Uzbekistan: Karakalpakstan and Khorezm Local Roads Network Reconstruction Project

approved

The Karakalpakstan and Khorezm Local Roads Network Reconstruction Project (the Project) aims to rehabilitate and reconstruct up to 516.1 kilometers (km) of local roads across 23 districts in the Republic of Karakalpakstan and the Khorezm Region of Uzbekistan. These roads serve as critical links between rural communities and key socioeconomic services such as markets, schools, hospitals, and administrative centers. The Project will finance the following activities: civil works for the rehabilitation of up to 516.1 km of rural roads using climate-resilient pavement structures and improved safety features; consultancy services for construction supervision and quality control; development of a digital geospatial platform to support construction monitoring, grievance management, and climate vulnerability mapping; and institutional strengthening and capacity building, including targeted programs to promote women and youth empowerment. Project implementation will be carried out over 5 years through two phases, 1 and 2. The financing for the Project is proposed to be committed via two separate loan tranches, each with its own Loan agreement, in line with the Project's implementation readiness and allowing for operational viability and efficient resource allocation. Phase 1: Reconstruction of up to 188 km of local roads across 9 districts in Khorezm Region, together with Institutional Strengthening and Capacity Building as well as Development of Digital Geospatial Platform and Women and Youth Empowerment Program with a proposed AIIB financing amount of USD71.163 million. Phase 2: Reconstruction of up to 328.1 km of local roads across 14 districts in the Republic of Karakalpakstan, with an expected AIIB financing amount of USD102.312 million. This Phase will be prepared and submitted for AIIB management's verification once agreed conditions for Tranche 2 readiness are met. The Project complements the Government of Uzbekistan's efforts to improve regional and local road infrastructure, supporting more inclusive and balanced development alongside existing investments in national and international corridors. Local roads in Uzbekistan, many built in the 1950s-60s, have suffered from decades of underinvestment, resulting in widespread deterioration and limited accessibility. Improving these roads is critical to unlocking the industrial and agricultural potential of underserved areas, particularly in Western Uzbekistan, including the environmentally fragile Aral Sea region. Reconstruction works will include full pavement rehabilitation, bridge repairs and new small-scale structures, enhanced drainage, safety signage, and bus stops. Where needed, sidewalks will be added to improve pedestrian safety, especially near schools and community centers. All civil works are planned within the existing rights-of-way, minimizing the need for land acquisition or resettlement. Environmental impacts are expected to be minor and localized to construction activities. The Project also includes a dedicated inclusion component, designed to enhance economic participation and resilience in project-affected communities. This includes vocational training for women, road safety and climate awareness campaigns for youth, and targeted support for women's entrepreneurship initiatives. These activities will be integrated with the development of the digital geospatial platform to facilitate inclusive monitoring, evidence-based planning, and transparent grievance redress.