UZBEKISTAN COMMERCIAL NEWS UPDATE

Date: October 2006

Author: Jahangir Kakharov, BISNIS Representative, Tashkent, Uzbekistan

NOTE: THIS COMMERCIAL UPDATE IS DRAWN FROM THE UZBEK PRESS AND OTHER OPEN SOURCES AND SHOULD NOT BE INTERPRETED AS OFFICIAL U.S. GOVERNMENT INFORMATION

Tashkent city administration to buy new trams, buses

TASHKENT. October 2 (Uzreport) - Tashkent city administration plans to purchase 30 trams and 300 buses in the near future. This announcement came on Friday from Shomurod Muhammadjanov, Deputy Governor of Tashkent city and chairman of Tashshahartranshizmat (Tashkent city transport service) at a press conference dedicated to the Third Uzbek International Exhibition AutoMotorShow 2006. AutoMotorShow 2006 was held in Tashkent on October 3-6 and was organized by ITE Uzbekistan. Mr Muhammadjanov said currently Tashkent city transporter has 600 buses from Mercedes-Benz. He said that the number of Mercedes-Benz makes up 38.7% of overall buses in Tashkent city bus fleets. Tashshahartranshizmat association unites economic entities, state and private organizations, which render transport services in Tashkent city. Currently, it has 10 bus fleets, special fleets, five taxi, trolleybus, tram fleets and others.

Uzbekistan's AGMK to start developing Khandiza field in 2007

TASHKENT. October 4 (Prime-Tass) - Uzbek state-owned metals and mining company Almalyk Mining-Metallurgical Complex (AGMK) plans to start mining the Khandiza polymetal deposit in the country at the end of 2007. In mid-August, the Uzbek government stripped the exclusive rights to develop the Khandiza deposit from the UK's Marakand Minerals, a 78% subsidiary of Oxus Gold, and transferred the rights to AGMK, the report said. The deposit contains silver, zinc, copper, lead, and also some selenium, cadmium, gold and indium. Under JORC (Joint Ore Reserves Committee) Code, the deposit's reserves are estimated at 14.4 million tons of ore, with silver content of 134 grams per ton, zinc content of 7.24 grams per ton, lead content of 3.5 grams per ton and gold content of 0.38 grams per ton. Almalyk Mining-Metallurgical Complex is the largest copper producer in the Central Asia. AGMK accounts for 90% of silver production and 20% of gold production in the country.

CDMA2000 boosts presence in CA to address rapid wireless telecommunications expansion

TASHKENT. October 9 (Uzreport) - The CDMA Development Group (CDG) today announced that CDMA2000 is showing strong growth across Central Asia. Up to 23 CDMA2000 operators are bridging the digital divide in countries such as Azerbaijan, Pakistan, and Uzbekistan by offering affordable voice and broadband data access to millions of users in both urban and rural areas. These operators have been able to sustain average revenue per user (ARPU) that is above the industry average, while providing areas that have limited purchasing power with affordable voice and value added data services.

"The CDG is pleased to report CDMA's strong growth across Central Asia," said Perry LaForge, executive director of the CDG. "Central Asian operators are finding the choice of CDMA2000 to be a natural one since the technology is mature and provides a competitive advantage with regards to supporting voice, broadband connectivity, low-cost handsets, and a lower total cost of network ownership. These factors, along with the technology's flexibility to address different market needs, has allowed these operators to effectively meet the growing demand for fixed and mobile wireless services while supporting an improved return on investment."

The region, comprised of Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Mongolia, Pakistan, Tajikistan, and Uzbekistan, represents a population of more than 236 million. CDMA2000 networks are already serving most of the people living in this diverse and populace region. The technology's inherent flexibility and adaptability in addressing different topographies, population densities, and service line-ups has enabled operators to viably operate in the urban and remote areas of Central Asia, where landline services are not easily available and voice usage is moderately high.

The growth of subscribers in the region has been brisk. For example, according to Khalid Khan, chairman of the Pakistan CDMA Forum, "The subscriber growth in Pakistan has been phenomenal, where the total CDMA2000 wireless local loop (WLL) subscriber base has exceeded 1.2 million subscribers in just the last year. With the expected launch of fully mobile CDMA2000 networks early next year, we expect more than 10 million people in Pakistan will be using advanced CDMA2000 services by 2010."

"We are impressed with the consistent performance of CDMA and the value proposition that it delivers," said Artem Orange, chief executive of Diallog, a foreign investor in Pakistan with licenses to operate in 5 telecom regions, covering more than 40 million of the country's population. "Apart from being able to offer ubiquitous broadband data access, the reliability of the CDMA connection and its voice clarity are the two major benefits that we are delivering to our customers."

Uzbek ISP launches Wi-Fi sites in Tashkent

TASHKENT. October 10 (Pravda Vostoka) - Sharq Telecom, Uzbek internet service provider, will launch wireless internet access points in 130 public sites in Tashkent, a local newspaper Pravda Vostoka reported. On October 6 the company installed Wi-Fi technologies at theaters, cafes or restaurants within its Wi-Fi Invasion programme. Currently, some 26 cafes and restaurants in Tashkent have been supplied with such modern types of services, the report concluded.

Uzbekistan's coal output up 6.1% on year in January-September

TASHKENT. October 10 (Uzreport) - Uzbekistan's coal output rose by 6.1% on the year to 2.405 million tons in January-September, the Uzbek Statistics Committee said. Of the total, open-pit mining increased by 6.0% on the year to 2.144 million tons, while underground mining increased by 6.9% on the year to 261,000 tons, the committee said. Brown coal output rose by 6.3% on the year to 2.349 million tons in January-September, while fossil coal output decreased by 1.8% on the year to 56,000 tons, the committee said. In 2005 Uzbekistan's coal output increased by 17.4% on the year to 3.168 million tons. Uzbekistan's annual coal consumption amounts to about 4 million tons.

Zeromax to complete second phase of associated gas utilization project

TASHKENT. October 10 (Uzreport) - Zeromax GmbH of Switzerland, co-founder of Kokdumalak Gas JV in form of LLC, is planning to complete the second stage of utilization of associated gas in Kokdumalak field, Kashkardarya region, in November.

The Uzbek-Swiss joint venture Kokdumalak Gas was formed in September 2004 by company ZEROMAX and Мubarakneftegaz with equal share holding of each party. The venture principal activity is aimed at realization of the project for delivery of equipment for utilization and compressing of oil-well gas, and execution of building and assembly works in the Kokdumalak oil and gas complex, providing preparation and compression of gas.

The duration of joint venture activity and has time limit of 7 years from the date of the beginning of putting the equipment into operation and after liquidation of the venture the equipment and assets will be transferred to Uzbekneftegaz.

The launch of the second phase will allow process some 3 billion cubic meters of association gas. The project was financed due to own funds of Zeromax GmbH and foreign credits. It is planned to complete second phase this year.

Kokdumalak field is one of the largest deposits of oil and gas. The field was opened in 1986 and its reserves make up 55 million tons of oil, 67 million tons of gas condensate and 145 billion cubic meters of gas.

Oxus Gold plc reports rise in gross revenue to US$13.55m

TASHKENT. October 11 (Uzreport) - Oxus Gold plc reports a rise in gross revenue, including attributable joint venture income, to US$13.55 million (2005: US$10.11 million) in its final results for the 12 months ended 30 June 2006and an audited profit after taxation and minority interest of US$2.11 million (2005: US$2.28 million).

The profit on ordinary activities was US$0.411 million (2005: US$1.87 million) after deducting US$1.39 million (2005: US$nil) for stock based compensation. This is in accordance with International Financial Reporting Standard 2, which is being applied to the Group's accounts for the first time. A further US$4.67 million (2005: US$1.41 million) was deducted in respect of legal and other costs arising from the abortive 2002 project financing. This includes the costs of High Court litigation that resulted in a judgment in April 2006 which ruled that the cancellation by the Company in August 2003 of five million warrants granted to Templeton Insurance Limited in August 2001 was invalid.

Net assets increased to US$133.07 million (2005: US$122.73 million), including cash and cash equivalents of US$13.71 million (2005: US$34.83 million). During the year the Company issued 11,102,855 shares. The total number of shares in issue at 30 June 2006 was 298,120,198. Earnings per share, based on the average number of shares in issue during the year, were 0.73 US cents (2005: 0.92 US cents).

Amantaytau Goldfields (AGF) in Uzbekistan contributed US$10.16 million (2005: US$6.43 million) towards the gross revenue, being the Group's 50% attributable share of profits for the year.

During July and August 2006 AGF underwent a State 'complex' tax, customs and compliance audit as part of the established regulatory procedure. All enterprises in Uzbekistan, whether State owned or otherwise, are subject to this procedure every three years.

As a result of the audit, at 30 June 2006 AGF has provided for US$2.60 million in taxes and interest relating to the period 1 January 2003 to 31 December 2005. In addition, a further amount of approximately US$7.00 million in withholding taxes on subcontractor invoices and customs duties is the subject of ongoing discussion with the relevant Uzbek authorities. The audit sought to impose various fines and penalties on AGF, and AGF is negotiating to have these amounts waived.

The Uzbek government has introduced two decrees that remove the tax privileges previously granted to AGF. As a result, AGF is currently operating under the regular Uzbek tax regime. AGF's legal advisors maintain that AGF is protected under Uzbek law from adverse changes to its investment environment until 2010, and AGF has applied to the relevant authorities, based on the 10 year legal protection, to have these privileges confirmed or reinstated as applicable.

Whatever the final outcome, AGF understands that it will be given reasonable time to pay any amounts due and is cooperating with the Uzbek authorities to ensure the minimum adverse effect on AGF's ongoing operations and expansion plans.

Operations

Despite the increase in tons mined and treated at AGF, year on year, annual gold production was down. This was due to the combined effect of lower grades and lower metallurgical recoveries. The former was related to a combination of dilution and lower grade ore mined. The latter was related to the increase of sulphidic and carbonaceous ore in the deeper parts of the pits.

As a consequence of the above, combined with the imposition of new, non-profit taxes total cost per ounce has increased substantially.

During the six month period to 31 December 2005 the AGF hedge book was eliminated, ahead of schedule, and Oxus bought out the balance of the project finance debt of US$8.40 million.

The AGF Vysokovoltnoye heap leach project produced its first silver and gold dore during the six month period to 30 June 2006. The stacking of agglomerated ore on the pads commenced during January 2006 and has shown a steady increase up to June 2006 when the tonnage of ore stacked was regularly exceeding design expectations. By June 2006 a total of 182,000 tons had been stacked of which only 76,000 tons was under irrigation. The tonnage difference is found on the side slopes which have yet to be irrigated. The Merrill Crowe plant is running at full capacity of 230 cubic meters per hour.

Uzbekistan to rise gas prices from 2007

TASHKENT. October 11 (Uzreport) - Uzbekistan's Uztransgaz has informed Tajikistan's state gas company Tajikgaz that it will increase the price of natural gas for Tajikistan to US$100 per 1,000 cubic meters starting January 1, 2007 from the current US$55, a representative of the Tajik company said on Tuesday. According to the source, Uztransgaz also informed Kyrgyz side on rise of gas prices from next year. Uzbekistan increased the price of gas for Tajikistan to US$55 per 1,000 cubic meters from US$42 per 1,000 cubic meters on 1 January 2006. Uzbekistan's gas exports to Tajikistan fell to 650 million cubic meters in 2005 from 720 million cubic meters in 2004. This year Tajikistan plans to buy 730 million cubic meters of Uzbekistan's gas. Uztransgaz, a subsidiary of Uzbekneftegaz (Uzbek oil and gas company), controls gas transportation and exports in Uzbekistan.

MTS-Uzbekistan has over 1.09 subscribers

TASHKENT. October 12 (Uzreport) - Subscribers' base of MTS-Uzbekistan reached 1.09 million people as of September 30, 2006, according to data of MTS (Russia). The Russian company said its Uzbek subsidiary recorded 9.4% growth of subscribers' base in September compared to August 2006. MTS-Uzbekistan is the first Uzbek mobile operator, subscribers' base of which reached 1 million. MTS-Uzbekistan, earlier rendered services under Uzdunrobita brand, founded in August 1991 and it is the first mobile operator in Central Asia. The company also leads on number of subscribers in Uzbekistan.

Beeline opens wap-site in Uzbekistan

TASHKENT. October 12 (Uzreport) - Inform-Mobile, contest service provider (trade mark jmi.ru), has developed wap portal (wap.beeline.uz) for the Beeline company (former Unitel) in Uzbekistan. The implementation of the scale project became possible due to the fact that Inform- Mobile won the tender on the delivery of content and development of wap- resource. The results of the tender became known in July this year. Prior to its starting in the commercial operation the portal was tested at the provider's powers during two months. Operators of information-entertainment Web portals have promising future. Their replenishment with our services and complete licensed content is one of the strong aspects of Inform- Mobile's development policy in the territory of the CIS- countries", the executive director of Inform-Mobile, Dmitriy Timoshchenko commented so their interest precisely in this project. "One of the factors of our success is our experience in CIS markets, and also another reason is that operators of cellular communication are our key partners", Timoshchenko emphasized. The commercial starting of wap.beeline.uz is timed to the transferring of operator Unitel under the Beeline brand. The design of the resource is executed in accordance with customer's brand-book: cognate corporate yellow-black strip.

Hyundai talks for stake in UzDaewoo plant

TASHKENT. October 13 (Uzreport) - Hyundai Motor Co., South Korea's top auto maker, is in talks with Uzbekistan to buy a stake in a former Daewoo Motor factory in the central Asian state, Korean newspaper the JoongAng Ilbo reported on Friday quoting Hyundai official. As earlier reported, an Uzbek industry official said the country had bought the 50% stake held by Daewoo in their joint venture but had yet to decide if it would seek a new foreign partner. "There have been negotiations with Uzbekistan on the plant, but nothing has been decided, and it is unclear if the talks would succeed," a Hyundai official said on Friday.
Analysts have said overseas production is crucial for Hyundai as a rising won currency dents profits earned abroad, the newspaper said. In 1996, the venture, UzDaewoo Auto, launched the conveyor assembly of Daewoo cars at a plant located in Asaka in Uzbekistan's eastern Andijan region. The plant, with a capacity of 200,000 cars a year, was estimated to be worth US$650 million and its charter capital was worth around US$200 million. The JoongAng Ilbo, reported on Friday that Hyundai said it was in talks with Uzbekistan and that it aimed to complete negotiations within this year, with a plan to expand the factory's capacity to 300,000 vehicles per year.

If labor issues are resolved, the factory could produce small cars such as the Verna and the Click, an unidentified Hyundai official told the paper. The factory aims to assemble 110,500 Daewoo-brand cars this year, up from 70,070 in 2004. Exports, bound mostly for Russia, are set to rise to 56,926 cars this year from 35,659 in 2004. Daewoo collapsed during the Asian economic crisis in the late 1990s, and General Motors Corp. and partners took a majority stake in some of its assets in 2002. Hyundai, which aims to be the world's No. 5 auto maker along with its affiliate Kia Motors Corp. by 2010 in terms of sales volume, sells about three-quarters of its cars overseas.

Hyundai and Kia plan to have around half their production -- or over 3 million vehicles -- abroad within the next five years. Last year they made 2.7 million units at home and 750,000 abroad. Hyundai has factories in the United States, China and Turkey, and plans to begin a construction for a plant in the Czech Republic within the year. Kia, which has factories in China and Slovakia, is set to start construction of its first U.S. plant in Georgia.

Shargunugol produces over 80,000 tons of coal

TASHKENT. October 13 (UzA) - Shargunugol joint stock company, coal miner in Surkhandarya region, produced over 80,000 tons of coal. The company directs main part of coal to Angren thermoelectric power station, Uzbekistan Temir Yollari (Uzbekistan Railways) and Almalyk Mining and Smelting Combine.

ADB, Uzbekistan celebrate 10 years of partnership

TASHKENT. October 13 (Uzreport) - The Asian Development Bank today celebrates 10 years of its partnership with Uzbekistan, a period in which it has provided about US$1 billion to improve living standards in the country and achieve economic development, the press release of the bank said on Friday, October 13.

Juan Miranda, Director General of ADB's Central and West Asia Department, arrived in the country yesterday [12 October] for a two-day visit to participate in the celebration, the release said. "Our partnership between ADB and Uzbekistan over these 10 years has grown stronger," said Mr. Miranda in press release. "ADB is proud of being Uzbekistan's development partner and we will continue to work together to meet the country's development needs," he added.

During his trip, he will also meet with the senior government officials and participate in a press conference and reception to mark the event. Juan Miranda said in press conference in Tashkent that he will meet Uzbek officials and private sector representatives. He said he will discuss current cooperation issues and further development of ties between Uzbekistan and the bank. He said he met representatives of National Bank of Uzbekistan for Foreign Economic Activities, Finance Ministry and Ministry for Foreign Economic Relation, Investment and Trade.

Mr Miranda said it is important day for the ADB and Uzbekistan. He said the sides are celebrating to events – 10th anniversary of partnership and arrival of new ADB Country Director for Uzbekistan, Hong Wei.

ADB is supporting economic reforms and enhancing country's potential for growth through investment to the rural development, social sector, regional cooperation, and private sector development. As of September 30, 2006, cumulative lending to Uzbekistan totals US$974.9 million for 23 loans. In terms of number of loans, projects in the education (30.4%) and agriculture and natural resources (26%) sectors account for the largest share of ADB's lending. The water supply, sanitation and waste management, and transport and communication sectors account for 13% each or 26% of total lending. Support to the health, nutrition and social protection, finance, industry and trade, and energy sectors represent the 17.6% of total lending. ADB has provided 65 technical assistance (TA) grants to Uzbekistan totaling US$33.3 million. Through its US$800,000 technical assistance grant, ADB assisted the Uzbek government in formulating its comprehensive medium-term strategy for improving living standards in Uzbekistan, which now has formed the basis for the Interim Welfare Improvement Strategy Paper (I-WISP). ADB continues supporting the Government to move its IWISP into a full Poverty Reduction Strategy Paper together with other development partners.

ADB achieved some important results in various sectors of economy. To name a few, rehabilitation of the Central Asian railway network is bringing fast service to travelers and freight on the Tashkent, Samakand to Bukhara line, the release said. In agriculture, the Government pilot tested reduction in the state procurement system and development of water user associations. Assistance to water utilities is improving the essential services vital to public health and is expected to benefit 1.1 million people, the release said.

ADB is the biggest donor to the country's education sector, providing US$260.5 million in loans to the sector since 1997, including projects for textbook development and a textbook rental scheme, policy reform, rural school development, and senior secondary education development.

Regional cooperation and integration is another key area of ADB's work with Uzbekistan. In Central Asia, it promotes regional cooperation through the Central Asian Regional Economic Cooperation (CAREC) programme. The programme has concentrated on financing infrastructure projects and improving the region's policy environment in the priority areas of transport, energy, trade policy, and trade facilitation.

ADB is committed to continue its assistance to Uzbekistan in the coming years. In March 2006 ADB approved its new five-year Country Strategy and Programme (CSP) of Uzbekistan for 2006-2010. The new CSP will promote growth that benefits the country's poor while ensuring good governance across the entire programme of assistance is maintained. The strategy will focus on rural development, promoting the private sector, regional cooperation in transport and customs transit, and improved social services that emphasize early childhood development and basic education.

The CSP proposes 14 projects from 2006 to 2008, including two to support agriculture sector in 2006, projects for an international road link, basic education, and water supply in rural areas in 2007. In 2008, the CSP will provide for a Central Asian railway link, an early childhood development project, and projects aimed at developing the agriculture sector and microfinance.

Cotton harvest exceeds 3.6 million tons

TASHKENT. October 17 (Uzreport) - Cotton-growers have exceeded the target set by the government, and collected over 3.6 million tons of cotton. The farmers have fulfilled their contractual obligations in a very short period of time – they have harvested high quality cotton before the beginning of the rain season.

Swiss company acquires controlling interest in Uzbek insurer

TASHKENT. October 17 (Uzreport) - Direct Associates Limited of Switzerland has acquired 54.38% stake in Madad agency for insurance protection of entrepreneurship and small business. The Uzbek company disclosed in a publication in local newspaper that the Swiss company purchased share in off-exchange market with agreement dated as of October 12. The disclosure said the cost of assets of Direct Associates in Madad made up US$495,900 on the date of the deal. Madad did not comment on the deal. Madad will become the third Uzbek insurance company with Swiss capital. Currently, Universal Sugurta and Transinsurance have Swiss shareholders.

Uzbek carmaker increase output by 32.6% in Jan-Sep

TASHKENT. October 18 (Uzreport) - UzDaewoo Auto, an Uzbek carmaker, increased car production by 32.6% year-on-year in January-September 2006 to 101,010 units. The Uzbek plant produced 54,549 unites of Nexia cars (up 17.5%), 35,188 unites of Matiz cars (up twice), 11,188 unites of Damas mini-buses (up 5.1%) and 85 unites of Lacetti cars (down 21.3 times, the plant stopped production of Lacetti in April 2006). Uzbek carmaker is planning to produce 142,000 cars this year and export 68,500 of them. The plant plans to produce 200,000 cars by 2008.

Uzbek GDP increases by 7.3% in January-September

TASHKENT. October 20 (Uzreport) - Uzbekistan's gross domestic product (GDP) grew by 7.3% in January-September 2006, against 7.2% observed for the same period of the previous year, the Prime Minister's press service said. The inflation rate for the same period made up 3.7%. During the reporting period, industrial output grew by 10.2%, and the volume of agricultural products – by 7.1%. The volume of utilized capital investments increased by 10% against 6.9% observed in January-September 2005. Trade balance surplus made up US$1.2 billion, supported by the increase in export volumes of 13%.

Huawei Technologies installs 1m ADSL ports in CIS

TASHKENT. October 24 (Uzreport) - Huawei Technologies Co., Ltd of China said it shipped 1 million ADSL ports in telecommunication markets of Russia and CIS, press release of company said on October 23.

The DSLAM [digital subscriber line access multiplexer] solution of Huawei installed at leading telecommunication operators of Russia and CIS, including Uzbektelecom in Uzbekistan, GoldenTelecom, KazakhTelecom, UkrTelecom, CentreTeleom and others. The company also supplies its solutions on broadband access to Moldavia, Georgia, Azerbaijan, Tajikistan and Kyrgyz Republic. A digital subscriber line access multiplexer (DSLAM) delivers exceptionally high-speed data transmission over existing copper telephone lines. A DSLAM separates the voice-frequency signals from the high-speed data traffic and controls and routes digital subscriber line (xDSL) traffic between the subscriber's end-user equipment (router, modem, or network interface card [NIC]) and the network service provider's network.

Sue Suemin [transliterated], Vice-President of regional department of Huawei Technologies on CIS states, said the company entered to DSL equipment market in 2003 and its share made up 30% in 2004. Currently, the share of Chinese company in Russia and CHIS makes up 60%.

French machinery producers to enter Uzbek market

TASHKENT. October 25 (Uzreport) - French machinery producers are planning to enter the Uzbek market and offer their modern technologies and solutions to Uzbek farmers, a head of international department of SYGMA said at the press conference on Tuesday. SYGMA (French Tractors and Agricultural Machines Manufacturers Association) is a professional organization bringing together manufacturers of tractors and agricultural machines. SYGMA and its members make up 85% of the agricultural machinery industry in France. A delegation of SYGMA arrived in Uzbekistan. Agnes Hottin, head of international department of SYGMA, said the delegation includes representatives of 10 largest French firms and they hope to sign long-term agreements with Uzbek partners. Ms Hottin said French machinery producers export over 450 types of equipments to over 130 countries of the world. She added that French machinery meet demands of farmers in five continents. Representatives of French firms presented their companies and products during the press conference. It was noted that French companies offer modern equipment, adapted to local conditions, reliable and competitive.

WORLD BANK SUPPORTS IMPROVEMENT OF BASIC EDUCATION IN UZBEKISTAN

Washington, October 26, 2006 -- The World Bank's Board of Executive Directors today approved a US$40 million IDA credit for the Uzbekistan Basic Education Project. The Project will help improve the quality and overall cost effectiveness of basic education in the country. The project is in accordance with the Interim Strategy Note for Uzbekistan discussed by the Bank's Board of Directors in July 2006, which envisioned lending focused on global public goods and basic social services, combined with technical assistance and analytical and advisory services for the country over a 12-15 month period.

Uzbekistan has achieved near universal access in enrollment in primary education for girls and boys totaling 99 percent, and secondary enrollment totaling 95.5 percent. The country has achieved almost complete literacy, which increased from 97.7 percent in 1991 to 99.3 percent in 2003. The share of the adult population that has gained specialized secondary, vocational, or higher education exceeds 75 percent. However, the quality of education still remains a main concern in achieving the Millennium Development Goals (MDGs). Challenges to quality education include a general lack of textbooks, low household incomes impacting the indirect costs of education (textbooks and other books, uniforms, and school supplies, for example), poor school facilities, a lack of qualified teaching staff, low salaries for teachers, and a lack of interactive teaching and learning methods.

"The proposed Uzbekistan Basic Education Project has been designed to support a

$1.2 billion, five-year program to raise the quality of basic education, which was launched by the Uzbek Government in July 2004. The Program targets basic needs in the country and responds to the Bank's earlier recommendations to address the quality of basic education. The Bank's participation should help to focus the government's Program more heavily on cost effectiveness and results, and thus help bring about a stronger development outcome for the entire Program," said Ernesto Cuadra, Lead Education Specialist of the World Bank and the Task Team Leader for the Uzbekistan Education Project.

The Project consists of four main components:

* Provision of Learning Materials and Resources for General Schools and Pre-Schools;

* Strengthening of In-Service Training for Teachers and Principals in General Secondary Schools and Pre-Schools;

* Support for Activation of School Boards; and

* Improvements in Education Finance, Budgeting and Management.

By the time the project is completed, the young people of Uzbekistan should be benefiting from more effective teaching in general secondary schools. Teaching practices will be improved as a result of in-service training, and allocation and utilization of public financial resources in education will become more efficient.

The Project is expected to make a critical contribution to helping the country achieve the MDG in education, which is aimed at improving the quality of primary and basic secondary education by 2015 while at the same time maintaining universal access.

Uzbekistan joined the World Bank in 1992. The World Bank's mission in the country is to improve people's livelihoods through being a partner in economic reforms, supporting the modernization of the country's social sectors and infrastructure, and sharing its knowledge and experience with the government and the people of Uzbekistan.

Total World Bank commitments to Uzbekistan amount to US$630 million.

For more information on the World Bank's work in Uzbekistan, please visit:

http://www.worldbank.org.uz

Uzbek court rules British firm to pay taxes

TASHKENT. October 27 (Uzreport) - Oxus Gold plc said that the Regional Economic Court of the Navoi province in Uzbekistan issued a ruling against Amantaytau Goldfields (AGF), Oxus' subsidiary in Uzbekistan, on 26 October 2006 claiming taxes of US$15.3 million relating to the period of 1 January 2003 to 31 December 2005, plus related fines and penalties equivalent to US$4.9 million. This amount includes US$7.1 million of recoverable VAT. AGF is 50% owned by Oxus Gold and 50% by the Uzbek State.

Oxus says in its release that in addition, the ruling also claims US$203.6 million in respect of alleged transgressions during the same period relating to the operation of AGF's overseas foreign currency bank account. The ruling becomes effective after 30 days unless overturned. AGF is appealing the majority of this ruling. AGF has been led to believe that any liabilities resulting from the rulings will be payable pursuant to a reasonable payment schedule.

AGF believes it was exempt from the majority of taxes claimed under the ruling. AGF also maintains that it was authorized by decree of the Cabinet of Ministers to operate an overseas bank account and that such operations were conducted legitimately and with the full knowledge of the relevant Uzbek authorities, including the Ministry of Finance and the Central Bank, to which AGF regularly submitted the required reports.

On 10 October 2006 the company announced that AGF has provided for US$2.6 million in taxes and was negotiating in respect of a further US$7 million of withholding taxes on subcontracting invoices and custom duties, plus various fines and penalties.

Notwithstanding the above, AGF continues to operate and senior officials of AGF and Oxus continue discussions with the Uzbek Government to resolve these issues.

For more information on Uzbekistan, visit BISNIS online at

http://www.bisnis.doc.gov/bisnis/country/Uzbekistan.cfm

BISNIS (www.bisnis.doc.gov) is part of the U.S. Commercial Service (www.export.gov)