Uzbekistan is preparing a major upgrade of its electricity network after signing a $200 million loan agreement with the Asian Development Bank (ADB). The financing will support the modernization of 60 substations and the introduction of digital power-grid management systems, according to the international lender.
The agreement was signed by ADB President Masato Kanda and Uzbekistan’s Deputy Prime Minister and Minister of Economy and Finance Jamshid Kuchkarov. It is the first energy project to be implemented under the ADB and World Bank Framework for Full Mutual Reliance, creating an opportunity for the two institutions to coordinate their financing and project procedures more closely.
Grid capacity under pressure
The project comes as Uzbekistan’s expanding economy and rapidly growing cities place additional pressure on the national power system. Reconstruction and modernization works are expected to reduce resource losses, ease transformer overloads and improve the reliability of electricity supplies. The programme will also strengthen the operational capabilities of JSC National Electric Grid of Uzbekistan.
According to the project targets, the upgraded infrastructure should create the capacity to connect at least 3.3 GW of renewable-energy generation to the grid. It is also expected to reduce greenhouse-gas emissions by nearly 23,000 tonnes of carbon-dioxide equivalent annually.
The programme includes professional training for the national grid operator, as well as measures to improve management and financial-control systems. ADB described the initiative as a continuation of its long-term support for Uzbekistan’s energy sector. Since 2010, the bank has provided the country’s government with more than $3.4 billion for similar initiatives.
“Ensuring reliable electricity supply is one of the key commitments of a modern economy to its people. This agreement will help Uzbekistan fulfil that commitment amid rising demand. Strengthening the grid will improve the reliability of electricity supplies to households, businesses and public institutions, while also enabling more electricity from renewable sources to be transmitted,” said ADB President Masato Kanda.
Potential for additional financing
ADB is the lead lender for the programme, although the World Bank may join the financing effort. A proposal for an additional $100 million in funding for Uzbekistan is expected to be submitted to the World Bank’s Board of Executive Directors for approval in October.
Uzbekistan became an ADB partner in 1995. Over three decades of cooperation, the institution has provided the Central Asian country with loans, grants and technical assistance worth a combined $15 billion.
For international companies in construction, electrical equipment, engineering, digital infrastructure, renewable energy and industrial development, the project signals a growing pipeline of opportunities linked to Uzbekistan’s power-grid modernization. More reliable transmission capacity could also improve operating conditions for factories, commercial facilities, logistics hubs and real-estate projects, while the planned integration of additional renewable generation may attract further investment into the country’s energy and infrastructure markets.
