New Policy Brief on Development of Public-Private Partnerships for Financing Water Infrastructure in Central Asia

Jun 2024; Georg Petersen, CAREC Institute

The water sector in Central Asia faces significant challenges such as increasing water demands and outdated infrastructure with limited finding to improve the situation. Public-private partnerships (PPPs) present a potential solution to address these challenges by leveraging private sector investment and expertise, potentially enhancing water services and infrastructure resilience. CAREC Institute’s recently published policy brief examines the opportunities, risks, and key considerations for implementing PPPs in the region. This policy brief integrates a review of academic literature, the analysis of current policy frameworks and the empirical evaluation of the current situation in Central Asia related to the possibility of implementation of PPP water project.

Some important advantages of PPPs include the risk-sharing between the governments and private sector, access to specialized expertise and access to private funds. However, PPPs are by nature complex, requiring careful negotiation processes, well-documented contracts as well as strong political support. The recent legal reforms indicate Central Asia’s increasing interest in PPPs.

To optimize the use of PPPs, it is recommended that Central Asian nations seek international assistance to refine their national PPP legislation. This will help balance risk mitigation with creating an attractive environment for investors. Additionally, establishing a regional PPP hub would facilitate the identification and promotion of cross-border PPP projects, attract funding, and streamline project management. Central Asia has established a foundation for PPP implementation. If the national regional frameworks will be refined, PPPs can be a valuable tool to be used by the region to access sustainable investments in the water sector.

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