Uzbekistan Quality Job Creation as a Cornerstone for Sustainable Economic Growth

Uzbekistan Quality Job Creation as a Cornerstone for Sustainable Economic Growth
There is very limited private participation in the power sector. This risks 
inefficient provision of services to consumers and insufficient investment in 
infrastructure development. The government has restructured Uzbekenergo 
to attract private capital to its generation and distribution segments. A deficient 
legal and institutional framework for private participation has limited the 
entry of private investments in large-scale thermal and small-scale renewable 
power generation projects. With respect to public–private participation (PPP) 
arrangements, the laws do not cover government support, lenders’ rights, 
and compensation of the private investor for losses in the event of contract 
termination on the grounds of public interest. The laws are also silent on the 
right to create any security interests over the project assets (ADB 2016e). 
The Law on Electricity prohibits independent power producers from feeding 
electricity to the grid. While the Law on Rational Energy Utilization introduces 
project-specific feed-in tariffs that allow recovery of capital investment and 
operation and maintenance cost of renewable energy facilities, this has not 
yet been applied to private investors. In terms of institutional arrangements, 
there is no dedicated public authority to serve as a central unit for PPPs
(ADB 2016e). 
Poor supply reliability. 
According to the World Bank Enterprise Survey 
2013, electrical outages happen almost six times a month in Uzbekistan, each 
lasting for about 5 hours. These numbers are worse than the average of the 
Eastern Europe and Central Asia region. Poor supply reliability has negatively 
affected profitability of businesses. Losses due to electrical outages amount 
to 6.6% of annual sales of enterprises. About 5% of manufacturing enterprises 
use generators that mostly run on diesel to support their operations. Those 
that own generators on average rely on them for 24% of their electricity 
needs (Table 2.8). Electricity from diesel-fired generation units is expensive. 
The generation cost is roughly SUM261 per kilowatt-hour (kWh), about 27% 
higher than the tariff to residential consumers in Uzbekistan in 2017.
9
Even 
getting electricity connection is a challenge for new enterprises. Among all 
respondents surveyed in all sectors (representing 390 enterprises), 32% 
identified that getting electricity was the most limiting factor for their firms’ 
operations (Figure 2.12). 
9
Data on the generation cost of diesel-fired generators are from World Bank (2013), adjusted to 
approximate the generation cost in 2017 and converted to sum using the average exchange rate in 2013 
(SUM2,097.2/$1.00).

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