ADB's Work in Turkmenistan

The Asian Development Bank (ADB) began working with Turkmenistan in 2000 and has since been helping diversify exports and increase regional connectivity to capitalize on the country’s vast energy resources and strategic location.

Endorsed by the Government of Turkmenistan in January 2020, ADB’s country operations business plan, 2020–2022 outlines a firm lending program worth $150 million, alongside $690 million in standby projects. These investments are intended to contribute to increased power and gas exports, better roads and transport infrastructure, and improved access to finance for export-oriented small and medium-sized enterprises.

Since 2010, Turkmenistan has also benefited from regional technical assistance projects under the Central Asia Regional Economic Cooperation (CAREC) Program.

Since 2000, ADB has committed $625 million for two loans and $7.99 million in technical assistance grants for Turkmenistan.

Ashgabat is the capital and largest city of Turkmenistan. At night, the city is illuminated in various colors.

Through a loan of $125 million, ADB supported the North–South Railway Project—288 kilometers of railway between Chilmammet (Ak Yol) and Buzhun (Hazar) stations, which lie on the route linking Turkmenistan with Kazakhstan to the north and Iran to the south. The project, completed in 2017, was instrumental in establishing a key transport corridor for regional freight and transforming local communities along the trade route.

ADB provided a technical assistance grant of $1.3 million for the Regional Power Interconnection Project. The assistance facilitated dialogue between Turkmenistan’s energy authorities and their counterparts in Afghanistan, which culminated in the 2015 signing of a long-term power purchase and sales agreement, with a fivefold increase in electricity exports from Turkmenistan to Afghanistan envisaged by 2027.

In 2018, ADB signed a $500 million loan for the National Power Grid Strengthening Project to address Turkmenistan’s aging transmission infrastructure and increase interconnection throughout the country. The project, slated for completion by 2023, will indirectly boost Turkmenistan’s electricity trade with the region.

The ADB North-South Railway Project seeks to create an efficient, safe, and reliable railway transport network in Turkmenistan. It will also boost connectivity with neighboring countries.

ADB worked closely with the government on the Turkmenistan–Afghanistan–Pakistan–India Natural Gas Pipeline Project. A regional technical assistance project worth $2.15 million has been contributing to the due diligence exercise intended to establish that the project is financeable and in line with ADB’s policies on safeguards, security, procurement, governance, and financial management.

ADB also continues to finance various knowledge services and products for Turkmenistan, covering various issues in macroeconomic management, statistics, and banking. For example, ADB approved knowledge support in 2020 to assist Turkmenistan in implementing International Financial Reporting Standard 9 for two commercial banks.

Nonsovereign Operations

As a catalyst for private investments, ADB provides financial assistance to nonsovereign projects and financial intermediaries. Total commitments in loans and equity investments from ADB’s own funds in 2020 amounted to $1.4 billion for 38 transactions in economic and social infrastructure, finance sector, and agribusiness. ADB also actively mobilizes cofinancing from commercial and concessional sources. In 2020, ADB mobilized $1.9 billion of long-term project cofinancing and $3.3 billion of cofinancing through its Trade and Supply Chain Finance Program and Microfinance Program. Total outstanding balances and commitments of nonsovereign transactions funded by ADB’s own resources stood at $14.3 billion as of 31 December 2020.

Financing Partnerships

Financing partnerships enable ADB’s financing partners, governments or their agencies, multilateral financing institutions, and commercial organizations to participate in financing ADB projects. The additional funds are provided in the form of loans and grants, technical assistance, and other nonsovereign cofinancing such as B loans, risk transfer arrangements, parallel loans and equity, guarantee cofinancing, and cofinancing for transactions under ADB’s Trade and Supply Chain Finance Program and Microfinance Program.

ADB began cofinancing operations in Turkmenistan in 2018. Sovereign cofinancing commitments for Turkmenistan have amounted to $1.5 million for one technical assistance project.

Textile factory 'Turkmenbashi Tekstil Kompleksi' employs more than 2,500 women, 95% of its workforce.

Operational Challenges

Turkmenistan’s National Program of Socio-Economic Development for 2011–2030 accentuates the need to diversify the country’s economy through well-designed investments and effective policy reforms. ADB stands ready to help the government secure the necessary funding to support investment projects with long-term socioeconomic benefits.

In addition to financing, ADB’s knowledge and experience in supporting macroeconomic reforms in other countries will help Turkmenistan in its efforts to implement reform initiatives.

To maximize the benefits of external financing, ADB can help the government improve public financial management. Such assistance may include work to clearly articulate investment criteria and priorities for improving people’s welfare; guidance to implement feasibility studies assessing the technical, financial, and economic viability of government spending; and advice to refine the government’s own procurement rules and guidelines. ADB can also help the government improve the country’s investment climate, which is necessary to attract more foreign direct investment and mobilize Turkmenistan’s own private sector investments.

Future Directions

Aside from assisting Turkmenistan in its recovery from the COVID-19 pandemic, ADB will be guided by its country partnership strategy, 2017–2021 to help the country reposition itself as a regional trade and transit hub and diversify its overseas markets.

To achieve these bold development objectives, the country operations business plan, 2020–2022 keeps its focus on the major infrastructure sectors of transport and energy, while also funding support for small and medium-sized enterprises and the systemic diagnosis of improvements to the health sector. The plan embraces key strategic priorities such as addressing poverty and reducing inequalities; tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability; strengthening governance and institutional capacity; and fostering regional cooperation and integration.