Best Project Finance Lawyers in Uzbekistan

About Project Finance Law in Uzbekistan

Project finance is a method of funding large-scale and long-term infrastructure, industrial, or public services projects, where the repayment of the loan is primarily dependent on the cash flow generated by the project. In Uzbekistan, project finance has gained prominence as the government continues to attract foreign investments in sectors such as energy, mining, transportation, and public infrastructure.

Project finance law in Uzbekistan governs how these projects are structured, what rights and obligations exist among the stakeholders, and how risks are allocated and managed. The legal framework for project finance projects in Uzbekistan is influenced by both local regulations and international best practices, making it essential for participants to understand the regulatory and contractual landscape.

Why You May Need a Lawyer

Project finance deals can be highly complex and often involve multiple stakeholders, including government entities, banks, contractors, and investors. Here are common scenarios where legal assistance is crucial:

• Structuring the project finance deal to comply with Uzbek laws
• Drafting and negotiating project agreements such as loan agreements, shareholder agreements, and EPC contracts
• Conducting thorough due diligence on the project, the contracts, and the parties involved
• Navigating government approvals and permits required for project success
• Assisting with securing collateral, credit enhancements, or guarantees from the government or financial institutions
• Representing clients in disputes or litigation related to the project
• Advising on tax implications and optimizing the project’s tax structure
• Ensuring compliance with environmental, construction, and labor regulations

Local Laws Overview

Uzbekistan’s legal system is characterized by a combination of civil law principles and several industry-specific reforms, especially in recent years, to attract both domestic and foreign investment in large projects. Key aspects relevant to project finance include:

• Investment Laws: Special incentives and protections are available under laws governing foreign direct investment, including repatriation of profits and protection against nationalization.
• Public-Private Partnership (PPP) Law: The PPP Law of 2019 provides a comprehensive legal framework for joint projects between the state and private sector, covering the rights, responsibilities, and dispute resolution mechanisms for both parties.
• Secured Transactions: Uzbek law recognizes collateral mechanisms, including mortgages and pledges, which are central to project finance structures.
• Licensing and Permits: Major projects often require government permits, environmental clearances, and compliance with industry regulations.
• Dispute Resolution: Parties may choose to resolve disputes through Uzbek courts or international arbitration, provided the contract allows for it.

Frequently Asked Questions

What is project finance and how is it different from corporate finance?

Project finance is a financing method where loans are repaid only from the cash flow generated by the project itself, and not by the general assets or credit of the project sponsors. In corporate finance, loans are usually secured by the company's balance sheet and assets.

Which sectors in Uzbekistan commonly use project finance?

Sectors such as infrastructure (roads, airports), energy (power plants, renewables), mining, water and waste management, and public services frequently employ project finance structures.

Can foreign investors participate in project finance deals in Uzbekistan?

Yes, foreign investors are encouraged to participate in Uzbek project finance deals. The legal framework provides protections and incentives to foreign developers, especially under the Law on Investments and Guarantees of the Rights of Foreign Investors.

What are typical agreements involved in project finance?

Common agreements include loan agreements, shareholder or joint venture agreements, engineering, procurement and construction (EPC) contracts, offtake agreements, operation and maintenance (O&M) contracts, and security agreements.

Is government support or guarantee available for project finance in Uzbekistan?

Some strategic projects, especially those in public infrastructure or public services, may receive government support in the form of guarantees, subsidies, or incentives. This is often detailed in the project agreements or concession documents.

How are risks typically allocated in project finance deals?

Risks are allocated based on which party can best manage them. For example, construction risk may be borne by the EPC contractor, while market risks may stay with the project company. The legal agreements explicitly outline these allocations.

What are the key challenges for project finance in Uzbekistan?

Challenges include navigating regulatory complexities, securing government permits, managing currency risks, ensuring enforceability of contracts, and access to long-term financing from banks or capital markets.

Can disputes be resolved through international arbitration?

Yes, parties can agree to resolve disputes through international arbitration, especially in cross-border projects. The Uzbek government recognizes and enforces foreign arbitral awards following international conventions.

Are there any tax incentives for project finance projects?

Incentives such as tax holidays, customs duty exemptions, and special economic zone benefits may be available, particularly for export-oriented or high-priority projects. Legal advice is essential to maximize such benefits.

What is the typical timeline for completing a project finance transaction?

Timelines vary depending on the scale and complexity of the project. From initial planning to financial close, it can take several months to a few years. Factors impacting timeline include due diligence, government approvals, and negotiation of contracts.

Additional Resources

For those seeking more information or assistance regarding project finance in Uzbekistan, the following resources and organizations can be highly valuable:

• Ministry of Investment, Industry and Trade: Responsible for overseeing investment policies and supporting investors.
• Uzbekistan PPP Development Agency: Provides guidance on public-private partnership opportunities and legal frameworks.
• Chamber of Commerce and Industry of Uzbekistan: Offers support to businesses entering the Uzbek market, including legal advisory services.
• Uzbekistan Banking Association: Can provide information on financial institutions active in project finance.
• International Financial Institutions: Such as the Asian Development Bank, World Bank, and EBRD, which regularly finance or co-finance major projects in Uzbekistan.

Next Steps

If you are considering involvement in a project finance transaction in Uzbekistan, consider taking the following steps:

• Consult with a qualified legal professional with experience in Uzbek project finance and cross-border transactions
• Engage in early due diligence to identify legal, financial, and operational risks
• Clarify your objectives and risk tolerance with your legal advisor
• Review and understand key agreements and regulatory requirements before proceeding
• Contact relevant government agencies for necessary information and permit guidance
• Stay updated on changes in local laws, incentives, and market practices

A specialized lawyer not only helps navigate legal complexities but also contributes to project success by ensuring compliance, securing rights and protections, and optimizing deal structure. Early legal involvement is often the key to a smooth and successful project finance transaction in Uzbekistan.