Uzbekistan: Major Reforms In The Energy Sector In Uzbekistan

Last Updated: 14 November 2018
Article by Eldor Mannopov and Bobur Shamsiev

To improve the organizational and legal framework of public administration in the electric power industry based on the experience of the leading countries, modern innovative ideas, developments and technologies, the President of the Republic of Uzbekistan signed a new resolution "On the Accelerated Development and Provision of Financial Stability into Electricity Sector" (the Resolution).

The Resolution approved the "Roadmap", which provides for the realization of seven investment projects on the modernization of the existing and the creation of a new generating capacity of 1,984 MW until 2020. It also provides for the reconstruction of the existing and the creation of new electricity networks with the total length of 7,100 km, the installation and the modernization of the total 2,500 transformation units and connection of all consumers to the System of Automated Control and Recording of Electricity (the Automated System) and the attraction of foreign credits from the foreign financial institutions in the amount of US$1.8 billion. The Cabinet of Ministers must approve the schedule of realization of every project within two weeks.

Ministry of Finance and the State Committee for Investments are given a task to direct at least US$100 million to the realization of the Project "Obod qishloq", project on construction and modernization of the low-voltage distribution networks.

The Resolution provides for the further implementation of the Automated System in Andijan, Namangan, Fergana, Kashkadarya and Surkhandarya regions with the credits provided by the Asian Development Bank in the amount of US$300 million. The Automated System was earlier implemented in Bukhara, Djizzak and Samarkand regions.

The rest of the attracted credits for the realization of the Automated System will be used to attract companies-contractors, identified through the international tender, for the creation of the single republican centre for the processing of the information of the Automated System.

The Resolution also provides for the execution of the additional agreement with the consortium of the advising companies "CESI S.P.A / AF MercadosEnergyMarketsInternational S.A /" to develop the tender documentation for the purchase of the modern recording equipment and ancillary parts that come with it, for the implementation of the Automated System throughout the territory of the Republic.

In accordance with the Resolution, the Commission on Reforming of the Electricity Sector (the "Commission") was created, and the following tasks were assigned to it:

  1. until December 1, 2018 – approving the "Roadmap" on the creation of the legal basis, procedures and regulation of the public-private partnership in the electric power industry;
  2. until December 15, 2018 – drafting the Decree of the President of the Republic of Uzbekistan on the creation of the Ministry of Energy of the Republic of Uzbekistan;
  3. until March 1, 2019 – creating the modern scheme of the organization of the production, transportation, distribution and sale of the electricity, with the aim of attracting private, including foreign direct investments to the entities that produce and distribute the electricity, including based on the public-private partnership, with the reservation of the full control of the transportation of the electricity, and gradual creation of the modern market of the electricity based on the competitive purchase of the production directly from the producers;
  4. until April 1, 2019 – preparing and approving the methodologies of calculation of tariffs on the electricity, based on the coverage of the current and capital expenses, stimulating the attraction of the private sector to the electricity sector, with the aim of creating interdepartmental tariffs commission within the Cabinet of Ministers;
  5. until May 1, 2019 – developing long-term investment programs on the expansion, modernization and diversification of the generating capacity for the period until 2030, with the production of the electricity up to 20,000 MW;
  6. in 2019 – providing implementation of the modern forms and technologies of corporate governance, international financial reporting standards into the electric power industry, and the issuance of the corporate bonds of the entities in the electric power industry in the international capital markets; and developing new investment projects in the electric power industry with the potential investors, on the basis of public-private partnership, deriving from the existing resources and utilization of the alternative sources.

The State Committee for Investments together with "Uzbekenergo" JSC and Agency on Development of Public-Private Partnership under the Ministry of Finance of the Republic of Uzbekistan were given a task to provide starting from 2019:

  1. Together with the International Financial Corporation, the realization of the pilot project on the construction of the solar photovoltaic power plant with the capacity of 100 MW in the Navoi region on the basis of tender;
  2. Together with the international financial institutions, the realization of the pilot project on the construction of a combined-cycle plant in one of the thermal power plants of the country, and modernization of the electricity networks in Andijan, Namangan, Fergana cities on the basis of the public-private partnership;
  3. Together with the international financial institutions, the development of main characteristics of the feasibility study on the project "Long-term Lease of Distribution Networks in the Tashkent City."

Within one month, the Cabinet of Ministers must prepare the draft of the law on the development of the procedures of connecting alternative producers of the electricity to the single energy system, and realization of the projects based on the public-private partnership. "Uzbekenergo" JSC together with the Ministry of Justice of the Republic of Uzbekistan must prepare the draft of the regulations on the connection to the single energy system of business entities, which produce electricity, including those producing electricity from the alternative sources, for the approval of the Cabinet of Ministers until April 1, 2019.

This Resolution addressed certain questions and issues highlighted by the President during the meeting earlier this month dedicated to the present condition of the energy sector of the Republic. During the meeting, the President said:

"We have a capacity to generate in total 14 thousand MW of the electricity in our country, 86% of which will be generated by the thermal power plants. However, 84% of the capacity of the thermal power plants started operation half a century ago, and the present capacity is working only for 83%."

In addition, it was noted that we use twice the resources to produce one unit of electricity then the developed countries do, 62% of the electricity lines were installed 30 years ago, and 57 percent of the distribution lines and 39.6 thousand transformation units are in the need of repair. With the purpose of improving conditions in the country, states bodies were given a task to develop the projects on the creation of additional power facilities for the production of 12.5 thousand MW by 2030. In particular, attention was paid to attracting the private sector and creating legal, institutional and technological bases of the public-private partnership mechanisms.

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