Shavkat Mirziyoyev gets acquainted with “reform” of gas and electricity tariffs

The Agency for Strategic Reforms under the President presented to Shavkat Mirziyoyev the measures for reforming the energy sector in Uzbekistan.

It should be recalled that on February 13, the President got acquainted with the reforms implemented in five main directions – transport, urbanization and urban development, entrepreneurship development, agriculture and energy.

According to the presentation studied by Gazeta.uz, $5 billion is needed to modernize the main electrical infrastructure, $2.5 billion to the gas transportation system, and $3-4 billion to the distribution system.

Measures have been developed in four areas to attract investments, create comfort for investors and strengthen their confidence.

The first is to improve legislation. By July 1, it is planned to adopt the new version of the law “On electric power” (currently adopted in 2009), which envisages the mechanism of attracting private capital for the production, distribution and sale of electricity, as well as the creation of an energy market regulator. By April 1, a new methodology for calculating tariffs for gas and electricity should be approved, and by May 1, a concept of gas market reform should be developed.

It is planned to approve the procedure for licensing market participants by April 1, and the rules for the use of main and distribution power networks by July 1, in order to create the regulatory legal framework of the energy regulator.

It is planned to develop the law “On regulation of the competitive energy market” by November 1.

The second direction is implementation of market reforms. By July 1, it is planned to renew 38 contracts for the purchase of $49 billion of electricity of Uzenergosotish within the framework of public-private partnership projects. Most likely, they are PPP projects in the field of alternative energy, in which the state undertakes to guarantee the purchase of electricity for 25 years (and other periods).

From April 1, it is planned to “reform” gas and electricity tariffs for the population and introduce social norms. One-time aid is expected to be paid to the needy part of the population in November. Energy Minister Jurabek Mirzamakhmudov said at the beginning of autumn that it is planned to increase the price of electricity and gas for the residents of Uzbekistan from May 1, 2024. At the same time, it is planned to introduce social norms. But first it is necessary to ensure continuous electricity supply, he said.

By May 1, it is necessary to complete the installation of meters at all stages from gas production to delivery to the consumer. The work was to be completed by October 1, and the integration with the system of tax authorities by November 1.

By October 1, it is planned to transfer the function of supplying liquefied gas to the population in at least five districts to a private operator.

The third direction is investment attraction. By April 1, a concept for the development of the electric power industry until 2030 is expected to be developed (currently there are several options).

Together with the World Bank, it is planned to develop a program for providing infrastructure to connect the solar power plants under construction to a single power grid by May 1.

Until June 1, a tender will be held in the city of Samarkand to attract investors for the distribution and sale of electricity within the PPP. The project is implemented in cooperation with the International Finance Corporation.

Until April 1, it is planned to implement the program of stabilization of gas production in 85 gas fields of Uzbekneftegaz and to revise the organizational structure of the company.

It is noted that in 2023 oil worth $350 million, diesel worth $118 million, fuel oil worth $78 million and other fuel products worth $99 million were imported into Uzbekistan.

It is expected that the modernization program of Uztransgaz gas transportation system will be developed by June 1.

The fourth direction is the transformation of state enterprises. It is planned to review the organizational structure of all energy enterprises by April 1. It is expected that foreign specialists will be recruited for the positions of first deputy chairman and chief geologist of Uzbekneftegaz.

A new system of corporate procurement, budgeting and investment planning should be introduced in state enterprises by May 1.

As part of the iCRAFT program of the World Bank, it is planned to allocate $45 million for:

•  energy sector reforms – $20 million;
•  improvement of energy efficiency and use of renewable energy sources – $5 million;
•  providing the needy part of the population with energy supply – $5 million;
•  MRV monitoring, reporting and verification system – $6 million.

In 2023, Uzbekistan imported more gas than it exported. The difference between deliveries exceeded $165 million dollars. Gazeta.uz tried to study the factors that caused this situation despite the fact that there are huge gas reserves in the country.