BRI 2.0 in Uzbekistan: Funded by Europe, driven by China-Saudi cooperation

BRI 2.0 in Uzbekistan

Central Asia’s largest wind power project quietly came online earlier this year.

Built by state-owned China Energy Engineering Group (CEEC), bankrolled with European debt, and packaged by Saudi developer ACWA Power, the project represents a new model for international cooperation under China’s Belt and Road Initiative (BRI), but also raises awkward questions for Brussels about who gets credit when the EU foots the bill.

CEEC has explicitly framed the Bash-Dhankeldy project as a BRI flagship that marries Saudi Vision 2030 with China’s infrastructure building ambitions, promoting the the wind farms in a state-media livestream.

This framing of the wind farm as a BRI project sits uneasily alongside the narrative of competition with China pushed by Brussels, which launched Global Gateway in 2021 as a rival to the BRI.

According to Francesca Ghiretti, director of the China Initiative at RAND Europe, “the biggest issue in cases like these is that EU funds are not contributing to EU reputation abroad – that was one of the key issues Global Gateway was meant to tackle.”

The Bash-Dhankeldy project is backed by two syndicated loans arranged by the European Bank for Reconstruction and Development (EBRD), each comprising a $150 million loan on the EBRD’s own account, plus B-loans syndicated to other lenders, including French and German state funds.

While EU institutions hold a 54% stake and treat the EBRD as a ‘Team Europe’ actor, it remains independent, with shareholders including China (0.09%).

The EBRD appears to be taking steps to reform public procurement, with a “Review of Procurement Policy and Rules” listed by the bank as a key policy for review in 2025.  “The EBRD is only in control of public sector procurement and private sector clients are free to select suppliers or contractors they prefer,” the EBRD said in a statement.         

But while this distinction holds, it also highlights the limits of Brussels’ influence. Although the EBRD operates independently, it is often presented as part of the EU’s Global Gateway offer. The result is that EU-funded projects can, quite legitimately, be delivered by Chinese firms.

In the last five years, Chinese firms won 13% of EBRD public-sector contracts by value, versus 35% for EU contractors across its 38 operating countries, 13 of which are in the EU.

Chinese companies have also been awarded more than €1 billion worth of contracts for EIB-funded projects in countries outside the EU, such as Georgia, Senegal, and Tunisia.

According to Elena Kiryakova at the Overseas Development Institute (ODI), a think-tank based in the UK, this pattern suits China’s new model of the BRI. “There’s been a noticeable shift globally towards China co-financing projects with multilateral development banks (MDBs),” she says.

In the early years of the BRI, projects were largely financed through loans from Chinese policy banks, typically tied to contracts awarded to Chinese companies. Since 2016, such lending has plummeted, driven by mounting caution toward high-risk financing, both in China and among recipient countries.

Yunis Sharifi, a fellow for Central Asia at the China Global South Project, observes, “host countries don’t want debt; they want investments, so we’re seeing more equity from Chinese firms and more international collaboration.”

Kiryakova also notes that a “drive to increase equity participation,” as well as tie-ups with foreign firms – what Beijing calls “third-party market cooperation” – are part of Beijing’s de-risking drive.

Although Chinese policy banks are reluctant to lend, Chinese state financial interests are still at play in Uzbekistan. The BRI’s flagship equity vehicle, the Silk Road Fund, owns 49% of ACWA Power’s RenewCo platform, giving it exposure to all post-2019 Saudi solar and wind assets. As of July 2024, state-owned China Southern Power Grid also owns a 35% stake in the Bash-Dhankedly project.

According to Naser al-Tamimi, an expert on China-Middle East relations at the Global Institute for Strategic Research (GISR) in Qatar, “clean energy is a cornerstone” of deepening China-Saudi cooperation.

In rhetoric and practice, Riyadh’s “Vision 2030” goal of diversifying its economy through petrodollar investment has been aligned with Beijing’s ambition to build a green Belt and Road and spur growth through so-called “new productive forces,” including renewables.

“Saudi Arabia and China are expanding clean technology partnerships into Central Asia and Africa,” al-Tamini says, noting that “third-party market cooperation in Central Asia and Africa” is currently “limited,” but has “considerable growth potential.”

Two firms from the Gulf – ACWA Power and the UAE’s Masdar – dominate Uzbekistan’s rapidly expanding portfolio of renewable energy projects.

Since 2019, Uzbekistan has signed at least 26 power-purchase agreements for solar and wind projects, aiming for a 40 percent renewables share in electricity generation by 2030. Nine were awarded through transparent auctions, but the government has since pivoted towards direct negotiations with power producers.

In total, ACWA Power and Masdar have won 19 of the 26 projects. Three of these 26 went to Chinese developers, three to French firms Voltalia and TotalEnergies, and two to Hyper Partners, a firm with widely reported links to the powerful Uzbekl Abdukadyr family.

As contractors, Chinese firms have dominated – winning 14 of the 18 EPC contracts announced to date.

11 of these involve European public finance – mostly through the EBRD, but also the EIB and state funds from Germany, France, and the Netherlands.

Pelješac Bridge in Croatia remains the textbook case of Beijing leveraging EU funds to further its own narrative. Although 85% of costs came from EU cohesion funds, Beijing branded the bridge a “key strategic project” of the BRI, raising alarm bells in Brussels and leading to procurement reform.

However, there have been limited efforts to level the playing field for European finance outside the EU. According to Ghiretti at RAND Europe, “the EU has begun to appreciate and tackle the strategic importance of public procurement, but many blind spots and loopholes still exist -especially on how to deal with funding and participation in strategic projects in third countries.”

Phil Cole, Director of Industrial Affairs at WindEurope, declined to comment on the case in Uzbekistan, but pointed to an EBRD-funded wind project in Romania that will be equipped with Chinese-made turbines, saying “European funding for Chinese-made turbines goes against made-in-Europe messaging from Brussels.”

“We’d hate for wind to go the same way as solar,” says Cole, recalling how Europe’s solar industry was decimated by cheaper Chinese exports in the early 2010s.

Although the Gulf-China-Europe tie-up is dominant in Uzbekistan, it is also increasingly evident in Africa. In Egypt, a 1.1 GW wind project is being developed by ACWA Power and minority partner HAU Energy, a Dutch-incorporated Franco-Egyptian joint venture with equity participation from the EBRD. It will be built by PowerChina using turbines from China’s Envision Energy and is backed by a $700 million debt facility led by the EBRD, with additional funding from British and German state institutions.

This project demonstrates the complexity of China’s BRI in 2025. For Beijing, multilateral cooperation allows China to mitigate risk and keep firms in play. The combination of Chinese engineering muscle and European finance is also a beneficial development for host countries. For Brussels, the gains are less clear. Positive or not, the cooperation certainly jars with the narrative of competition propagated through Global Gateway.