The Uzbekistan government’s key priority remains the expansion of energy and, especially, in the renewables sectors, Chris Weafer, co-founder of Macro-Advisory in Moscow, said, adding that at least $15 billion will be spent in this sector this decade.
The government expects demand for electricity to grow by 70% over the next decade. A Finance Ministry study calculated the total cost to build that capacity at “in excess of $15 billion”. The specific amount of new generating capacity is 30 GW, and the government strategy is to target new facilities in these categories: Thermal power plant (including steam and gas plants) – 19 GW (60%); Nuclear power plant – 2.4 GW (8%); Solar power plants – 5 GW (15%); Wind power plants – 1.7 GW (5%); Hydroelectric power stations – 4 GW (12%).
In June 2019, Shavkat Mirziyoyev, who was re-elected as Uzbekistan’s president on October 24, 2021, signed a law ratifying the charter of the International Renewable Energy Agency (IRENA) — a decree from the same month set goals to allocate US$5.3 billion to 810 investment projects to develop renewable energy up until 2022. Late last year the President said, “We need a lot of investments in this sector. According to rough estimates, $15-20 billion would be needed in the next 10 years.
According to Weafer, Uzbekistan plans to implement 52 projects worth $9 billion as it moves into the deep processing of natural gas and production of value-added products, the press service of the presidential office said on November 25, 2020.
Fifteen projects are to be implemented in the field of inorganic chemistry, 23 in organic chemistry and 12 in the production of polymers. The projects would allow the production of $4.1 billion worth goods, the replacement of imported products worth $1.1 billion, the export of value-added goods worth $1.45 billion and the creation of 6,500 new jobs, according to officials.
One project aims to establish an innovation center that will be engaged in the research and development of new types of polymers made with gas feedstock and the training of specialists.
In October, Canadian oil and gas company Condor Petroleum said it plans to invest over $1 billion in the operation of gas fields in Uzbekistan’s Bukhara province in 2021-24.
Uzbek state-owned enterprise Uzkimyosanoat announced the commissioning of its $982 million ammonia and urea production complex in Navoiyazot. The Navoiyazot facility is one of Uzbekistan’s largest chemical plants, producing mineral fertilizers by processing natural gas feedstock. The complex has the capacity to produce 660,000 tons of ammonia and 577,500 tons of urea. The product is to be exported to neighbouring countries in the region, as well as to Turkey, Ukraine, and Georgia. The project was financed with loans from Japanese banks worth $577 million and included a loan from the Fund for the Reconstruction and Development of Uzbekistan at $320 million.
Weafer said there are plans to deregulate gas and electricity markets. “The government has published a draft document that proposes abolishing Uzbekistan’s gas and electricity supply monopoly and opening it up to investors. It is intended to allow local companies to buy electricity and liquefied petroleum gas on the open market, rather than from state monopolies. According to a draft presidential decree published on January 18th, the state monopoly on the supply of electricity and liquefied gas to local enterprises will be abolished as early as this year,” he said.
Turning to privatization, he said this is partly in response to continuing domestic energy shortages and partly a part of the privatization commitment. The draft also proposes the cancellation of customs duties and permits for the import of liquefied gas. The energy ministry will be tasked with overseeing the implementation of the roadmap for change and will allow enterprises to import electricity and gas from August 1st , the draft document said.
Foreign Direct Investment
Uzbekistan intends to raise $7.6 billion in foreign direct investment (FDI) by the end of this year, according to Badriddin Abidov, deputy minister of investment and foreign trade. “Last year, Uzbekistan saw $7 billion worth of FDI. These investments were channeled towards promising industries such as electrical engineering, IT, and so forth. We are planning to attract $7.6 billion in FDI in 2021. Cooperation is scheduled with several European and Asian countries,” said Abidov.
Uzbekistan, Kazakhstan, and the US are to cooperate on the launch of the Central Asian Investment Partnership initiative, according to a joint statement signed on January 7. The governments of the three countries plan to attract some $1 billion over five years. The funds are expected to go into projects that advance private sector-led growth and increase economic connectivity within Central Asia and the broader region. Representatives of the three countries also said that they welcome other countries joining the initiative to promote regional economic partnership and prosperity.
The European Bank for Reconstruction and Development (EBRD) provided $521 million in 2020. The EBRD published a report on its activities in Uzbekistan in 2020. The bank extended loans valued at $521 million to various projects in the country in 2020. The funds were pledged to 18 projects to support the country’s banking sector, small and medium sized enterprises’ (SMEs’) access to finance, the upgrading of key infrastructure and the promoting of renewable energy development.
To support Uzbekistan’s green transition, the bank financed its first privately owned and competitively tendered renewable energy project in the country by extending an equity bridge loan for the construction of a 100 MW solar photovoltaic plant in the Navoi region of Uzbekistan, Weafer said. By supporting this project, the EBRD contributed to Uzbekistan’s objective to generate 8 MW of solar and wind power by 2030.
Loans worth $150 million were provided to support vital upgrades of electricity and water supply infrastructure in Surkhandarya region.
More than $55 million was invested into various private sector projects. This included a $40 million equity investment in the country’s leading food chain Korzinka, marking the development bank’s first equity investment in the country in a decade, a loan of $12.5 million to fertilizer producer Indorama Kokand and a loan of $2.8 million in local currency-equivalent to a leading domestic producer and trader of disposable medical goods, Healthline.
Uzbekistan and the EBRD have signed loan agreements worth $150 million to finance infrastructure projects, the Ministry of Investment and Trade said on December 10. The funds are to be allocated for the implementation of projects that support the electricity sector and for the construction of a water pipeline network to improve water supply in the Muzrabod district of Surkhandarya region, the ministry said. During video-conferenced talks, the EBRD expressed its readiness to provide comprehensive support to accelerate reforms in the financial and banking sectors of Uzbekistan.