Turkmenistan has launched the construction of a four-lane, $2.3bn country spanning highway aimed at generating more regional trade, state-run Neutral Turkmenistan newspaper reported on January 25. The road will link Turkmen capital Ashgabat to Turkmenabat, a town bordering Uzbekistan.

The 600-km highway across desert lands is expected to also connect, via Ashgabat, to another planned road stemming from the Caspian Sea port of Turkmenbashi. As neighbouring Uzbekistan is presently opening up its economy by removing barriers to foreign trade and investment, Turkmenistan will be in a position to offer it access to the sea port. Uzbekistan would be able to ship its commodities exports, mostly consisting of gold and cotton, via Turkmenbashi to ports in Russia, Iran and Azerbaijan.

The Turkmenbashi Port infrastructure, launched last year, is set to boost Turkmenistan’s revenues from handling traffic on north-south shipping routes, tripling the remote ex-Soviet state’s annual cargo handling capacity to 25mn-26mn tonnes.

Turkmenistan’s economy has historically relied on gas exports, but has shifted towards diversification following an economic crisis triggered by falling world hydrocarbon prices in 2014-2016. Its focus is currently on building transit hubs for trade—including hubs for goods coming from China as part of the huge Belt and Road initiative.

Another notable project includes a railroad linking Tajikistan to Turkmenistan via Afghanistan. This project is attempting to connect Tajikistan to the Turkmen sea port. Joint Turkmen and Tajik projects are a rare sight, but with neighbouring Uzbekistan’s President Shavkat Mirziyoyev jump-starting attempts at fostering regional cooperation, the other “stans” have been actively attempting to interlink their economies.

Big Nonpayment Woes

Last year, reports emerged that foreign companies operating in Turkmenistan have not been receiving payments for the past 4-5 years. In February 2018, Turkish company, Polimeks, decided to halt the construction of a toll road from the Turkmen capital Ashgabat to the Caspian port city of Turkmenbashi. Given these trends, the success of the new highway project could end up becoming dependent on the authorities’ ability to pay contractors’ bills. The construction of the road will be coordinated by a little-known private company called Turkmen Awtoban, with a loan provided by the national bank.

Turkmenistan is undergoing a budgetary crisis, much of it stemming from over reliance on hydrocarbon exports amid low oil prices and the loss of Russia as a gas export customer.

The government has ended the era of discounted gas, water and electricity prices for citizens amid the financial woes. It has also made contributions to Turkmenistan’s Pension Fund by business owners mandatory and set a new tight limit on money transfers from local bank cards to Visa cards. Ashgabat has also framed a number of new fines in an attempt at filling up the depleted state coffers.