Ministry of Economy and Finance of the Republic of Uzbekistan

In the context of sustainable economic development, demand for electricity and natural gas continues to grow, alongside the need for large-scale modernization of network infrastructure and the attraction of private investment into the sector. In this regard, establishing a stable and transparent tariff-setting regulatory framework is becoming increasingly important.

In this context, the introduction of the Regulatory Asset Base (RAB) methodology represents a key step toward aligning Uzbekistan’s regulatory framework with internationally recognized practices. This reform is being implemented in close cooperation with international development partners and financial institutions.

RAB regulation provides a more transparent and predictable mechanism for setting both consumer tariffs and the tariffs of regulated companies. This approach enables companies to recover efficient operating costs, asset depreciation, and earn a justified return on invested capital.

As a result, a transparent pricing system will be established, the financial condition of fuel and energy enterprises will improve, their international credit ratings will increase, and the preparation of financial statements in accordance with international standards will be encouraged.

In addition, the introduction of RAB regulation plays an important role in mobilizing investment for the modernization and expansion of energy systems.

Electricity and natural gas infrastructure require significant capital investment to improve reliability, reduce technical losses, and integrate new sources of generation. A transparent regulatory framework enhances confidence among both consumers and investors and facilitates access to domestic and international financing.

This, in turn, over the medium to long term, will contribute to lowering the cost of capital and enable more sustainable financing of strategic infrastructure projects, while supporting more competitive prices for consumers.

The next important step will be the gradual introduction of long-term regulatory instruments, which will significantly enhance tariff predictability for both consumers and regulated companies. This will support the implementation of a balanced tariff policy, enabling gradual and manageable tariff adjustments while ensuring that energy companies are able to meet their revenue requirements and continue providing reliable and high-quality services.

At the same time, performance-based regulatory mechanisms will be introduced in a phased manner to strengthen operational efficiency and improve service quality across the electricity and natural gas sectors.

These mechanisms will incentivize companies to optimize costs, reduce losses, enhance the reliability of supply, and improve customer service standards, ultimately ensuring more efficient and reliable energy services for consumers.

Overall, the introduction of RAB-based regulation in the electricity and natural gas sectors represents an important institutional reform that will support Uzbekistan’s broader energy sector transformation. By strengthening financial sustainability, mobilizing investment, improving operational efficiency, and enhancing regulatory transparency—while being implemented in cooperation with international partners—this reform will help create a modern and resilient energy system capable of supporting Uzbekistan’s long-term economic development and energy security objectives.

In line with the transparency principles outlined above, the table below provides a summary of the key metrics expected to be used to set tariffs during the initial phase of RAB implementation in 2026 (no later than September 1).

These metrics provide market participants with a general understanding of the regulatory approach and key assumptions underlying the system.

As part of the initial implementation of RAB regulation, and following tariff adjustments in 2024 and 2025, tariffs are expected to continue moving toward cost-recovery levels.

Under the new methodology, the price of electricity generation is projected to increase by approximately 9%, transmission services by 30%, distribution services by 10%, and natural gas distribution services by about 23%.

It is noteworthy that the portion of costs for electricity and natural gas generation, transmission, and distribution services that exceeds the tariffs set for end consumers will be covered by state budget funds.

Preliminary parameters for the implementation of the regulated asset base (RAB) model in electricity and natural gas tariff setting in 2026