IFC, a member of the World Bank Group, is providing a $12.5 million long-term loan to JSC Indorama Kokand Fertilizers and Chemicals to finance the modernization of its fertilizer plant in Uzbekistan, which will create jobs and benefit the country’s agriculture sector. The investments will help the company introduce energy-efficient technologies to boost production capacity of high quality phosphate fertilizers for local and regional farmers, improving crop yields and farmer incomes.
In parallel, the European Bank for Reconstruction and Development (EBRD) is providing a similar-sized loan for the project. The loan agreement was signed today at a virtual signing ceremony by JSC Indorama Kokand Fertilizers and Chemicals, IFC, and EBRD.
Formerly known as the JSC Kukon Superphosphate Factory, based in the city of Kokand, the state-owned company was acquired in 2019 by Indorama Holdings B.V., a wholly-owned subsidiary of Indorama Corporation, Singapore, through a government privatization process. The revamped plant will increase production from less than 100,000 tons to about 350,000 tons of fertilizers per year of which up to 75,000 tons could be exported after meeting domestic requirements.
“The privatization of Kukon Superphosphate Factory is part of the government of Uzbekistan’s plans to restructure the chemicals sector and increase its competitiveness. This project demonstrates our commitment to implement the privatization effectively and transparently to attract responsible and experienced investors like Indorama, who can take these enterprises to the next level of development,” said Sardor Umurzakov, Deputy Prime-Minister, Minister of Investment and Foreign Trade of Uzbekistan.
Uzbekistan has the advantage of being able to draw on its own raw materials to produce a wide range of fertilizers, however, the sector, which has been largely state-controlled, has suffered from severe underinvestment, industrial inefficiency, and resource overconsumption. With new investment and fresh technical expertise, Uzbekistan’s fertilizer and chemical industry has the potential to create jobs, enable other industries and services to develop, boost exports, and ensure food security through better crop yields.
Amit Lohia, Group Vice Chairman of Indorama Corporation, said, “We are proud of our roots in Uzbekistan since 2010 and are excited about our first fertilizer investment in the country. Our goal is to supply Uzbekistan’s fast-growing agricultural sector with high-quality phosphate-based fertilizers in the near future. This project also integrates well with our existing cotton-farming activity in the country. The financing of this project in the current global environment reflects Indorama’s strong long-term partnership with IFC, spanning three decades, and now also brings EBRD in as a long-term partner.”
Georgina Baker, IFC Vice-President for Europe, Central Asia, Latin America, and the Caribbean, said, “IFC’s financing will help the company significantly increase production and supply locally-produced fertilizer, a critical factor in enhancing agricultural productivity. We look forward to continuing supporting such private sector-led initiatives that can dramatically improve the lives of local farmers and residents, create jobs, increase food security, and contribute to the economic development of Uzbekistan.”
IFC has also been providing advisory support to JSC Indorama Kokand Fertilizers and Chemicals to help the company develop and establish its fertilizer distribution and agronomic-support systems such as crop-nutrient management in Uzbekistan and neighboring countries.