ADB grants $200m loan to reform Uzbekistan’s power sector
Uzbekistan has been granted a $200 million policy-based loan by the Asian Development Bank (ADB) for improving its power sector under the latter’s Power Sector Reform Program.
The proceeds from the loan will be used by the central Asian country to enhance the power sector’s financial sustainability and ensure adequate investment in vital infrastructure.
The Power Sector Reform Program will help in restructuring Uzbekistan’s power sector by offering budget support and targeted policy actions. This is expected to enable competition and also create a favorable environment for attracting private investment.
Furthermore, the program will reduce sector lapses to ensure fair and transparent competition and consumer protection, said ADB.
Seung Duck Kim – ADB Energy Specialist said: “Reliable and affordable electricity supply is essential for driving economic growth and socioeconomic development. As a first of its kind in Uzbekistan’s energy sector, this policy-based loan will be critical to support complex reforms and deepen private investment.
“By encouraging private sector participation, the program will support the government’s ultimate objectives of creating jobs and improving the quality of life. Clean energy transition will be at the center of reforms to accelerate the development of modern and reliable energy infrastructure that will put greenhouse gas emissions into structural decline.”
Although Uzbekistan is 100% electrified, the quality of service is not good and reliable because of bottlenecks in transmission and also aging power generation and distribution facilities, said ADB.
The bank further said that due to its weak financial performance, Uzbekistan’s power sector has found it difficult to fund new investments.
Structural and policy measures were initiated by the Uzbekistan government to enhance oversight in the power sector and financial sustainability. The measures also included bringing down greenhouse gas emissions in the electricity supply chain and boosting energy efficiency by upgrading regulatory standards and taking up a district heating efficiency improvement program.
ADB said that its program has been supporting the reforms with the intention of increasing private sector participation in power generation by more than 15% in capacity terms and boosting revenue collection to 99% by the year 2023.
The Power Sector Reform Program was developed jointly by ADB with the Agence Française de Développement, which will offer co-financing of a €150 million loan ($169 million).
ADB sector reform support for the country has concentrated on enhancing the internal management system and institutional strengthening of state-owned power utility Uzbekenergo.