TASHKENT (Interfax) – The Uzbek government and the Japanese International Cooperation Agency (JICA) on Monday signed an agreement to extend an 18-billion-yen ($220-million) loan to the state-owned joint-stock railway company O’zbekiston temir yo’llari (Uzbek Railways).

The north-south corridor linking Europe through Central Asia to the Middle East and South Asia (CAREC Corridor 6) transits Uzbekistan from Keles on the border with Kazakhstan to Tashkent, Samarkand, Karshi, and Kumkurgan, before reaching Termez on the border with Afghanistan. The corridor annually carries about 10 million tons of freight, including 1.6 million tons of humanitarian relief goods to Afghanistan (more than half its imports). Afghanistan expects more traffic from Uzbekistan and its northern neighbours via the corridor, especially after the ADB-funded Hairatan to Mazar-e-Sharif railway in northern Afghanistan was completed in 2010. The corridor will also enable the Uzbekistan provinces of Samarkand, Kashkadarya, and Surkhandarya to increase exports of cotton and its by-products, horticulture products, marble, oil, and gas. Overall, rail traffic is increasing and inadequate rail line capacity in some sections of the route creates bottlenecks.

These funds will be used to implement an electrification project for the Karshi-Termez railroad in southern Uzbekistan, a source in government circles told Interfax.

JICA is issuing the loan for a period of 30 years, with a ten-year grace period, at a rate of 1.2% per annum.

The $388.33-million project, which will be implemented in 2012-2017, involves electrification of the 325-kilometer-long Karshi-Termez railroad section, as well as infrastructural and social facility development. Besides the JICA loan, Uzbek Railway will use its own funds to finance the project.

The Karshi-Termez railroad includes the new Tashguzar-Baysun-Kumkurgan railway line, which was also built with Japanese financial support. The 223-km-long section connects two of Uzbekistan’s southern regions – Kashkadarya and Surkhandarya – bypassing Turkmenistan, reducing the current distance by 170 km. The cost of the project was $447 million. Its logical continuation is the new electrification project, which is aimed at boosting Karshi-Termez’s throughput capacity.

Uzbek Railway plans to electrify certain railroad sections measuring a total of 865.5 km in length in 2011-2018. The $1.064-billion project will increase passenger and freight flows in Uzbekistan’s south by at least 20%, while also boosting freight transit in neighbouring Afghanistan.

Of Uzbekistan’s 4,200 km of railroad, 930 km have been electrified.