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Reforms in Uzbekistan’s energy sector and cooperation with major international financial institutions

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Since September 2016, when Shavkat Mirziyoyev began his presidency, Uzbekistan has embarked on a process of deep economic and social reforms. We are determined to make our country more modern and our economy more efficient, to manage it in a more open and accountable way and to become an integral part, not only of the region, but also the global social, political and economic landscape. 

Our commitment to this cause has already been internationally recognised. We are very proud that, firstly, The Economist named Uzbekistan ‘the most improved country of the year’ in 2019 and then the World Bank’s Doing Business report in 2020 stated that the business climate in the country had improved significantly and, notably, the country had moved up the rankings to 69th out of 190 countries thanks to reforms in such key areas as tax payments, minority investor protections, cross-border trade and contract enforcement.

As with any large-scale undertaking, it would be virtually impossible to achieve the desired results in isolation. We freely admit that we still have a lot to learn and, in order to implement our exciting vision of the future, and we need financial help in the form of direct investments and advice on the liberalising of our economy. In this regard, we are very grateful for the support and contribution of several major international financial institutions, especially in the energy sector – one of the pillars of our economy.

In recent years, and in particular, with the support of the World Bank, the power sector has undergone a significant transformation. In July 2019, we adopted a Plan of Practical Measures for Reforming the Electricity Industry of the Republic of Uzbekistan. More than 150 representatives from government agencies, enterprises, international financial institutions and international organizations took part in a round table discussion. 

As a result, an agreement was reached with the World Bank Group on the following measures:

  • allocation of $300 million for a program of comprehensive transformation, modernization, commercialization and corporatization of JSC National Electric Grids of Uzbekistan, development and financing of its priority investment program, financial recovery of the enterprise, acquisition of a credit rating, issuance of bonds and preparation of the electric power industry for the transition to a liberalised electricity market in the medium term;
  • preparation and implementation of the next phase of projects based on public-private partnerships (PPP) for achieving the generation of 1000 MW of solar energy. 
  • preparation by the World Bank and the International Finance Corporation (IFC, WB Group) of the first public-private partnership for thermal power generation in the Syrdarya region with a total capacity of 1,600 MW.
  • In the fuel and energy sector, as of January 1, 2021, 62 investment projects are being implemented for a total amount of $33.37 billion, of which $292.15 million is financed by the World Bank.

Based on recommendations by an international group of experts, including a special Adviser to the Minister of Energy, Budak Dilli, a number of documents are being developed, such as the Grid Code for Backbone Electric Grids, a new edition of the law on electricity, and the creation of a national regulator for the country’s wholesale energy market. 

As of October 1, 2020, the World Bank is involved in 23 projects with a total value of $4.44 billion. 

Our other important international partner is the European Bank for Reconstruction and Development (EBRD). The EBRD’s cumulative energy portfolio in Uzbekistan is over $1 billion and it is involved in: 

  • co-financing with the Asian Development Bank (ADB) of the second phase of the construction of CCGT units with a capacity of 900 MW at the Talimarjan TPP;
  • working on the development of wind energy with a capacity of 100 MW in the Republic of Karakalpakstan on the basis of a public-private partnership (auction);
  • co-financing for the modernization of electricity networks and development of the potential of JSC National Electric Grids of Uzbekistan.

In addition to financing, the EBRD also provides technical support on projects related to the establishment of an independent regulatory body and the development of the renewable energy sector in Uzbekistan.

Furthermore, the Asian Development Bank (ADB) is assisting Uzbekistan in the implementation of 32 projects in the energy sector for a total amount of about $2 billion, including:

  • continuing support of investments in the energy sector with a view to modernizing and building new generating capacities and upgrading the existing infrastructure for transmission, distribution and dispatching of electricity, as well as promoting regional cooperation;
  • preparation of projects of public-private partnership in the field of power generation in Uzbekistan, including a program for the development of 1 GW of solar generation, as well as electric and gas distribution networks and heat supply in the city of Tashkent.

Currently, ADB is effectively providing technical assistance in reforming the fuel and energy complex — specifically, helping us develop the concept of transition to a competitive electricity market for the period 2021-2025 and a new edition of the draft Law of the Republic of Uzbekistan “On Electricity”.

The Talimazan Combined Cycle Power Plant in Uzbekistan.

Several large-scale projects on energy generation are also progressing in partnership with the Japan International Cooperation Agency (JICA). For example, construction of the 2nd and 3rd combined cycle plants at the Navoi thermal power plant, and the construction of the Turakurgan TPP. These projects will have a huge direct impact on ensuring the energy security of the country.

JICA is also contributing to the development of a Training Center at Navoi TPP JSC for the training and retraining of industry specialists. The total amount of funds raised by JICA is $2,318.49 million. 

Uzbekistan is a country rich with natural and human resources, deep historical and cultural roots, a large young and dynamic population that is committed to becoming a modern, vibrant nation with a developed free-market, modernized industry and diversified economy. We have plenty of personal drive, but a lot more energy will be required to achieve our economic goals and with help from international financial organisations and other partners we are pressing on with the reforms spearheaded by our government. 

The scope of international cooperation and assistance that is already underway is a clear signal of the increasing trust and confidence being placed in the transformative process taking place in our country. We welcome other international companies and organisations to partake in our effort to build a new modern open Uzbekistan – a land of economic growth and political stability in Central Asia. 

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