Ministry of Energy: Goals, Objectives, Plans and Achievements

One of the most important conditions for the development of modern Uzbekistan is the country’s economic stability, which largely depends on achieving energy security.

Economic growth and liberalization were among the priorities outlined in the Strategy of Actions for the Five Priority Areas of Development of the Republic of Uzbekistan for 2017–2021.

A strong energy policy provides a foundation for improving the competitiveness of the national economy. Therefore, structural reforms, modernization and diversification processes are currently underway in one of the leading sectors of the economy — the fuel and energy sector.

An important step in this direction was the establishment of the Ministry of Energy of the Republic of Uzbekistan in accordance with Presidential Decree No. UP-5646 dated February 1, 2019, “On Measures to Radically Improve the Management System of the Fuel and Energy Sector of the Republic of Uzbekistan.”

The Ministry of Energy and the organizations within its structure carry out state regulation of the production, transmission, distribution and consumption of electricity and heat, as well as coal, and the extraction, processing, transportation, distribution, sale and use of oil, gas and petroleum products.

Key Objectives of the Ministry of Energy

The Ministry of Energy has been assigned a number of tasks, including:

• regulating the energy sector;

• implementing production sharing agreements and monitoring compliance with them;

• attracting private capital to the extraction and production of energy resources;

• developing public-private partnerships (PPPs);

• improving tariff policy to promote a competitive business environment;

• increasing and diversifying energy production;

• introducing modern corporate governance practices in the energy sector, including the optimization of production processes based on recommendations from the World Bank.

What Has Been Accomplished?

A fundamental restructuring of Uzbekenergo JSC was carried out as part of the energy sector reform initiated by the President of the Republic of Uzbekistan.

Three joint-stock companies were established on the basis of Uzbekenergo JSC:

• Thermal Power Plants;

• National Electric Grid of Uzbekistan;

• Regional Electric Power Networks.

The purpose of this reorganization was to transition to modern methods of electricity generation, transmission, distribution and sales.

An important step in the development of the country’s electricity sector was the adoption in May 2019 of the Law of the Republic of Uzbekistan “On the Use of Renewable Energy Sources” and the Law “On Public-Private Partnership.” These laws established the legal framework for accelerating renewable energy projects.

The Ministry of Energy developed the Concept for the Development of Renewable Energy Sources in the Republic of Uzbekistan for 2019–2023.

Together with the international consulting company Mott MacDonald (United Kingdom), a Master Plan for the long-term development of Uzbekistan’s electricity sector, including renewable energy, was developed.

At the end of April 2020, the Government approved the “Concept for Ensuring the Republic of Uzbekistan with Electric Energy for 2020–2030,” developed by the Ministry of Energy in cooperation with relevant ministries, agencies and international consultants.

In mid-2019, the reform of the oil and gas sector began on the basis of Presidential Resolution No. PP-4388. By the end of 2019, the first stage of the transformation had been completed.

A new organizational structure of Uzbekneftegaz JSC was established. The following joint-stock companies were incorporated into its structure:

• Uzburneftegaz;

• Uzneftegazdobycha;

• Uznefteprodukt;

• Uzneftegazmash.

Unnecessary intermediate management structures within Uzbekneftegaz JSC were eliminated. Oil and gas production and gas processing organizations were also transformed into structural divisions of Uzbekneftegaz JSC, including departments and plants.

Uztransgaz JSC was separated from Uzbekneftegaz JSC and designated as the sole operator responsible for purchasing natural gas from gas-producing organizations for subsequent transportation, including export and import, as well as for supplying consumers connected to main gas pipelines.

Based on the regional gas supply branches of Uztransgaz JSC, Hududgaztaminot JSC was established to operate gas distribution networks and supply natural and liquefied gas to households and social-sector facilities.

Current Work of the Ministry of Energy

The Ministry is currently implementing the Strategy for the Fuel and Energy Supply of Uzbekistan for 2020–2030 and the Comprehensive Program for the Digitalization of the Electricity Sector for 2019–2021. The program is aimed at automating enterprise resource planning (ERP), as well as dispatch control and data acquisition through SCADA systems.

One of the key priorities for the development of Uzbekistan’s electricity sector is the expansion of generation capacity in areas such as thermal power plants (TPPs), nuclear power and renewable energy sources, with the involvement of foreign direct investment.

Another important project being implemented at an accelerated pace is the introduction of an Automated System for Electricity Metering and Control (ASKUE). In particular, more than 7 million consumers were scheduled to be connected to the automated electricity monitoring and metering system by the end of 2020. As of May 15, 2020, 3.32 million modern electricity meters had been installed across the country.

Work is also underway to implement a number of investment projects based on public-private partnerships, including the construction of photovoltaic (solar) power plants.

The Ministry of Energy is also focused on continuously promoting electricity conservation, introducing energy-saving technologies and raising public awareness of the importance of energy efficiency.

According to specialists from the Uzbekenergoinspektsiya, each household in the country has the potential to save an average of 400 kWh of electricity per year. Across the country, this could amount to approximately 1.8 billion kWh. The electricity saved in this way would, for example, be sufficient to supply the Jizzakh or Syrdarya region with electricity for an entire year.

Ministry of Energy: Plans Through 2030

According to the adopted “Concept for Ensuring the Republic of Uzbekistan with Electric Energy for 2020–2030,” the following targets were set for the ten-year period:

• increase generation capacity from 12.9 GW to 29.3 GW;

• increase electricity production from 63.6 billion kWh to 120.8 billion kWh;

• reduce natural gas consumption from 16.5 billion cubic meters to 12.1 billion cubic meters;

• reduce electricity transmission losses to 2.35% and distribution losses to 6.5%, which is 1.85 times lower than the 2019 level.

Implementation of these plans is expected to strengthen the country’s energy security, taking into account forecasts that Uzbekistan’s energy consumption will almost double over the ten-year period.

At present, thermal power plants account for approximately 85% of the country’s generation capacity. Therefore, by 2030, the construction of 15.6 GW of new and modernized thermal generation capacity is planned. At the same time, 6.4 GW of physically outdated thermal generation capacity is expected to be decommissioned.

The plans also include the construction of modern combined-cycle gas turbine power plants with a total capacity of approximately 10 GW at the Syrdarya, Navoi, Talimarjan, Tashkent and Turakurgan thermal power plants, among others.

Power plants using renewable energy sources will also be constructed, with the combined share of solar and wind power expected to reach 21%.

Flexible generation capacity based on gas-piston units or aviation gas turbine units with a total capacity of approximately 3 GW is also planned.

Projects to improve electricity metering systems will continue, along with legal reforms aimed at improving tariff policy and facilitating the transition to a wholesale electricity market.

The development of renewable energy sources, particularly solar energy, will remain a key priority.

To accelerate the development of renewable energy, public-private partnerships will be widely used in this sector, and major investment projects are being developed.

All these efforts are aimed at ensuring energy security and supporting the dynamic development of Uzbekistan.

Functions of the Ministry of Energy

The Ministry’s main functions include:

• implementing a unified energy policy aimed at ensuring the country’s energy security and meeting the growing demand of economic sectors and the population for energy resources;

• separating state regulatory functions from commercial activities in the energy sector, improving the legal and institutional framework for social and public-private partnerships, developing clear market-based mechanisms for tariff policy, and promoting a healthy competitive environment;

• creating conditions for the active attraction of investment, particularly foreign direct investment, into infrastructure projects, as well as the modernization, technical upgrading and technological re-equipment of energy-sector enterprises;

• implementing state policy on energy conservation and reducing the energy intensity of the economy, encouraging the widespread introduction of advanced resource- and energy-saving technologies in economic sectors and households, and promoting the development of alternative energy sources;

• widely introducing modern technological process automation systems at energy-sector enterprises, as well as systems for accounting for the extraction, supply and consumption of energy resources;

• optimizing the management systems, organizational structures and divisions of energy-sector enterprises and introducing modern working methods and performance indicators, including quality management and indicative planning, aimed at achieving specific results.

Tasks of the Ministry of Energy

The Ministry’s key tasks include:

• developing and implementing a unified state policy in the fuel and energy sector aimed at ensuring the energy security of the Republic of Uzbekistan, providing sustainable supplies of fuel and energy resources to economic sectors and the population, and promoting and developing renewable energy sources;

• exercising state regulation over the production, transmission, distribution and consumption of electricity and heat, coal, as well as the extraction, processing, transportation, distribution, sale and use of oil, gas and petroleum products;

• ensuring unified regulatory, legal and technical regulation of the energy sector in the Republic of Uzbekistan;

• creating and developing a balanced system for strategic planning and development of the fuel and energy complex, increasing and diversifying energy production, and developing coordinated short-, medium- and long-term forecasts for the production, supply and consumption of all types of energy resources, as well as comprehensive development programs for the energy sector;

• increasing the investment attractiveness of the fuel and energy sector through the development of public-private partnerships and improvements to tariff policy that promote a favorable competitive and business environment in the energy market;

• coordinating the implementation of investment projects in the fuel and energy sector, actively attracting private capital to the extraction and production of energy resources, and developing cooperation with international financial institutions, donor countries, companies, banks and other organizations;

• promoting the introduction of modern corporate governance practices in the energy sector, advanced information and communication technologies, and automated management, metering and monitoring systems, thereby improving management efficiency, reducing production costs and increasing the transparency of the financial and economic activities of energy-sector organizations;

• encouraging the introduction of innovative technologies into the production processes of oil and gas and electricity companies, improving energy efficiency and promoting energy conservation;

• organizing systematic training, professional development and retraining of engineering, technical and managerial personnel in the energy sector.