TASHKENT, Uzbekistan, October 13. Uzbekistan, The World Bank (WB) has signed an agreement on the provision of financing in the amount of $46.2 million to Uzbekistan to reform the country’s energy sector, Trend reports.
The funds are said to be used to implement the project Innovative Carbon Financing for the Transformation of the Energy Sector of Uzbekistan (iCraft), aimed at producing clean energy, improving energy efficiency, and reforming energy subsidies.
Being the first project to support reforms in the country’s energy sector, it will help Uzbekistan fulfill its international obligations in the field of climate change and effectively use energy resources.
The government undertakes to use part of the funds provided under the iCraft project to protect vulnerable households from tariff increases. In particular, the project will assist in the implementation of the state program for the transition to a "green" economy and other measures to reform the energy sector.
As part of this initiative, it is planned to purchase emissions from the country until 2027, the reduction of which will be possible thanks to more efficient use of energy resources and the reform of energy subsidies.
It will also help Uzbekistan gain access to international carbon markets through a pilot international trade deal on carbon credits. These measures will accelerate the country's transition to a green economy.
Meanwhile, Uzbekistan is among the countries with the highest levels of energy intensity and greenhouse gas emissions. This situation is explained by high subsidies for the generation and transmission of energy in the country, which results in low electricity and gas tariffs.
Thus, the revenues received by energy enterprises from the services provided are insufficient to cover the costs of production and delivery of the corresponding energy carriers to consumers.
In turn, low tariffs do not contribute to a thrifty attitude toward energy and the introduction of energy-efficient technologies in households and in the private sector. They also limit the ability of energy companies to provide quality services to users.