractual models, such as service contracts, management contracts and leasing arrangements, can be tailored to meet stakeholder needs.
4.2.1. Contractual forms for irrigation vary significantly internationally
Public-private partnerships in irrigation vary significantly. Table 4.2 below illustrates the typical contractual forms of public-private partnerships in irrigation, alongside a description of the types of contracts used and the level of investment. However, it is important to note that this is not a comprehensive list.
Smaller irrigated-agriculture projects may not be able to deliver predictable financial returns. Furthermore, as public-private partnerships in irrigation have not been consistently implemented on a global scale, the landscape is still evolving.
Table 4.2. Contractual forms of public-private partnerships for irrigation
Copy link to Table 4.2. Contractual forms of public-private partnerships for irrigation|
Contractual Form |
Description of Contract |
Level of Investment |
|---|---|---|
|
Operation, management and maintenance contract |
The private sector is responsible for operation, management and maintenance of infrastructure services for specified recipients. The private-sector provider charges a fee in return for the provision of a service, with the fee originating either from the government or from end users. |
Assets tend to be publicly financed. |
|
Infrastructure concession |
The private sector is employed to raise commercial funds for the development of infrastructure and is responsible for the construction, operation, management and maintenance of the infrastructure. |
Investment can be made either in part or in whole by the private sector. Grant funding can also cover a proportion of the cost. |
|
Farm-service agreement |
The private-sector provider can enter into a partnership with smallholder farmers or communities for service provision at farm level. |
The level of private-finance investment required depends on the type of private-sector service provision. |
|
Hub-farm agreement |
The private sector can undertake commercial agricultural production either through a land concession or a lease. |
Private capital is typically required for on-farm investment, and irrigation fees can reflect some or all infrastructure-related costs. |
Source: (PPPRC, 2024[8]).
4.2.2. Project, market and institutional barriers to address for irrigation public-private partnerships in Uzbekistan: insights from international practices
Uzbekistan is exploring ways to update its irrigation infrastructure, including the introduction of concrete-lined channels to improve efficiency. However, the efficacy of introducing public-private partnerships may be limited in this context, as a significant portion of the existing irrigation network consists of intra-farm channels, which may face greater resistance to change. Public-private partnerships are more appropriate for new developments rather than for schemes already in operation (World Bank Group, 2022[7]). This is because such projects often encounter increased resistance from various stakeholders, each influenced by their own perceptions of risk.
Farmers no longer pay irrigation tariffs but instead remain liable for the water-abstraction charge (“tax on water use”, according to the official translation) based on estimated or metered volumes (Tax Code, Articles 445-447), as set out in Presidential Resolution PP-5 of 2024. Farmers cover electricity costs for privately operated pumps, while electricity for large state-run primary pumping stations continues to be funded by the state budget.
The uptake of water-saving technologies offers the potential to boost farm incomes while reducing water-related costs. Public-private partnerships can be particularly effective in modern schemes requiring large investments and private sector expertise. These models are most successful in pressurised irrigation systems, such as drip and sprinkler irrigation, where entrepreneurial farmers are more likely to pay for improved services. In such cases, the private sector typically shares in the initial capital investment and contributes to operation and maintenance.
The experience of other countries in managing irrigation public-private partnerships highlights the importance of addressing demand and payment risks, which are notoriously difficult to control. Uzbekistan can also draw on emerging lessons in tariff setting to improve farmer uptake of public-private partnership schemes. Setting tariffs close to the mobilisation costs of alternative water sources helps reduce opportunistic behaviour and mitigate demand risk (World Bank Group, 2022[7]), thereby making public-private partnership projects more attractive to end users.
Opportunities for private-sector involvement in irrigation public-private partnerships are generally limited and thus would require effective marketing campaigns. Internationally, there are few examples of successful public-private partnerships in irrigation. Where they do exist, outcomes are mixed and success measures are not clearly defined, as evidenced by the case study on Morocco, a large-scale public-private partnership for irrigation, discussed in Box 4.1 below.
Box 4.1. The first international public-private partnership in irrigation: the Guerdane project in Morocco
Copy link to Box 4.1. The first international public-private partnership in irrigation: the Guerdane project in MoroccoIn response to recurring droughts, Moroccan farmers, particularly citrus growers in the Guerdane region, have increasingly relied on irrigation. However, intensive agricultural practices have significantly depleted groundwater reserves.
In July 2004, a public-private partnership (PPP) irrigation concession was awarded by the Government of Morocco with support from the International Financial Corporation. A consortium led by Omnium Nord-Africain (ONA), a Moroccan international conglomerate, won the 30-year concession, with other members including Morocco’s Fund Igrane and Austria’s Infrastructure Development and Management.
Background
The Guerdane irrigation perimeter in Morocco’s Taroudant Province spans 10 000 hectares and produces 50% of the country’s citrus crops. Historically, approximately 600 citrus farmers relied exclusively on private wells drawing from the Souss aquifer. However, overexploitation led to a decline in groundwater levels, making citrus farming increasingly unsustainable. Between 1995 and 2002, citrus cultivation in the region contracted by 22% due to farm abandonment and reduced productivity.
To address water shortages, the 1995 Souss-Massa Watershed Management Plan allocated 45 million cubic metres of water annually from the Mohamed Mokhtar Soussi-Aoulouz dam system, located 40 miles away. The government engaged a private partner to develop a 300-kilometre irrigation network and distribution system, ensuring water delivery based on farm size. The project aimed to provide surface water to cover approximately half of the region’s irrigation needs.
The total investment cost, of around 70 million euros, was divided between users (8%), the Moroccan government (48%) and the private operator ONA (44%).
Structure
The transaction is structured as a 30-year concession contract for the construction, co-financing and management of an irrigation network to channel water from a dam complex and distribute it to farmers in Guerdane. At the end of the concession, ownership of the infrastructure will revert to the government.
The concession grants exclusivity to channel and distribute irrigation water within the perimeter. The construction timeline and associated costs, as well as the collection risk, are transferred to the concessionaire. The government is responsible for ensuring water security.
Selection criteria
The selection criteria for the winning bidder were based on the water tariff, to incentivise a lower tariff, in line with the government's goal of making surface water accessible and affordable for a larger number of farmers. The public subsidy was designed to ensure that water tariffs remained aligned with current pumping costs, thus making them affordable to farmers. The winning bidder offered a significantly lower tariff compared to the price that citrus farmers had previously paid for groundwater irrigation.
Risk mitigation mechanisms
To mitigate the demand/payment risk, an initial subscription campaign was conducted, during which farmers paid a fee covering the average cost of on-farm connections. The concessionaire’s construction obligation only began once 80% of the available water had been subscribed to. Water shortage risks were allocated as follows: the concessionaire assumed a revenue loss risk, capped at 15%, whilst farmers faced a tariff surcharge in case of drought (capped at 10% of the tariff), and the government sustained the risk of more significant shortages through financial compensation to the concessionaire.’
Socio-economic analysis
Two potential negative impacts for both farmers and the region were identified: individual costs and associated risks, as well as the broader socio-economic effects beyond the perimeter.
The individual costs for farmers involved in the project include connection fees, investments in the mandatory drip irrigation systems (which are partially subsidised but require an advance payment), costs for tree renewal, and water bills. While the IFC claims that the project has made surface water available to farmers at an affordable price, many farmers interviewed argued that the water costs are excessive – more than double the average price charged by Morocco’s public irrigation systems. Additionally, farmers bear significant costs for additional irrigation needs, which account for about 50% of plantation water requirements, typically supplied by private boreholes. Despite the high added value of citrus production, these costs, combined with financial and environmental risks, limit the accessibility of the project for many farmers.
4.2.3. Considering risk allocation for public-private partnerships in irrigation
There is a clear need to assess the risks for public-private partnerships in irrigation prior to implementation. In line with the same principles for public-private partnerships in general, risk allocation for irrigation public-private partnerships should follow key principles to ensure efficiency and sustainability.
Risks should be allocated to the party that is best able to manage them through risk mitigation or absorption to ensure the following: minimising the likelihood of the risk occurring, mitigating the impact of the risk on project outcomes and absorbing the risk at the lowest cost (World Bank Group, 2022[7]).
The extent of government involvement and risk-sharing depends on what is necessary in a specific context to ensure project viability. International experience shows that levels of government involvement vary significantly across public-private-partnership schemes for irrigation.
Some of the key risks the government of Uzbekistan may face when implementing public-private partnerships in irrigation are identified in Table 4.3 below, although this list is non-exhaustive and other risks may occur throughout the duration of the project. This list can serve the government as an initial guideline for identifying common risks across public-private partnerships in irrigation projects.
Table 4.3. Common risks associated with irrigation public-private partnerships
Copy link to Table 4.3. Common risks associated with irrigation public-private partnerships|
Risk area |
Type of risk |
Description |
|---|---|---|
|
Construction |
Design risk |
The irrigation PPP may be either under- or over-designed, which can restrict its ability to achieve sustainability and reliability. |
|
Land acquisition |
Project sites may be unavailable within the required timeframe or in the manner anticipated. |
|
|
Site risk |
Project sites can be sensitive due to the socio-economic context and tensions around natural resources. |
|
|
Water abstraction |
Scarcity risk |
The water source for the irrigation scheme may be insufficient or unavailable for the required level of service. |
|
Enforcement of water abstraction |
Regulation may be weak, or the public agency may lack the capacity to enforce water-abstraction rights. |
|
|
Demand |
Water |
Demand for irrigation water may be insufficient to sustain the scheme. |
|
Agricultural offtake |
Even if productivity increases, farmers may not be able to sell their agricultural produce in the markets. |
|
|
Payment |
Payment and collection risk |
There may be risks associated with charging farmers cost-recovery tariffs for operation and maintenance. |
|
Counterparty risk |
The government party may fail to fulfil its contractual obligations. |
|
|
Planning |
Integration risk |
The granting authority may not have the power to govern all stakeholders within a scheme |
|
Value chain |
Gaps in planning across the value chain can lead to risks. |
|
|
Asset-management planning |
Risks may arise from a lack of long-term planning for irrigation assets, including life-cycle costing. |
|
|
Cross-cutting |
Pre-contract risk |
Procurement of the PPP may be carried out inefficiently, including through a poorly structured arrangement |
|
Contract design |
The contract may be inappropriate for the life cycle of the irrigation scheme limited in scope |
|
|
Financial risk |
Investors of lenders may be unwilling to provide upfront funding or to continue financing. |
|
|
Reaching financial closure |
Weak planning can lead to difficulties in achieving financial closure. |
|
|
Performance risk |
Risks may arise around asset performance and the ability to deliver quality and quantity within promised timeframes. |
|
|
Force majeure |
Events external to the PPP, such as natural disasters, may undermine the project. |
|
|
Social risk |
The project or associated land reallocation may cause social disruption and generate resistance. |
Note: This list is drawn from the World Bank and PPIAF’s irrigation toolkit and is a non-exhaustive set of risks.
Source: Adjusted from (World Bank Group, 2022[7]).
References
[1] Asian Development Bank (2025), Accelerating Private Sector and Green Transformation in Uzbekistan, Asian Development Bank, Manila, Philippines, https://doi.org/10.22617/tcs240578-2.
[5] Global Water Intelligence (2024), Private investment drives Uzbekistan’s growing water sector boom, https://www.globalwaterintel.com/articles/private-investment-drives-uzbekistan-s-growing-water-sector-boom.
[6] Government of Uzbekistan (2024), Resolution, President of the Republic of Uzbekistan: On measures for the development of public-private partnerships in the Republic of Uzbekistan for 2024-2030, https://lex.uz/ru/docs/7089558#.
[9] Houdret, A. and S. Bonnet (2016), “Le premier partenariat public-privé pour l’irrigation au Maroc : durable pour tous ?”, Cahiers Agricultures, Vol. 25/2, p. 25001, https://doi.org/10.1051/cagri/2016009.
[2] OECD (2019), OECD, Recommendation of the Council on Principles for Public Governance of Public-Private Partnerships, https://legalinstruments.oecd.org/public/doc/275/275.en.pdf.
[3] OECD/ADB (2019), “Public-private partnerships”, in Government at a Glance Southeast Asia 2019, OECD Publishing, Paris, https://doi.org/10.1787/15cb126c-en.
[8] PPPRC (2024), https://ppp.worldbank.org/public-private-partnership/ppp-sector/water-sanitation/ppps-irrigation, https://ppp.worldbank.org/public-private-partnership/sites/default/files/2022-02/Irrigation_PPP_Toolkit_.pdf.
[10] The World Bank (2010), Morocco: Guerdane Irrigation.
[4] World Bank (2024), Water Security Financing Report, http://documents.worldbank.org/curated/en/099100406262537840.
[11] World Bank (2014), Unsolicited Proposals - An Exception to Public Initiation of Infrastructure PPPs.
[7] World Bank Group (2022), Irrigation PPP toolkit.
Notes
Copy link to Notes← 1. For more information on the Centre for Public Private Partnership Projects, please see Annex A.
← 2. The Centre for Public Private Partnership Projects (formerly PPPDA) is a register of public-private partnership projects in Uzbekistan, designed to ensure co-operation and increase transparency in the management of PPP projects.
← 3. Exchange rate true as of April 2025, with data drawn from the Centre for Public-Private Partnership Projects (previous PPPDA) in July 2024.
← 4. Qualitative analysis of outputs from USP public-private partnerships remains limited. However, preliminary data suggest that USPs play a significant role in advancing public investment projects, with 16% of all public-private partnerships initiated through USPs occurring in the water and sewerage sector internationally. In low-income countries, a higher proportion of PPPs reach financial close through USPs, while upper-middle-income countries record a higher total contract value compared to those in low-income countries (World Bank, 2014[11]).
← 5. A precision agricultural method using laser-guided equipment to reshape field surfaces for optimal water use.