Uzbekistan Quality Job Creation as a Cornerstone for Sustainable Economic Growth

Large future investments. 
The government expansion plans for the 
sector summarized in Tables 2.10–2.13 will require substantial investment
(Table 2.15). For hydropower alone, the 22 projects laid out in Presidential 
Resolution No. PP-2947 will require $2.2 billion. The government will fund 61% 
of that, while external funding will provide the rest. Sources of external funding 
include the Asian Development Bank, Asian Infrastructure Investment Bank, 
and Eximbank China. 
11
ADB. n.d. Projects. Uzbekistan: Advanced Electricity Metering Phase 4 Project. https://www.adb.org/
projects/41340-015/main#project-pds (accessed 16 July 2018).

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Infrastructure as a Foundation for Job Creation
Table 2.15: Required Investment for Hydropower Plants, Uzbekistan
($ million)
Project
Cost
Source of Financing
Government
FDI and Lending
New Construction (11 projects)
1,730.5
1,195.6
534.9
Modernization
507.1
168.3
338.9
Total 
2,237.6
1,363.9
873.8
FDI = foreign direct investment.
Source: Government of Uzbekistan (2017). 
Huge investments are required to rehabilitate and extend the transmission and 
distribution networks. Additional high-voltage transmission lines are needed 
to supply electricity in the densely populated Fergana Valley. Where no large 
power generation facilities exist, a circular transmission network should be 
created to allow transmission within the country, and to further integrate 
regional grids. In the short term, the government aims to construct six high-
voltage transmission lines that will cost about $570 million. The government 
has estimated that a total of $1.3 billion will be needed for investments in 
transmission and distribution systems by 2020. This will include modernizing 
switchyards and constructing new distribution-level infrastructure, such as 
advanced electrical meters for individual customers. 
Uzbekenergo had also increased its long-term investment from 
SUM1.3 billion to SUM1.5 billion to replace aging and inefficient generation 
assets. In the past, the government has provided the investments. With the 
huge investment requirement, funding from the public coffers will not suffice 
and should be supplemented by private investments. However, private sector 
participation in the power sector is currently negligible due to the sector’s poor 
economic performance, and insufficient financing of the sector has stifled 
the modernization and reconstruction of power infrastructure. Investment 
directed to the electricity generation sector has been growing but at a slow 
pace, accounting for just 3.5% of the total annual investments of the company 
during 2007–2017.
Increasing investments through private funds requires adjusting electricity 
tariffs to cover long-run supply costs. The tariff hikes since 2012 had enabled 
the Uzbekenergo to slowly recover operating and maintenance costs and other 
administrative expenses. The current electricity tariffs for all of Uzbekenergo’s 
subsidiaries were on a cost basis to cover these costs. The 2018 tariff rates 
are SUM178.40/kWh for industry and SUM228.60/kWh for residential users 

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