Uzbekistan's energy sector declining amidst growing investments (Exclusive)

Baku, Azerbaijan, Nov. 26

By Fikret Dolukhanov – Trend:

In the first nine months of 2018, the volume of realized investments in the energy sector of Uzbekistan exceeded 3.07 trillion soums, which is seven times more than last year (421.7 billion soums), Uzbekenergo told Trend.

Of the total investment realized, the share of Uzbekenergo accounts for 342.8 billion soums, which is almost twice as much as in 2017 (187.6 billion soums).

Growing investments, however, did not have a significant impact on the electricity production volume. In January-September 2018, Uzbekistan produced 45.5 billion kilowatt-hours of energy against 44.7 billion kilowatt-hours a year before.

At the same time, Uzbekenergo's own production for the reporting period has even declined. While in 2017 the energy company produced 40.9 billion kilowatt-hours of electricity, in 2018 this figure dropped to 40.3 billion kilowatt-hours.

Uzbekenergo underlined that the company managed to export 1.8 billion kilowatt-hours of electricity in the first nine months of 2018.

It is noteworthy that Uzbekistan’s commercial banks are quite passive in lending to the energy sector. In the reporting period, the commercial banks of Uzbekistan allocated only 30.6 billion soums to Uzbekenergo.

Finance Specialist in Central and West Asia Regional Department at ADB Rafael Abbasov earlier told Trend that it is the right time for Uzbekistan to transform Uzbekenergo, the old, vertically integrated state-owned electricity utility, into a modern, regional energy hub.

The author underlined that to succeed in the energy sector, Uzbekistan must reform its legal, financial and regulatory structure.

Also, according to Abbasov, to achieve trade fairness, Uzbekenergo needs to introduce international corporate governance principles coupled with segmented financial disclosures for generation, transmission, and distribution subsidiaries.

(8277.53 soums = 1 USD on Nov. 26)

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Follow the author on Twitter: @FDolukhanov

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