Uzbekistan energy profile

Located between the Amudarya and Syrdarya rivers, the Republic of Uzbekistan (Uzbekistan) covers an area of 448 978 km². The territory is bordered by Kazakhstan to the north and west, by Kyrgyzstan to the east and Tajikistan to the southeast, and by Turkmenistan and Afghanistan to the south. Its permanent population as of 1 January 2020 was 33.9 million, with 2.5 million residing in the capital, Tashkent (https://www.gov.uz/uz).

Most of Uzbekistan (about four-fifths) is occupied by plains, one of the main ones being the Turan Plain. The country’s highest point (4 643 m) is in the spurs of the Tien Shan and Pamir mountain ranges in the east/northeast, and northern/central Uzbekistan is occupied by the Kyzylkum and Karakum deserts.

Uzbekistan’s subsoil is rich in oil, gas, coal and uranium. For natural gas, it ranks 11th in the world for mining and 14th for reserves, and for uranium it is 6th for mining and 7th for explored reserves. It is also among the world leaders for producing and supplying reserves of certain minerals: gold, copper, phosphorites, molybdenum, etc. (http://darakchi.uz/ru/68477).

In 2019, Uzbekistan’s gross domestic product (GDP) in current prices amounted to UZS 511 838.1 billion (USD 57.9 billion according to the Central Bank of the Republic of Uzbekistan’s average annual exchange rate) – a 5.6% increase in real terms from USD 50.4 billion in 2018. According to World Bank estimates, Uzbekistan’s 2018 GDP at purchasing power parity (PPP) was USD 282 billion (USD 1 = UZS 8 069 in 2018; USD 1 = UZS 8 839 in 2019). GDP per capita was UZS 15 242 000 (USD 1 724) in 2019, a 3.6% rise from 2018; it also rose in 2017 (+2.7%) and 2018 (+3.6%) (https://stat.uz/ru).

Uzbekistan has been implementing large-scale reforms in recent years to strengthen its energy industry. Problems are associated with high wear and tear on equipment as well as with the slow pace of infrastructure updates, faulty equipment operations, inadequate installations, and both gas pipelines and power lines that have exceeded their service life. The country’s unstable financial situation and inadequate introduction of resource- and energy-saving technologies have raised technological losses and made fuel and energy resource supply interruptions more frequent.

• Uzbekistan is one of the world’s largest natural gas producers, annually producing around 60 billion cubic metres (bcm), of which 35-40 bcm are supplied by the Uzbekneftegaz joint-stock company (JSC). In 2019, production totalled 60.4 billion cubic metres (bcm).
• In 2019, gas condensate production amounted to 2.1 million tonnes (Mt) – equal to three times the conventional oil production in the same year. Conventional oil production peaked in the early 2000s and has since declined steadily.

• Since the early 2000s, Uzbekistan has been exporting 10-15 bcm of natural gas annually (15 bcm in 2018: 8 bcm to China; 4.5 bcm to Russia; 2.5 bcm to Kazakhstan; and 500‑550 mcm to other Central Asian countries).
• On top of its domestic oil production, Uzbekistan imports additional crude oil for its refineries (around 30% of total input in 2018). Refining output satisfies domestic market demand and allows for small quantities to be exported (0.13 Mt in 2018).
• Uzbekistan’s most important export destinations for energy commodities are China, Russia and Kazakhstan.
• Uzbekistan’s current approved hydrocarbon reserves are forecast to last for 20-30 years (https://www.gazeta.uz/ru/2019/07/12/gas-export/).

• Total final energy consumption is around 30 Mtoe (29.5 Mtoe in 2018).
• The residential sector is the largest consumer, with a share of almost 40%, while the industry, transport and services sectors are each responsible for roughly 20%.
• Domestic gas consumption is approximately 39 bcm, including liquefied natural gas (LNG) used by half of consumers.
• Uzbekistan generated 61.6 terawatt hours (TWh) of electricity in 2019, mostly from natural gas (>85%). The share generated from coal is expected to increase in the future to around 10% (currently around 3%).

In Uzbekistan, HPP generation is counted as electricity produced from renewable energy sources (RESs).

Despite the country’s considerable solar energy potential, it has no industrial-scale solar power plants. Furthermore, as wind potential has not been studied sufficiently, there are also no industrial-scale wind farms.

Uzbekistan is, however, taking measures to establish a legal framework for the development of this energy segment. The Law on the Use of Renewable Energy Sources and the Law on Public-Private Partnerships have been adopted, as well as the Regulations for Connecting Businesses that Produce Electricity, Including from Renewable Energy Sources, to the Unified Electric Power System.

As solar, wind and biomass energy production shares are low, statistical agencies do not currently take them into account.

Ministry of Energy of the Republic of Uzbekistan

The Ministry of Energy was established by Presidential Decree No. UP-5646 of 1 February 2019 on Measures to Radically Improve the Management System of the Fuel and Energy Industry of the Republic of Uzbekistan.

It is responsible for regulating the production, transmission, distribution and consumption of electric and thermal energy and coal, as well as the production, processing, transportation, distribution, sale and use of oil and gas, and their products.

The Ministry of Energy’s main tasks are to:

• Regulate the energy sector.
• Implement production-sharing agreements and supervise compliance.
• Attract private capital for the exploration and production of energy resources.
• Develop public-private partnerships (PPPs).
• Improve the tariff policy to facilitate the formation of a competitive business environment, increasing and diversifying energy production.

The Ministry of Energy is the body authorised to implement the unified state policy for RESs.

Uzbekenergo JSC was fundamentally restructured as part of the transition to modern methods of electricity production, transportation, distribution and sales, and three other JSCs were established based on the Uzbekenergo JSC model: the Thermal Power Plants company, National Electric Networks of Uzbekistan and Regional Electric Networks.

Ministry of Economic Development and Poverty Reduction

Formerly the Ministry of Economy and Industry, the Ministry of Economic Development and Poverty Reduction was established by Presidential Decree No. PP-4653 of 26 March 2020 on the Organisation of the Activities of the Ministry of Economic Development and Poverty Reduction of the Republic of Uzbekistan and its Subordinate Organisations.

The ministry’s main objectives are to analyse and forecast macroeconomic indicators and development, based on proposed economic management market mechanisms and strategies to develop Uzbekistan’s main industries (including energy) given the state of the economy, the foreign market situation, and trends in the global and regional economy. It also formulates strategies (models) for the country's industrial development based on the effective deployment of production forces, rations and food production.

Ministry of Innovative Development

Established by Presidential Decree No. UP-5264 of 29 November 2017, this ministry’s primary objectives are to develop and implement innovations in state and public construction, taking into account long-term scenarios of the country's development; define the state’s scientific, technical and innovation policy priorities; and approve state scientific and technical programmes for fundamental, applied and innovative research.

Ministry of Finance

This ministry co‑ordinates efforts to ensure the financial stability of the basic sectors of the economy; improves pricing and the procedure for tariff-setting for certain types of goods and services; and strengthens payment discipline.

Ministry of Investment and Foreign Trade

Established in accordance with Presidential Decree No. 5643 of 28 January 2019, this ministry is the successor to the Ministry of Foreign Trade and the State Committee for Investments.

It is responsible for implementing the unified state investment policy; co‑ordinating efforts to attract foreign investments, primarily direct investments; co‑operating with international financial institutions and foreign governmental financial organisations; and devising and co‑ordinating unified state policies on foreign trade and international economic co‑operation.

Ministry of Construction

The Ministry of Construction was established by Presidential Decree No. PF-5392 of 2 April 2018 on Measures to Radically Improve the System of Public Administration in the Construction Sector.

It implements a unified state scientific and technical policy in the field of engineering and technical research for urban planning and construction to increase productivity, reduce construction and installation costs, and introduce innovative energy-efficient and energy-saving projects and solutions into construction.

Uzbekistan has adopted a number of laws related to energy: the Law on the Rational Use of Energy (April 1997); Law No. 312-II on Production Sharing Agreements (7 December 2001); Law No. 444-II on Subsoil (13 December 2002); Law No. ZRU-225 on Electric Power Engineering (9 September 2009); Law No. ZRU-370 on Joint Stock Companies and Protection of Shareholders' Rights (6 May 2014); Law No. ZRU-537 on Public-Private Partnerships (10 May 2019); and Law No. ZRU-565 on Peaceful Uses of Nuclear Energy (9 September 2019).

On 21 May 2019, Uzbekistan adopted Law No. ZRU-539 on the Use of Renewable Energy Sources. It defines privileges and preferences for RES use, including fee payment exemptions:

• for manufacturers of renewable energy installations, all types of taxes for five years from the date of the company’s state registration
• property tax for renewable energy installations and land tax for the areas occupied by these installations (rated capacity of at least 0.1 MW), for ten years from the commissioning date
• land tax for persons using renewable energy on residential premises with complete disconnection from existing energy networks, for three years from the month RES use commences.

The Legislative Chamber of the Oliy Majlis (Supreme Assembly) of the Republic of Uzbekistan adopted a new version of the Law on the Rational Use of Energy in April 2020. The law stipulates that the Ministry of Energy is authorised to implement a unified state policy on rational energy use, applicable to all economic sectors and social facilities.

The Ministry of Energy is also required to develop mechanisms to encourage the introduction of energy-efficient and energy-saving technologies, including in production processes, and to monitor them accordingly.

Uzbekistan’s most important reform document is the Strategy of Action for the Five Priority Development Areas of Uzbekistan in 2017-2021, adopted 7 February 2017. The five-year strategy has five main directions: 1) state and social system improvement; 2) rule of law and judicial and legal system reform; 3) economic development and liberalisation; 4) social development; and 5) security, religious tolerance, interethnic harmony and foreign policy.

The investment climate in Uzbekistan has improved significantly in recent years, as the International Finance Corporation (IFC) reported in Doing Business 2018. For the “ease of doing business” indicator, Uzbekistan ranked 74th out of 190 countries (in 2013, it was 154th out of 185).

In addition, efforts to improve its rating on the “taxation” indicator, which considers taxes and mandatory contributions as well as the administrative burden of businesses, raised Uzbekistan from 161st place in 2013 to 78th in 2018.

Its ranking for the “receiving credit” indicator also moved from 154th in 2013 to 55th in 2018 thanks to key measures to expand credit availability through banking structures for entrepreneurial activities and housing construction. Lending procedures were also simplified and modern customer service systems in banks were created (https://finance.uz/index.php/ru/fuz-menu-economy-ru/2888-investitsionnyj-klimat-uzbekistana-mezhdunarodnye-rejtingi-regionalnyj-i-otraslevoj-aspekt).

Uzbekistan’s judicial system consists of a constitutional court, a supreme court, Uzbekistan’s highest economic court, the supreme court of the Republic of Karakalpakstan, the economic court of the Republic of Karakalpakstan, and regional and Tashkent-district city and economic courts.

In accordance with the constitution (Article 108) and the Law on the Constitutional Court, the Constitutional Court of the Republic is the highest judicial body of constitutional control and therefore judges cases on the constitutionality of legislative and executive acts.

The economic court system includes Uzbekistan’s highest economic court, the economic court of the Republic of Karakalpakstan, and regional courts. The courts exercise judicial power by resolving economic disputes among enterprises, institutions and organisations of all forms of ownership. The Supreme Economic Court of the Republic of Uzbekistan is the highest judicial authority for economic legal proceedings.

Uzbekistan is implementing comprehensive measures to deepen structural reforms, modernise and diversify basic sectors of the economy, and balance the socioeconomic development of its territories.

Presidential Decree No. PP-4477 of 4 October 2019 approved the Strategy for the Transition of the Republic of Uzbekistan to the Green Economy for the Period 2019-2030. The strategy has many objectives within several priority areas (https://lex.uz/docs/4539506):

Electricity

• reconstruct and modernise generating capacities of existing power plants with the introduction of highly efficient technologies based on combined-cycle and gas turbine units
• improve main power network configurations and modernise them to increase power system stability
• implement organisational and technical measures, including optimising modes, reactive power compensation and electricity network schemes
• increase automation of technological processes, reduce electric energy consumption for transportation and distribution
• finish equipping power consumption systems with automatic control and metering devices.

Thermal energy

• introduce new technologies for generating thermal energy, including co‑generation technologies for central boilers and coal-fired steam turbine power units based on ultra-supercritical steam parameters
• modernise and reconstruct outdated boiler house equipment
• utilise exhaust gas heat from turbocharger units
• formulate optimal heating network configuration and modernisation
• use modern insulating materials in reconstructing and modernising heating networks
• automate, dispatch and optimise heat generation and transportation systems, taking the number of consumers into account
• equip consumers with modern metering devices
• use solar collectors for heating water in boiler rooms.

Oil and gas

• reduce natural gas losses in the production, processing, transportation and distribution stages by upgrading compressor stations, low- and medium-pressure gas distribution networks, and the gas transportation system with effective technologies for monitoring hydrocarbon resource losses (i.e. a supervisory control and data acquisition [SCADA] system)
• introduce modern gas distribution and metering technologies
• reduce greenhouse gas (GHG) emissions during the processing and storage of oil and petroleum products
• reduce GHG emissions from the combustion of associated petroleum gases once processes for their utilisation and advanced processing have been introduced
• introduce alternative energy sources at oil and gas production facilities
• deploy waste gas heat recovery for power generation.

Implementation targets

• reduce specific GHG emissions per unit of GDP by 10% of the 2010 level
• double the energy efficiency indicator and reduce the carbon intensity of GDP
• further develop RESs, raising their share in total electricity generation to more than 25% by 2030
• ensure that the entire population and all economic sectors have access to modern, inexpensive and reliable energy supplies
• modernise the infrastructure of industrial enterprises, ensuring their sustainability by raising energy efficiency at least 20% and applying clean and environmentally safe technologies and industrial processes more widely
• expand the production and use of more energy-efficient and eco-friendly motor fuels and motor vehicles, as well as develop electric transport.

New renewable generation facilities (solar, wind and hydropower plants) with a total capacity of over 8 400 MW are planned for construction to increase the share of RES in total electricity generation to 25%.

Plus, construction of Uzbekistan’s first nuclear power plant (NPP) with a capacity of 2 400 MW, which is also expected to help stabilise the country’s energy supply, began in autumn 2019 (Presidential Decree No. PP-4422 of 22 August 2019, https://lex.uz/ru/docs/4486127).

Uzbekistan’s State Statistics Committee carries out its activities in accordance with the Law on State Statistics of 12 December 2002, Presidential Decree No. PP-3165 of 31 July 2017 on Measures to Improve the Activities of the State Statistics Committee of the Republic of Uzbekistan, and the Presidential Decree on Additional Measures to Ensure Openness and Transparency of the Public Administration, as Well as to Increase the Number of Statistics.

The Statistics Committee has become active in international forums in recent years. It shares official national energy statistics with the International Energy Agency and is keen on adopting international methodologies.

As a result, Uzbekistan released a pilot energy balance in 2019 following the United Nations Statistics Division’s International Recommendations for Energy Statistics guidelines. Increasing amounts of energy data are also being published in the energy section of the statistics website in several user-friendly formats.