A land plot may appear suitable for a project in terms of its size and location but ultimately prove unsuitable for the intended production activities. This may be caused by development restrictions, the absence of legally documented access, insufficient utility capacity, or connection costs that were not taken into account when calculating the investment. Legal due diligence of the site should be conducted before assuming obligations to commence construction or purchase equipment. The results of such due diligence should determine the transaction terms, budget, and project launch schedule. Under Article 31 of the Land Code, rights to a land plot arise after its boundaries have been established on site, plans and descriptions have been prepared, and the rights have been registered with the State. In accordance with Article 33 of the Land Code, the document certifying such right is an electronic extract from the State Register of Rights to Immovable Property. Accordingly, due diligence should include a current extract from the Register, the document serving as the basis for registration, the lease agreement if the land plot is leased, and verification that the cadastral boundaries correspond to the actual boundaries. It is also necessary to establish whether there are any disputes, prohibitions, pledges, or third-party rights affecting the land plot. A letter expressing support for the project does not, by itself, establish a legal right to the land. If the land plot has yet to be obtained, the legality of the specific method by which it is to be allocated must be verified. Under Articles 23–24 of the Land Code, different procedures apply, including electronic online auctions and cases expressly provided by law in which land may be allocated by the Cabinet of Ministers. A promise to transfer land without an auction therefore requires verification of the specific legal basis for such transfer and the authority of the body making the relevant decision. If the project does not comply with the established type of permitted use, the issue of changing that use should be resolved before work begins. Under Article 10⁵ of the Land Code, an application to change the principal type of permitted use is submitted through a Public Services Center or the Single Portal of Interactive Public Services. In accordance with Article 10⁶ of the Land Code, conditionally permitted use requires a separate permit. Submission of an application does not, in itself, mean that the requested change has been approved. Sanitary, protective and security zones, as well as restrictions applicable near cultural heritage sites and areas exposed to natural hazards, must be reviewed separately. Under Article 62 of the Urban Planning Code, such zones may restrict the use of the relevant territory. In practice, these restrictions may reduce the area available for development or make the selected production technology impossible to use. Under Article 29 of the Land Code, encumbrances may include prohibitions on certain activities and obligations to commence and complete development within specified periods. Registered encumbrances remain in force when the land plot is transferred to another person. They should therefore be assessed against the project and construction schedule rather than merely listed in a due diligence report. Under Article 30 of the Land Code, an easement may be established for pedestrian or vehicular access, as well as for the installation and operation of power lines, communication lines, pipelines, and other utility networks. An easement is established by agreement or, if no agreement can be reached, by a court decision. The agreement is subject to state registration, and the easement remains in force when the encumbered land plot is transferred to another person. In accordance with Article 30¹ of the Land Code, a written easement agreement must specify, among other things, its purpose and duration, the cadastral number of the land plot, the rights and obligations of the parties, and the amount of payment, where applicable. For an investment project, it is advisable to attach a route plan, establish access rights for maintenance and repairs, and determine the procedure for restoring the affected land after works are completed. An oral agreement with a neighboring landowner creates a risk that construction or operation of the facility may be interrupted. Connection to the electricity grid is regulated by Resolution No. 555 of the Cabinet of Ministers dated 31 August 2021. Under paragraphs 16 and 24 of the Regulation approved by this Resolution, for consumers with a connected capacity exceeding 50 kW, the territorial electricity network enterprise prepares technical specifications within three business days after receipt of the request. This is the deadline for preparing the technical specifications. Design, construction, and commissioning of the connection require subsequent actions and agreements. Gas supply is governed by Annex No. 2 to Resolution No. 256 of the Cabinet of Ministers dated 31 March 2018. Under paragraph 17 of that Regulation, the absence of a gas distribution network in the relevant territory with sufficient capacity to supply the consumer constitutes grounds for refusing to prepare technical specifications. For water supply and wastewater disposal, a similar ground is provided in paragraph 17 of the Regulation contained in Annex No. 4 to Resolution No. 256. Both water supply and wastewater acceptance capacity must be verified: confirmation of one parameter does not resolve the issue with the other. The technical specifications obtained should be assessed together with the project designer. It is necessary to determine where the connection point is located, whether new lines, a substation, or a pumping station are required, whether third-party land plots will be affected, and whether the cost of the required works is consistent with the project’s financial model. For an existing enterprise, it is also necessary to determine whether the approved technical conditions allow an increase in load when production is expanded. Under Article 42 of the Law “On Investments and Investment Activities”, an investment agreement with the Government of the Republic of Uzbekistan may provide for mutual obligations of the parties concerning the development of production and social infrastructure. At the same time, under Article 45 of the same Law, the State is liable for obligations assumed under the relevant agreements with foreign investors and signed by authorized persons. For a project, it is advisable to agree in advance on the consequences of infrastructure delays, including the notification procedure, extension of dependent project milestones, allocation of additional costs, and liability of the party responsible for performance. If the project launch date depends on the construction or commissioning of an external substation, this dependency should be expressly reflected in the agreement and the project schedule. These circumstances do not result in automatic termination of the agreement. Under Article 24 of the Land Code, early termination of a lease is carried out by agreement of the parties or, in the absence of such agreement, by a court decision. If development is delayed because of utility connections, the causes of the delay should be documented promptly. Applications, technical specifications, refusals, correspondence, and documents confirming completed works should be retained. At the same time, amendments to contractual deadlines should be initiated where legally permissible. Correspondence may prove the circumstances causing the delay, but does not, by itself, extend the lease term or eliminate statutory grounds for its termination. Under Article 4 of Law No. ZRU-781, public needs are limited to the purposes expressly established by law. These include, for example, the construction of certain transport and engineering infrastructure facilities. Interpreting other purposes as public needs is prohibited. Accordingly, another commercial project’s interest in the land plot does not, by itself, constitute legal grounds for expropriation. Under Article 23 of Law No. ZRU-781, compensation includes the market value of the immovable property and rights to the land plot, perennial plants, relocation expenses, and losses provided for by law. Lost profits are taken into account until the previous activity is restored, but for no more than one year, or in the amount of profit from a seasonal harvest. In addition, compensation for inconvenience equal to 5% of the market value of the immovable property located on the land plot is provided. Under Article 22 of Law No. ZRU-781, the terms, amount, and timing of compensation must be set out in a notarized agreement. The period for vacating the property begins after compensation has been provided in full. To substantiate the amount of its claims, the investor should have documents confirming its rights to the land plot, the value of the facilities, investments made, income received, and expenses associated with relocating the activity. Before making the principal investment, the following should therefore be verified: • the registered right to the land plot, its duration, boundaries, and encumbrances; • the project’s compliance with permitted land use and development restrictions; • legally documented access and rights to install utilities outside the land plot; • connection conditions with parameters sufficient for the operation of the enterprise; • agreed costs, deadlines, and parties responsible for creating the required infrastructure; • compatibility between the land development deadlines and the schedule for utility connection and commencement of production. The identified conditions should be incorporated into the relevant agreements and linked to financing milestones. For example, payment of funds for the main phase of construction may be made conditional upon registration of the rights to the land plot, establishment of the necessary easements, and execution of agreements concerning external utility networks. This makes it possible to determine whether identified risks can be eliminated before the project incurs its principal expenditures. Material current as of 19 September 2026.Land and Infrastructure Risks in Investment Projects
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