Uzbekistan Power Generation Sector Overview

 

 

January, 2008

 

Author: Jahangir Kakharov, Bisnis Representative in Uzbekistan

 

INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2008.  ALL RIGHTS RESERVED FOR USE OUTSIDE OF THE UNITED STATES.

 

SUMMARY

 

Currently, Uzbekistan is the largest electricity producer among the Central Asian republics and a net exporter of electricity. The country’s total installed generation capacity is 12,300 MW. Uzbekistan achieved self-sufficiency in energy after gaining independence in 1991. Today, about 50% of power generating facilities of the Central Asia Integrated Power Grid is located in Uzbekistan. This power grid also incorporates the power systems of Turkmenistan, Tajikistan, Kyrgyzstan and southern Kazakhstan.

 

However, maintenance of its power systems has deteriorated over the past years. Much of the equipment in generation, transmission and distribution systems is outdated and extremely inefficient. At present it needs serious renovation and upgrade to meet growing demand of the economy. The facilities require rehabilitation by introducing more efficient and environment friendly equipment, so that they can operate at their design capacities. There are currently no manufacturing facilities in the country for the production of equipment used in power generation and transmission.

 

Renovation of the energy sector is a priority for the government of Uzbekistan. The growing demand for electricity and the wear and tear of the existing power generating facilities in the country has motivated the government to develop a long term program for the reconstruction and development of the sector during 2001-2010. In December 2001, the Government of Uzbekistan approved a Generating Capacity Development and Rehabilitation Programme for the Energy Sector until 2010 envisaging an increase in the installed capacity of national power stations by 15% by 2010. In 2008-2010, Uzbekistan plans to implement 4 projects worth more than $300 million. This program presents good opportunities for international contractors and suppliers of energy equipment and services.

 

In July of 2007, it was announced that Uzbekistan plans to attract investments from Arab financial institutions to the tune of $144 million to implement several projects in the power sector of Uzbekistan. 

 

A. Market Highlights and Best Prospects 

 

The following section will describe the general situation of the Uzbekistan power-generating industry, a privatization plan, the government policy on industry reconstruction and development and its influence on prospective involvement of foreign contractors and suppliers, procurement regulations and statistical data.

 

I.         Market Profile

 

General Overview

 

Uzbekistan is the largest producers of the electric power energy in Central Asia. However, according to estimates, at the current rate, by 2010 demand for primary energy may exceed projected production. The installed capacity of the country (12,300 MW) comes from 39 power plants, including 11 large thermal power plants with a total capacity of 10,600 MW and 28 hydroelectric power stations with a total capacity of 1,700 MW. There are no nuclear power plants in Uzbekistan.

 

Thus, electricity in Uzbekistan is derived primarily from thermal plants with 87% of thermal plants powered by natural gas. The other 13% powered by coal and heavy oil. The largest natural gas-powered facilities include the Syrdarya (3,000 MW), Tashkent (1,860 MW) and Navoi plants (1,250 MW). The Talimardjan thermal power station with its unique 800 MW turbines is largely complete (the first block of the station was commissioned in 2005). The most significant coal-powered facilities are two power plants in the vicinity of the Angren mine near Tashkent, the largest one being Novo-Angren (2,100 MW). About 11.5% of electricity in the country is produced at 28 hydroelectric plants, the largest being Charvak hydroelectric station (600 MW) and Khodjikent hydroelectric station.

 

Uzbekistan generates about 47-48 billion kW/h of electric power annually. In the first 9 months of 2007, Uzbekistan produced 35.8 billion kW/h of electricity, which constituted 97.l % of the production volume during the same period of 2006. The decrease in production during the last few years, albeit insignificant, emphasizes the need to rehabilitate power generating capacities in the country. Power exports are mainly directed at the neighboring countries (Tajikistan and Kyrgyzstan during winter period and Afghanistan throughout the year). For instance, during the visit of Afghanistan government delegation in the spring of 2007, it was announced that Afghanistan is planning to purchase electricity from neighboring Uzbekistan and Tajikistan and the country started to construct electricity network in direction to these countries. Finance Ministry of Afghanistan Anwar ul Haq Ahadi said that Afghanistan and Uzbekistan discussed opportunity to supply about 300 megawatt of electricity a year, but Uzbekistan expressed readiness to supply only half of this volume.

 

The power system of Tajikistan experiences shortages in winter and surpluses in summer within the range of 1 to 1.5 kWh. Such winter shortages are covered with power flows from the Republic of Uzbekistan and other sources. Summertime hydropower surpluses are transmitted to Uzbekistan and other countries in the region. Rather than exporting electricity, it has been more common for Uzbekistan to export raw materials, especially natural gas, which the neighboring countries use it in their own thermal power plants.

 

The Uzbek power system is located in the central part of the United Central Asian Power System (CAPS), which includes the power systems of Kazakhstan, Kyrgyzstan and Tajikistan (the Turkmen system that has previously worked with the CAPS is now working with the Iranian Power System). As noted above, Uzbekistan accounts for over 50% of electricity generated by the System. At the present time, the CAPS works in parallel with the UES of Russia through a number of single-chain high voltage power lines (VL-500 kV) connecting Southern and Northern Kazakhstan.

 

The total length of electricity lines is over 230,000 km. The power system is connected to the infrastructure of the neighboring countries, mostly by 500 kV and 220 kV lines.

 

Most of the equipment for power generation was produced in Russia, other parts of the former Soviet Union and by Soviet trading partners in Central and Eastern Europe. The physical condition of the CAPS and the UDC has deteriorated to an extent that makes it difficult to maintain reliable operation and develop a responsive regional wholesale power market without significant investment to rehabilitate the infrastructure. The current technical state is inadequate for modern metering and telemeter, telecommunications, frequency control, information systems, and supervisory control and data acquisition.

 

The facilities require rehabilitation with more efficient and environment-friendly equipment, so that they can operate at their design capacities. There are currently no manufacturing facilities in the country for the production of equipment used in power generation and transmission.

 

Renewable Energy

 

Uzbekistan possesses huge potential resources of renewable energy. Climatic conditions of Uzbekistan are especially favorable for utilizing solar energy. The potential of only solar energy estimated at 51 billion TOE (tons of oil equivalent). The use of currently existing solar energy technologies and equipment would allow produce 179 million TOE, which more than three times exceeds current annual extraction of fossil fuel in the country. In the late 1980’s, a solar furnace was built in the country with a capacitance rate of 1,000 kW and a focus temperature of 3,000 degrees on Celsius.  At the present time, solar energy is used mainly for hot water supply. Several manufactures in Uzbekistan namely Uzgeliokurilish, Encom, and Photon produce flat solar water heaters. The total area of installed solar collectors in the country is estimated at 40,000 square meters.  The marginally utilization of solar energy in Uzbekistan is caused by low gas and electricity prices and the absence of a government renewable energy development programme.

 

According to ADB, in many remote rural areas, decentralized generation through renewable energy sources, mainly through small hydropower plants, offers a competitive and environmentally friendly option for addressing electricity shortages (mainly, these electricity shortages are caused by the fact that these areas are located far from electricity grid). The hydropower potential from natural water flows is estimated to be about 20,000 MW, about 30% of that from small hydropower plants. Only 30% of the small hydropower plant potential is currently being used.

 

The recently compiled atlas of winds estimates that the gross potential of wind energy in Uzbekistan at 2.2 million TOE. The technical potential of wind is about 430,000 TOE. It is roughly estimated that about 75% of the country can’t be used to generate power with the help of wind because wind flows are seasonal in this part of Uzbekistan. However, there are two regions in the country - Karakalpakstan and in the Tashkent Region – with high potential for construction of wind power stations. Currently, the lack of meteorological stations with a modern data collection and registration system in the regions with good prospects for the wind power industry precludes more precise estimate of the technical potential in such regions. Small wind power stations are installed in one of the remote districts of Karakalpakstan and in Charvak near Tashkent.

 

The reserves of biomass resources are also estimated to be considerable – at least

2.65-2.95 TOE. Small facilities generating power from biomass are operational in some small poultry and animal husbandry farms of Uzbekistan.

 

The government of Uzbekistan has developed a small-scale hydroelectric plants construction program in order to increase utilization effectiveness of the hydro energy potential of the rivers and irrigation channels of the country. In July 2005, the Government of Uzbekistan requested ADB assistance to develop small hydropower plants along the existing irrigation canals and reservoirs. The proposed Rural Renewable Energy Development project worth about $30 million foresees construction and operation of five small-sized hydropower plants. In addition, the Ministry of Agriculture and Water Resources plans to implement a program of small-size power facilities to introduce about 440 MW of additional capacity and 1.3 billion kW/hour of power output.

 

Uzvodenergo (Uzbekistan Water Energy) Specialized Association (a division of the Ministry of Agriculture and Water Management) has launched the construction of Andijan and Ahangaran Small Hydroelectric Power Stations in 2007. The budget of two construction projects totals approximately $16.9 million. The source said it was planned to appropriate about $3.7 million this year. Construction is scheduled to be completed by the late 2008. The China National Electric Equipment Corporation (CNEEC) has already started the installation of equipment for the energy blocks of the stations.

 

Earlier in 2007, CNEEC signed a contract with the Ministry of Agriculture and Water Management of Uzbekistan for the construction of Andijan and Ahangaran small hydroelectric power stations. The contract envisages the delivery of equipment and chief-assembly of two energy blocks with the capacity of 50MW for the Andijan station, and with the capacity of 21 MW for the Ahangaran station, as well as the training of the personnel. The construction is funded through the $15.93 million loan of the China Eximbank, provided under the guarantee of the Uzbek government, and UzbekEnergo's own funds. It is planned that Andijan station will produce 171.1 million KW/h of electric energy yearly, and Ahangaran station – 66.5 million kW/h.

 

In line with the small hydroelectric energy development programme, Uzbekistan plans to build 41 small stations with the total capacity of over 1,180 MW by 2010. The total budget of the programme totals some $250 million. Currently, the share of hydroelectric power in the total power generation of Uzbekistan makes up about 10%.

 

Government Control

 

According to Energy Charter Secretariat, the power sector of Uzbekistan is owned by the government. It is a part of the so called “fuel and energy complex” (FEC), to which the coal industry, the district heating systems and the distribution systems for certain other types of energy products (liquid fuels, etc.) also belong. The head of the FEC is the Deputy Prime Minister of Uzbekistan. The structure of Uzbekistan’s power system is still a vertically integrated, government-owned monopoly, despite recent efforts in restructuring aiming at making it more market-oriented.

 

In February 2001 the Government of Uzbekistan issued a decree on partial privatization, demonopolization and deregulation of the power engineering and coal mining industries. The Ministry of Power and Power Supply that controlled electric power generation was transformed into Uzbekenergo State Joint-stock Company. It is an open-type joint stock company incorporating the JSC Ugol (Coal) as an independent legal entity. Major power stations and electric grids were also transformed into joint-stock companies, and partially offered to foreign investors.

 

However, Uzbekenergo still holds the controlling shares of those companies. For instance, the subsidiary enterprise Uzelectroset (Uzbekistan electricity grid) took charge of all high-voltage transmission lines (110-500 kV) used for transporting electricity within Uzbekenergo. The main tasks of Uzbekenergo include power supply and dispatch, development program drafting, promotion of investment, R&D support in the coal and renewable energy sources industries, and the promotion of energy efficiency.

 

Financial Status of the Industry and Tariffs

 

Since State Joint-stock company Uzbekenergo is virtual monopoly in production, transmission and sale of power, the government of Uzbekistan regulates all tariffs for energy.  As Energy Charter Secretariat notes, price and tariff regulatory functions for the FEC are distributed among several state bodies. One such body is the Department of Price Settlement under the Ministry of Finance of the Republic of Uzbekistan and deals with economic regulation. The Department is, in fact, setting the tariffs for all forms of energy. Another one is UzEnergoNadzor, which is responsible for technical regulation in the electricity sector. The Ministry of Finance has price setting functions regarding electricity and energy products. These functions are further distributed to two subdivisions - one deals with all prices and tariffs for electricity and energy products for industry residential consumers, and the other deals with prices for coal and oil products for retail customers.

 

Uzbekenergo elaborates the draft electricity tariffs and submits them to the Ministry of Finance for approval. Draft tariffs developed by Uzbekenergo for electricity and heat take into account the annualized forecast costs in the power sector and the profits needed to assure the development of the sector. Depending on changes in the cost of power production, the tariffs can be revised and adjusted. All electricity end-users are differentiated by categories of tariff groups, depending on their activities, but irrespectively of the form of ownership.

 

Average price for power in Uzbekistan in 2007 stood at about 3.5 cents/kWh – lower than in many other countries of the CIS. Nevertheless, this represents significant increase compare with the average weighted tariff as of July 2003 - 1.26 US cents/ kWh.

 

As the Energy Charter Secretariat notes one of the greatest challenges that Uzbekistan faces in restructuring the power sector is the problem of cross-subsidies and direct government subsidies. Both subsidies and cross-subsidies lead to negative consequences, such as inefficiency, insolvency, etc. The officially stated purpose of cross-subsidies is to keep the prices of electricity and other energy products low for consumers and businesses that cannot afford to pay the real price or enjoy special supply rights. As a result, the consumers and businesses that do not have such privileges pay a higher price for electricity, which results in higher cost of their products and often renders them uncompetitive. Eventually, such businesses fail or just stop paying the bills. In its turn, Uzbekenergo finds out that its cash flow does not cover the cost of fuel and other expenses. In the absence of bankruptcy procedures and enforcement, this leads to a situation where everyone owes to everyone else, with the only distinction being that some owe more than the others. In an environment like this, businesses cannot be properly run, as managerial decisions cannot be made on economic grounds.

 

Government Policy

 

No FDI has been reported so far in the power sector, although the Uzbek government is trying to attract foreign capital for the rehabilitation of the national power industry. The State Property Committee (SPC) of Uzbekistan announced in August 2006 that the tender for the state's shares in Navoi and Tahiatash Power Plants failed. The privatization consultant for the tenders was Russian Finam Investment Company. The tender failed to draw bids, though several foreign investors showed interest in the bids, and even purchased tender documents.

 

In the end of 2007, Uzbek government announced tenders for sale to foreign investors of 48% of the shares of Syrdarya and 47% of shares of Tashkent Heat Power Stations. The deadline for receipt of bids is January 29, 2008 and the results will be announced in March, 2008. Starting price of Tashkent Heat Power Station is $7.35 million. Foreign investors also need to invest $135.7 million to reconstruct the plant. Starting price of the Syrdarya Heat Power Station is $222.9 million and investment needs are $358.8 million

 

It should be noted that in 2005-2007, the tenders to sell shares in 6 power stations, including Syrdaria and Tashkent Heat Power Stations were announced. However, none of the potential investors decided to buy the shares.

 

There are several reasons why FDI into Uzbekistan’s energy sector has been far below potential up to now. Energy Charter Secretariat stresses the following:

 

 

Growing demand for electric energy and depreciation of the existing power generating facilities in the country has motivated the government to develop a long-term program for reconstruction and development of the sector for 2001-2010. This program shall provide a lifetime extenuation for the existing power generating capacities. The program also includes introduction of new generating capacities for 1,748 MW, transformer capacities on 2,429 MVA and installation of 1,355 km of 220-500 kV power transmission lines. Large involvement of international consultants, contractors and equipment suppliers are needed for the implementation of these programs. Generally, in accordance with Uzbek legislation, the contractors or suppliers are selected through open tender process. However, the government usually prefers a bidder which offers investments, loans or similar attractive financing sources for the relevant project. Detailed description of the program is as follows:

 

Plans for Reconstruction and Development of Energy Generating Capacity

 

The plans for Reconstruction and Development of Energy Generating capacities for 2001-2010 include modernization of energy facilities, reconstruction and further development of the power transmission networks and construction of new power generating capacities, including:

 

-          maintenance and modernization of worn-out Electric Power Station (EPS) equipment;

-          increasing capacity for the existing Heat Power Stations (HPS);

-          decrease in fuel consumption; and

-          introduction of up-to-date technologies.

 

Implementation of this program would allow the reduction of fuel consumption rates, meet gas saving rate on approximately 540 million cubic meters per year, raise the capacities of functioning power stations by 905 MW and ensure extenuation of the equipment operation for the next 8-10 years.

 

Within the framework of this program, the first 800 MW power units at the Talimarjan State

District Power Station of condensing type was commissioned in 2005.  The Program requires introduction of additional Steam-Gas Turbines Units (SGTU) at the Tashkent SDPS, Navoi SDPS and Mubarek HPS. The Program implementation also would allow saving annually of 300,000 tons of conventional fuel. Total generating capacities to be introduced by year 2010 shall reach 1,748 MW.

 

Uzbek Ministry of Agriculture and Water Resources shall implement a program of Small-size Power Facilities construction to introduce about 440 MW of additional capacities and 1.3 billion kW/hour of power output.

 

Reconstruction and further development of the power transmission networks is also one of the most important directives of the energy sector improvement plans. Its implementation would reduce its dependence on energy systems of neighboring countries, and increase the efficiency, reliability and flexibility of the electric energy transmission networks.

 

For instance, in 2008-2010, Uzbekenergo plans to install second set of autotransformers with capacity of 501 MWT in the substation “Surkhon” in the south of the country. This project will be accompanies with construction of 500 kV “Guzar-Surkhan” high voltage line with the length of 240 km and worth about $93 million.  

 

Plans for Restructuring of the Fuel Resources Utilization

 

It is planned to reduce the gas consumption of the power stations and increase the coal based power output, which will include:

 

-          construction of the second coal supply line and equipment installation at the Novo-Angren SDPS;

-          modernization of the existing coal supply facilities at the Angren SDPS;

-          efficiency increase oriented reconstruction and re-equipment of the power facilities.

 

Above measures shall improve the fuel balance structure, increase coal-used portion of the power output from 4.7% to 15% and decrease natural gas consumption from 85% to 71%. Investments of $254 million are expected in the coal industry in a 10 years period. Uzbekistan mined 3.168 million tons of coal in 2006 or up 10.1% year-on-year. Uzbekenergo has already transferred Angren thermoelectric power station to coal consumption and creation of new and transfer of existing stations from gas to coal consumption is expected.

 

Upcoming Projects

 

Reconstruction of two power-generating blocks of the Syrdarya State District Power Station (SDPS) has been completed. The feasibility study of the project has been financed by USTDA. Siemens has carried out and completed the reconstruction of two 300MW energy blocks of SDPS on account of the EBRD loan. The Program for Reconstruction and Development of Energy Generating capacities requires reconstruction and introduction of additional Steam-Gas Turbines Units (SGTU) at the several other heat power plants of the country including:

 

 

1.         Construction of the steam-gas units at the Tashkent SDPS. First block of Tashkent State District Power Station commissioned in 1963 and last twelfth in 1971. The capacity of the station is 1,860 megawatt. Japan Bank for International Cooperation (JBIC) issued credit for 24.95 billion yens (about $221 million) with maturity of 30 years in 2002 for this project. The project stipulates installation of a 370 MW combined-cycle unit at Tashkent SDPS.

 

The first tender for construction of this unit was held in 2005 and its results were found unsatisfactory. Mitsui and Marubeni of Japan passed preliminary stage, but Mitsui failed to submit necessary documents in time. At a later stage it was found that application of Marubeni did not meet requirements of the tender. In mid-2006, Uzbekenego state joint-stock company re-announced the tender on selection of a general contractor. Re-announcement of the tender postponed the reconstruction.

 

Uzbekenergo calls applicants for the full-turnkey EPC-Contract under this project. The project shall consist of engineering, procurement, manufacturing, transportation, erection, installation and commissioning including modification, project management, of a complete operable gas turbine combined cycle power plant to be constructed by an EPC Contractor with a single responsibility on the full turnkey basis in the premises of the Tashkent SDPS. The power plant uses natural gas from gas fields of Uzbekistan. The power plant consists of one gas turbine generator, one unfired heat recovery steam generator, and one steam turbine generator complete with all the associated auxiliary equipment and those will be configured multi-shaft arrangement. Uzbekenergo appointed international consultant to assist in implementation of this project – JPower/CEPCO and plans to complete the project in 2009.

 

2.         Modernization of the Navoi SDPS. Estimated cost of the project is $232 million. It will include installation of new energy block with combined-cycle units with capacity of 346 MW. Uzbekenergo is expecting relevant proposals from interested international contractors.

 

3.         With the purpose of enhancing power supply reliability of the power grid and reducing power losses in transmission, a project to construct a 500 kV high voltage power supply line between Syr Darya TPP and Sogdiana Substation will be implemented in 2007-2009. Islamic Development Bank (IDB) will fund the project and, currently, it is in project prospecting/surveying stage. The Board of Executive Directors of the IDB approved a loan as an “installments sale” and “leasing” in the amount of $25.1 million with a 15-year maturity including a three-year grace period.

 

The goal of the project related to the rehabilitation of main power transmission grids is to meet power requirements of the Central Asian Republics with a view to support the economic growth. As a special objective, the project will pursue the improvement and enhanced efficiency of the power transmission system and a better trade in electricity among such countries, as well as improved efficiency of the main power transmission grids through the rehabilitation of 500 kV substations, control, protection and monitoring systems and auxiliary equipment.

 

Currently, feasibility study of the project has been approved and a consulting firm to oversee the project has been selected. Preparation works in the project site has started.

 

4. Construction of a 500 kV high voltage line between “Sogdiana Substation and Tallimarjan Heat Power Station with outdoor switchgear of 500 kV in the power station. The project is to be implemented with funding of the Islamic Development bank and it is expected to start in 2009.

 

5. Construction of gas-turbine unit in Tashkent Heat Power Station. The purpose of this project is enhancement of the efficiency of the work, reliability of heat and power supply for consumers and meeting the growing demand for power.

 

Tashkent Heat Power Station consists of the five steam boilers with total steam productivity of 415 tons/hour constructed from 1939 till 1955, steam turbine with installed capacity of 30 MWT built in 1954, and seven water boilers with a total heat productivity of 650 Gcl/h constructed from 1963 till 1969.

 

The feasibility study of the project has been prepared by the institute “Teploectroproject” and it foresees the construction of three gas-turbine units with 25 MWT water boiling utilizer, reconstruction of the existing boilers PTVM-100 to increase the productivity of the boiler to 120 Gcal/h. Financing for the purchase of necessary equipment is to be provided by the Japanese Bank of International Cooperation.

 

6. Construction of external power supply objects of Tashkent. The purpose of this project is ensuring the provision of power for the new consumers in the central part of Tashkent and enhancing the reliability of power supply. Preliminary feasibility study has been prepared and is being reviewed.

 

7. Transfer of the Novo-Angren Heat Power Station for the around the year use of coal. Novo-Angren Heat Power Station has 7 power generating units with capacity of 300 MWT. Natural gas, coal, and mazut are used as a fuel.

 

 

Procurement Methods

 

Major involvement of foreign contractors and suppliers is expected for the maintenance, reconstruction and development of the power generation and transmission facilities. The procurement of the foreign contractors for each project or assignment shall be implemented through open tender process. The rules of the tender are described in the Resolution of the Uzbek Government No. 456 issued in November 2000. However, the bidder with an attractive proposal for financing sources, such as long-term loan arrangement, can apply for exceptional preferences in the tender. The tenders for each project and assignment will be announced in the domestic and international press.

 

B. Competitive Analysis

 

I.         Domestic Production.

 

Most of the equipment for the power industry was produced in Russia, other parts of the former Soviet Union and by Soviet trading partners in Central and Eastern Europe. There is only limited specifications of this equipment were produced in Uzbekistan.

 

The Uzelectroaparat Factory in Tashkent produced switchboards and other small devices for power stations. Another plant - Uzbekcable - producing cooper-wire cables for the power-transmission lines.

 

Currently above companies have old technology and no capability to meet required quality and reliability standards.

 

II.        Third Country Import

 

As noted above German Siemens won the tender and completed the reconstruction for two (out of ten) turbines of the Syrdarya Thermal Power Station in 2002. The project on modernization of these two units increased the plant's capacity by 600 megawatts. At the present time, the established capacity of the Syrdarya plant is 3000 MW. The project, estimated at $45.44 million, was partially financed by a $27.8 million loan from the European Bank for Reconstruction and Development.

 

Another German Company - "ABB Kraftwerker Berlin" - together with its local partner has won the tender for repair of steam turbines, pumping equipment and generators at the Novo-Angren Power Station.

 

III.      U.S. Market Position

 

U.S. companies have not been involved directly in reconstruction and development projects in the power generating industry of Uzbekistan. There are also no records of direct imports from U.S. in this sector.

 

C. End-User Analysis

 

The largest consumer of power equipment and services in Uzbekistan is directly or indirectly “Uzbekenergo” – the state owned monopoly producer, electricity grid operator, and seller. Since Uzbekenergo’s legal status is state owned joint stock company, it would be right to say that the electric power generation industry of Uzbekistan is a state-controlled sector.

 

According to World Bank, the Central Asian Republics (CARs) will need to get an intra-regional agreement on electricity transit in place for having access to export markets including Pakistan, Iran and some other countries. Major new power generation projects in Central Asia will only be feasible if there is assured access to export markets outside the region. Western investors currently view the new generation projects as high-risk ventures. Pakistan and Iran have the added attraction of experiencing their peak demand in the summer when the largest potential electricity surpluses exist in Central Asia. Once agreements are in place they will then have to be carefully managed to ensure the benefits from intra-regional trade are optimized. Access to these markets like Afghanistan, Pakistan, Iran, China and Russia will particularly benefit the Kyrgyz Republic and Tajikistan since they are the countries with the potential to export significant quantities of electricity. Uzbekistan (and to some extent Kazakhstan), have the potential to export thermal power in the winter and also benefit in their role as prospective transit countries and as potential power traders.

 

d. market access
 
I.         Business environment
 
The Government of Uzbekistan generally welcomes joint-venture initiatives. Since the Government is more interested in bringing in new technology and the development of this industry, it welcomes any interests of foreign companies by offering tariff exemptions for the import of equipment.
 
In some cases local joint venture partners depend on their foreign partners to shoulder the majority of capital investment (because they often have little working capital and face high interest rates from local banks). However, large investment projects, approved and guaranteed by the government, create an opportunity for the export of machinery, equipment, parts, materials, consumables as well as a technical assistance on import duties free base.

The rapid pace of change and the high degree of uncertainty in the legal and regulatory environment may present significant problems for U.S. business in Uzbekistan. Legislation often contains exclusions and exceptions and the authorities are frequently able to issue special regulations or grant permissions or, vice-versa, ban on a case-by-case basis. Therefore, U.S. firms operating in Uzbekistan are advised to use a capable and experienced local partner or attorney.

Some concerns of foreign firms, entering in to the country, should be focused on the underdeveloped level of banking, telecommunications, and transportation networks.

 
II.        Financing
 
All projects for the reconstruction and development in the Energy sector are included in the Investment Programs of Uzbekistan. It was determined that these projects would be financed by Uzbekenergo's internal funds, foreign and commercial loans, investments and other sources. The Government of Uzbekistan decrees that all receipts from privatization in the sector shall be reinvested to the renovation projects.
 
Bulk of financing for the upgrade of the power sector of Uzbekistan currently comes for Japanese Bank of International Cooperation, Arab financial institutions, Islamic Development Bank, and Asian Development Bank.
 

III.      Major Trade Events

 

1.         International Exhibition “Clean Energy. Energy Saving”

 

3rd International Exhibition “Clean Energy. Energy Saving” in Uzbekistan organized by International Exhibition Group (IEG) with support of SJSC “Uzbekenergo” and the Technology Transfer Agency.

 

March 12-14, 2008

Intercontinental Hotel

Tashkent city, Uzbekistan

 

Clean Energy. Energy Saving 2008 is specialized exhibition of energy saving technologies, equipment for eclectic and thermal power production on renewable power resources (RPR) base, power conversion and distribution.

 

Contacts:

 

IEG Uzbekistan

Noila Muzafarova – Project Manager

Ph.:   +(998-71) 138 59 82

Fax:   +(998-71) 138 59 88

Mob.  +(998-93) 381 07 82

E-mail:  noila@ieguzexpo.com

Web: www.ieguzexpo.com

 

2.         International Exhibition Power Uzbekistan 2007

 

3rd International Specialized Exhibition "Energy, Energy saving, Electrotechnical equipment, Information and measuring equipment, Cables, Lighting, and Modern technologies in electric energy".  Power Uzbekistan 2008 will be organized by International Trade and Exhibitions (JV) Ltd. (UK) and ITE Uzbekistan. ITE is a leading international organizer of exhibitions and conferences in the new markets of CIS countries and Eastern Europe.

September 23-25, 2008

Tashkent, Uzbekistan

Uzexpocenter

 

The objectives of the exhibition are to demonstrate scientific and industrial equipment to be used in the energy sector of Uzbekistan, attract more partners and customers, broaden the range of goods produced by domestic and foreign manufacturers, and increase cooperation between enterprises, organizations, firms and investors.

 

The theme of the exhibition allows demonstrating development and potential in key economy-forming sectors of industry such as power engineering, electric equipment, building and construction, communication, oil-and-gas complex, and housing and utilities infrastructure.

 

Contact:

Shakhnoza Nizamova

Project Manager

Tel. : + 998 71 113 01 80

Fax: + 998 71 152 51 64

E-mail : shakhnoza_nizamova@ite-uzbekistan.uz

 

 

E. U.S. Department of Commerce Contact 

U.S. companies and individuals interested in learning more about the consumer goods market in Uzbekistan may obtain additional information from BISNIS representative in Uzbekistan. BISNIS offers advisory services and logistical support to assist U.S. companies entering this emerging market.  For additional information about how BISNIS can help your business, or for answers to specific questions, please direct inquiries to

 

Mr. Jahangir Kakharov, 

BISNIS Representative in Uzbekistan

Telephone: 998 71 143-51-54

Fax: 998 71 143-51-54

E-mail: bisnis.tashkent@xnet.uz

 

For more information on Uzbekistan, visit BISNIS online at http://www.bisnis.doc.gov/bisnis/country/Uzbekistan.cfm

 

BISNIS (www.bisnis.doc.gov) is part of the U.S. Commercial Service (www.export.gov).