The Electricity Sector Transformation and Resilient Transmission Project was officially launched today in Tashkent. It will help improve the performance of the National Electric Grid of Uzbekistan JSC (NEGU) to ensure reliable energy supplies to millions of households and businesses across the country.
In June 2021, the project was approved by the World Bank’s Board of Executive Directors and will be supported by $380 million in credit from the International Development Association (IDA), and a $43 million loan from the Green Climate Fund (GCF) under the Sustainable Renewables Risk Mitigation Initiative Facility. The Government of Uzbekistan will receive this financing at very low-interest rates and with the longest repayment period of up to 40 years. The GCF will also provide a $4 million grant to cover selected project activities.
In February 2022, a Presidential Decree “On measures to implement the Electricity Sector Transformation and Resilient Transmission Project with the participation of the World Bank, as well as to develop and improve the efficiency of the system of backbone electric networks of the republic” was adopted. The document has created legal, administrative and organizational basis for launching the relevant activities provided by the project.
In Uzbekistan, electricity demand is expected to grow to over 100 TWh by 2030, a significant increase from 61 TWh in 2018. The country has more than 250,000 km of electricity transmission and distribution lines, most of which were built during the Soviet period and are now past their useful economic life. The obsolete infrastructure results in high electricity losses, estimated at 20 percent of net generation, and frequent power outages undermining economic activities and the well-being of citizens across the country.
“This new transformational project will be implemented under a recently approved World Bank’s Country Partnership Framework for 2022-2026, which, among other priorities, also aims to support Uzbekistan’s transition to a green economy,” said Marco Mantovanelli, World Bank Country Manager for Uzbekistan. “It supports the Government’s goal of removing barriers to the effective operation and growth of the electricity sector. The project activities will help modernize the national power transmission system and will ensured reliable electricity supply for approximately 32 million consumers.”
“The project will create the conditions necessary for transforming NEGU into a modern and commercially run company, as well as enabling grid integration of new large-scale renewable energy projects developed with private sector participation into the national power transmission system. It will also support the Government’s efforts in transitioning towards a competitive electricity market and establishing a robust regulatory foundation in the energy sector,” noted Dadajon Isakulov, Chairman of the NEGU’s Board.
The project will allow to modernize outdated energy infrastructure by financing a part of NEGU’s priority investment program. This will include rehabilitation, upgrade, and expansion of 22 existing obsolete high-voltage substations and construction of a new 500 kV transmission substation and associated transmission lines in 11 regions of Uzbekistan.
The project also will introduce modern digital and telecommunication technologies and solutions to improve the process of monitoring, control, and operation of the power transmission system. This will include the installation of a new Supervisory Control and Data Acquisition (SCADA) and Energy Management System (EMS) for NEGU’s central and regional dispatch centers to replace the outdated systems placed in operation during the Soviet era.
Given the company’s strategic role in the electricity sector, the project will support the transformation of NEGU by developing its business processes, financial, operational, and commercial performance, digitalization, as well as institutional capacity. This will include activities to improve the company’s operation and planning functions, corporate governance and decision-making processes, and cybersecurity management.
The project aims to support the country in its clean energy transition by improving the transmission network’s capacity to integrate renewable energy produced by the private sector. It will contribute to the Government’s plans to decarbonize the electricity sector. The project will directly support the integration of 1,500 MW of renewable energy into the power grid leading to additional CO2 emissions reduction. It will also help mobilize private investments in the country’s renewable energy sector.
The project will also contribute to the development of regional electricity trade in Central Asia by rehabilitating and expanding transmission infrastructure connecting Uzbekistan with Afghanistan, Kazakhstan and Tajikistan’s electricity systems.
