The International Bank for Reconstruction of Development (IBRD) has granted a $195m loan for the $1.63bn Pap-Angren railway project in Uzbekistan.
Part of the Central Asia Regional Economic Cooperation (CAREC) programme, the project is aimed to strengthen transport connectivity in the Ferghana Valley by improving the efficiency of transport services in the Uzbek part of the valley.
The CAREC programme is intended to implement a transport and trade facilitation strategy focused on six transport corridors and the present project is located along corridor two, which runs from China to the Caucasus.
World Bank Uzbekistan country manager Junghun Cho said: "It will help reduce the income disparity between the Uzbek part of the Ferghana Valley and the rest of Uzbekistan.
"The project will raise employment and business opportunities by increasing the rate of economic growth in the Ferghana Valley. It will also facilitate diversification of the economy by improving infrastructure to increase economic productivity and competitiveness."
The Pap-Angren project will see the construction of a single, 124km-long track rail link between Angren and Pap, including a 19.2km rail tunnel through the Kamchik Pass.
Work under the project includes rail infrastructure, electrification, signalling, track maintenance, video surveillance system and power distribution on the line.
The IBRD loan also provides technical assistance to state joint stock railway company Uzbekistan Temir Yullary (UTY) for supporting railway construction and improving railway logistics, along with implementation support.
For this project, UTY will provide $1.08bn from its own funds, the state budget and the Fund for Reconstruction and Development of Uzbekistan. In addition to the IBRD loan, China Exim Bank will also deliver $350m in funding.