China’s Silk Road Fund acquires Uzbekistan power plant on Xi’s visit

The sovereign fund carrying out the Belt and Road Initiative is expanding its footprint in Central Asia by partnering with Saudi’s leading private water and energy operator, ACWA Power.
China’s Silk Road Fund acquires Uzbekistan power plant on Xi’s visit

China’s Silk Road Fund (SRF) has purchased 49% of shares in a $1 billion gas-fired power plant in Uzbekistan from Saudi private operator ACWA Power, further expanding China’s Belt-and-Road investments during President Xi Jinping’s first overseas visit since the pandemic started.

The partnership was announced on September 14, the same day Xi began his visit to Uzbekistan and attended the Shanghai Cooperation Organization summit.

Under the agreement, SRF will own 49% of the 1.5-gigawatt combined cycle gas-fired power plant in the Sirdarya region of Uzbekistan, while ACWA Power will continue to be the majority shareholder with a 51% stake in the facility.

The agreement is expected to close by the fourth quarter of 2022. In commercial operation, it will be responsible for 8% of installed power capacity in Uzbekistan and meet 15% of the country’s electricity demand across industry and households.

The Silk Road Fund is China’s sovereign investment body that implements the Belt and Road Initiative (BRI). As of September 14, it manages $54.3 billion of assets with an investment footprint across nearly 60 countries.

The power plant is the first strategic partnership between the Saudi utility operator and the Chinese sovereign fund in Uzbekistan and Central Asia. Separately, ACWA Power has three additional projects in Uzbekistan, chiefly in wind energy, while SRF has invested in the country’s culture, tourism, oil and gas sectors.

“The project symbolises the cooperation under the Belt and Road Initiative among China, Saudi Arabia and Uzbekistan. Silk Road Fund will partner with ACWA Power to bring cleaner power in a more efficient way to local people,” said fund chairwoman Zhu Jun. 

Zhu Jun, Silk Road Fund

Uzbekistan is southwest of Kazakhstan, where Xi first initiated the Belt and Road concept in 2013 and the first foreign country Xi has visited since the pandemic began in 2020. Both countries lie just west of China’s Xinjiang Uygur Autonomous Region.

The power plant, with total investments of $1 billion, is being developed by ACWA Power and financed by multilateral development banks and commercial banks.

The state-owned China Energy Engineering Corporation acts as the engineering, procurement, and construction contractor of the project and commenced construction work at the beginning of 2021. The project is scheduled for commercial operation in 2024.

“Under our successful public-private partnership model, the support of global investors like Silk Road Fund is critical in ensuring the development of advanced energy infrastructure that benefits both nations and communities and enables robust socio-economic progress,” said Paddy Padmanathan, chief executive officer of ACWA Power.

Paddy Padmanathan, 
ACWA Power

The project will replace the existing and obsolete gas-fired power plant in Sirdarya region. The new plant is expected to reduce carbon dioxide emission by more than two million tons annually, SRF added.

Prior to the announcement, SRF chairwoman Zhu said during the China-Europe-Africa Green Energy Development Forum that the fund will continue to promote investments in the green and low-carbon sectors of Europe and Africa.

Earlier in June, SRF also signed an investment framework agreement with the Indonesia Investment Authority. The Chinese fund committed to investing up to Rmb20 billion ($2.85 billion) to facilitate investment cooperation with Indonesia, with a focus on projects that promote community development and economic connectivity between Indonesia and China.


According to alternative-assets data provider Preqin, infrastructure dealmaking in Central Asia in 2022 has been relatively muted, with just seven completed deals with an aggregate value of $200 million as of September 15, compared to the total value of $1.4 billion from 12 deals in 2021.

Globally, infrastructure deals involving power plants in Asia have also largely shrunk year to date. In 2021, Asia was just slightly behind North America to be the second-largest destination for power plant investments, attracting $1.97 billion worth.

In 2022, the value slumped to just $162.4 million as of September 15, compared with $2.33 billion of investment going into power plants in Latin America and Caribbean, and $1.29 billion entering North America.

Industry insiders told AsianInvestor that some Hong Kong businesses see opportunity in China’s BRI, both politically and financially, either in providing advisory or business services, or through involvement in operations.

Some said they would only be interested in participating in BRI-related infrastructure projects when there are extra risk premiums compared to the public market, and also when their teams gain the relevant expertise to look at deals in Central Asia.

“The power plant and Asia nature is interesting, but Central Asia is a bit too frontier for my case,” said the Hong Kong chief investment officer of a multinational life insurance company.

“They are risky, which means expertise to deep dive. In my case, the organisation doesn’t have such resources and expertise,” the CIO told AsianInvestor.

“I think so long as there is an additional premium on top for the private market versus the public market, investors will be interested to explore the opportunities,” said a Hong Kong-based multi-asset portfolio manager at an American asset management firm.

“But if these projects don’t have the extra risk premium and growth potential, then it will be hard for investors to look into the illiquid private assets. In that case, it is more likely a political play among countries,” he told AsianInvestor.

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