Turkmenistan : Advancement of Private Sector Participation and Development of the Roadmap for Public-Private Partnerships

Sovereign Project | 57183-001

1. The TA is expected to provide initial support to the GoT to start addressing the lack of a comprehensive strategy and the limited capacity of the GoT in their understanding on what actions and instruments will be most suitable to promote and advance PSP and PPPs in Turkmenistan. By funding scoping studies, providing consultant support and supporting capacity building activities, the TA is expected to help the GoT to identify key interventions needed to create an enabling environment for the private sector to flourish and for PPPs to emerge. The TA will also support capacity-building and institutional strengthening activities, further improving the environment for PPPs and non-sovereign operations. The TA will also support preparation of a high-level PPP Roadmap for Turkmenistan, including overview of opportunities and constraints to the implementation of PPPs in infrastructure development, management and operations in Turkmenistan.

Project Details

  • Project Officer
    Kabrelyan, Dmitry
    Central and West Asia Department
    Request for information
  • Country/Economy
    Turkmenistan
  • Sector
    • Public sector management
Project Name
Advancement of Private Sector Participation and Development of the Roadmap for Public-Private Partnerships
Project Number
57183-001
Country / Economy
  • Turkmenistan
Project Status
Active
Project Type / Modality of Assistance
  • Technical Assistance
Source of Funding / Amount
TA 10166-TKM: Advancement of Private Sector Participation and Development of the Roadmap for Public-Private Partnerships
Source Amount
Technical Assistance Special Fund US$ 225,000.00
Operational Priorities
  • OP6: Strengthening governance and institutional capacity
Sector / Subsector
  • Public sector management / Economic affairs management

Gender
Gender equity theme
Description

1. The TA is expected to provide initial support to the GoT to start addressing the lack of a comprehensive strategy and the limited capacity of the GoT in their understanding on what actions and instruments will be most suitable to promote and advance PSP and PPPs in Turkmenistan. By funding scoping studies, providing consultant support and supporting capacity building activities, the TA is expected to help the GoT to identify key interventions needed to create an enabling environment for the private sector to flourish and for PPPs to emerge. The TA will also support capacity-building and institutional strengthening activities, further improving the environment for PPPs and non-sovereign operations. The TA will also support preparation of a high-level PPP Roadmap for Turkmenistan, including overview of opportunities and constraints to the implementation of PPPs in infrastructure development, management and operations in Turkmenistan.

2. This TA will explore critical issues that need to be addressed to boost PSP and to foster development of PPPs in the country. It responds directly to the GoT request for ADB's support of private sector and PPPs development, which have been reaffirmed during the discussions between ADB Vice-President (South, Central and West Asia) and GoT Senior Officials, which took place from 12 to 16 June 2023. During these discussions, the GoT have also requested ADB's support with reviewing of the 2021 PPP Law, and development of the required frameworks and systems. The TA will support review of the PPP Law and also additional work that is required for signing of the framework agreement between ADB and the GoT in order to support ADB's private sector operations in Turkmenistan. This work will include identification of potential projects suitable for PSP or that can be delivered as PPPs and also will support related capacity building efforts. The TA at a glance is in Annex 1.

Project Rationale and Linkage to Country/Regional Strategy

1.Turkmenistan, a resource-rich country in Central Asia, has long relied on its hydrocarbon reserves as the primary driver of economic growth. Although an Upper Middle Income Country (UMIC), Turkmenistan faces significant and complex development challenges that contribute to low competitiveness and create adverse investment climate, namely: (i) an economy highly dependent on hydrocarbons, (ii) export markets mainly concentrated to two countries: Peoples Republic of China (PRC) and Russia, (iii) a dominating role of the Government of Turkmenistan (GoT) and state and pervasive administrative controls, (iv) financial restrictions including foreign exchange controls and existence of shadow markets, (v) lack of economic diversification, high value chains and quality employment opportunities, and (vi) under-developed institutions of modern market-based economy. In its long-term plan, the GoT's priority is given to addressing these challenges by promoting economic diversification, enhancing private sector, boosting human capital development, and promoting innovation. The dependence on the extractive industry and high state control have limited diversification of the country's economy, leading to an underdeveloped private sector and limited use of public-private partnerships (PPP) for delivery of infrastructure and social services.

2.ADB is currently developing its next Country Partnership Strategy (CPS) for Turkmenistan, which will cover the period 2024-2028. The overall theme of the proposed CPS 2024-2028 is to support transformation into a more sustainable, climate resilient, and competitive economy. The proposed CPS strongly emphasizes strengthening economic competitiveness and private-sector development which is key to boosting inclusive economic growth and diversifying the economy away from reliance on hydrocarbons. The proposed CPS will have three pillars: (i) supporting green transformation to a sustainable and climate-resilient economy; (ii) strengthening economic competitiveness through diversification, private sector, and human development; and (iii) promoting structural reforms and institutional development. Under Pillar 2, ADB will explore innovative and transformational non-sovereign operations and the use of PPPs. Pillar 3 of the CPS will cover improving the business climate, reducing the dominant role of state-owned enterprises, rationalizing policies, and strengthening market-oriented institutions. Under Strategy 2030, ADB aims to expand its private sector operations and pursue development impacts as the key objective of its private sector operations.

3. The European Bank for Reconstruction and Development's diagnostic study for Turkmenistan (May 2019) highlights the following main obstacles holding back private sector development: the challenging business climate resulting from heavy state presence in the economy, weak property rights, and in many cases state-directed - instead of market-based - access to resources required for conducting business. Additionally, the study cites as major obstacles rationing and slow conversion of local currency into foreign exchange because of the fixed, overvalued exchange rate, which weighs both on current businesses and on foreign investment, and lack of reliable data, which complicates investment choices by businesses.

4.The multilateral and bilateral development agencies operating in Turkmenistan fully realize that to overcome the challenges standing in the way of boosting private sector participation (PSP) and PPPs, the GoT has to double down on its efforts towards private sector-oriented policies and institutional reforms to be designed and implemented in a coherent and well-sequenced way. The continuation of such reforms is imperative for nurturing genuinely business-friendly policies and development of the private sector. While empirical evidence gathered worldwide strongly suggests that government reforms focused on creating enabling environment and supporting private sector are critical, the same evidence also highlights that these reforms alone are not sufficient as PSP can be constrained considerably by many other factors, including: (i) limited access of private sector to affordable financial resources (both debt and equity), (ii) low levels of entrepreneurial and enterprise skills, including lack of management and technical skills, (iii) restricted access or insufficient command of information, (iv) limited access to external markets, and many others. To tackle these constraints, governments in developing countries are rightly advised to encourage the creation of business support infrastructure and promote business development services. In Turkmenistan, there is still much room to further (i) streamline such infrastructure, and (ii) expand informational, training, mentoring and consulting services for the private sector.

Impact

Private sector development in Turkmenistan strengthened

Project Outcome

Description of Outcome

Enabling environment for PSP and PPP in Turkmenistan strengthened.

Progress Toward Outcome

Implementation Progress

Description of Project Outputs

Conditions for enabling PSP in Turkmenistan identified

High-level PPP Roadmap prepared

Capacity building workshop, training program delivered and a field trip to Uzbekistan completed

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location
Nation-wide

Summary of Environmental and Social Aspects

Environmental Aspects
Involuntary Resettlement
Indigenous Peoples

Stakeholder Communication, Participation, and Consultation

During Project Design
During Project Implementation

Contact

Responsible ADB Officer
Kabrelyan, Dmitry
Responsible ADB Department
Central and West Asia Department
Responsible ADB Division
Private Sector Development Unit, CWRD (CWPS)
Executing Agencies
Asian Development Bank

Timetable

Concept Clearance
-
Fact Finding
-
MRM
-
Approval
25 Oct 2023
Last Review Mission
-
Last PDS Update
27 Oct 2023

Funding

TA 10166-TKM

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
25 Oct 2023 - 25 Oct 2023 31 Dec 2024 - -
Financing Plan/TA Utilization
ADB Cofinancing Counterpart Total
Gov Beneficiaries Project Sponsor Others
225,000.00 0.00 0.00 0.00 0.00 0.00 225,000.00
Cumulative Disbursements
Date Amount
07 Nov 2023 0.00

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Access to Information Policy (AIP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

None currently available.


Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.


Evaluation Documents See also: Independent Evaluation

None currently available.


Related Publications

None currently available.


The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.


Contracts Awarded

No contracts awarded for this project were found

Procurement Plan

None currently available.