Attracting international capital into Uzbekistan's energy sector will require further liberalization of electricity prices, full-scale implementation of RAB-based regulation, and a clearer legislative framework, according to Marius Dan, Central Asia CEO of Templeton Global Investments. He made the remarks on August 24 at the Silk Road Finance & Technology Forum in Tashkent.
Dan's firm manages Uzbekistan's National Investment Fund (UzNIF), the state investment vehicle at the center of the country's push to modernize its state-owned enterprises and open them to foreign capital.
He said the growth of artificial intelligence, the digital economy and the country's population would all place increasing strain on energy infrastructure.
"Ultimately, all of this will run on electricity. As the National Investment Fund, we hold assets in the energy sector, and we want to make sure our companies are ready for that. That means substantial capital investment in distribution networks, generation, transmission and transport infrastructure," Dan said.
One of the fund's goals, he said, is to prepare its portfolio companies to raise capital on international markets to finance these investments.
Reform of a fragmented regulatory system
Achieving that, the Franklin Templeton representative stressed, will also require reform of energy sector regulation.
"We're talking about liberalizing electricity prices and fully implementing a regulated asset base — RAB — methodology for distribution and transmission networks, so that these companies have sufficient incentive to keep investing in the grid," Dan said.
He noted that the need for investment is being amplified by economic growth, a rising population and the country's continued digitalization.
Asked by the moderator whether the energy system would be able to keep pace with rising demand — given the need to simultaneously scale up capital investment, reform prices and overhaul the regulatory system — Dan acknowledged there was still a great deal of work ahead.
"There's a lot still to be done, and much of it depends on how quickly the government is willing to move on putting the right legislative framework in place — one that creates the right incentives for these companies," he said.
He noted that private capital had already been drawn into the energy sector in recent years through power purchase agreements (PPAs), but said state-owned energy companies also need to become more attractive to investors and improve their ability to raise financing.
"Some steps have already been taken this year, especially with the initial rollout of the RAB mechanism, but much more clarity needs to emerge before the end of the year — at least, that's what we're hoping for as a fund. Because that will determine how much capital these companies are able to raise and then invest in the grid, in order to meet rising demand in time," he said.
"The last thing we want is to run into electricity shortages, or problems with transmission and distribution," Dan added.
UzNIF's stake in the outcome
The comments underscore how directly UzNIF's own fortunes are tied to the pace of Uzbekistan's energy reforms. The fund holds stakes in five energy companies: 40 percent of Uzbekgidroenergo, 40 percent of Uzbekistan's National Electric Grids, 40 percent of Regional Electric Networks, 25 percent of Thermal Power Plants, and 40 percent of Hududgaztaminot.
UzNIF was established by presidential decree in August 2024 and holds minority stakes — typically 20 to 40 percent — in 18 state-owned enterprises and commercial banks spanning banking, energy, telecommunications, transport and utilities. Franklin Templeton was brought on in May 2025 as trustee and asset manager, tasked with overhauling the corporate governance and financial performance of those companies ahead of a planned listing on the Tashkent and London stock exchanges. Energy assets account for roughly a fifth of the fund's portfolio by investment weight, according to Franklin Templeton, with transportation the largest single category.
The fund's mandate — and its credibility with international investors — depends heavily on whether Uzbekistan's state energy companies can be made commercially viable enough to attract outside financing. That, in turn, hinges on the tariff and regulatory reforms Dan described.
What RAB regulation would change
In May, Uzbekistan's Ministry of Economy and Finance announced plans to introduce a regulated asset base (RAB) methodology for calculating electricity and gas prices. Under this system, prices would be calculated not only based on a company's current operating costs, but also on the value of its regulated assets — networks, equipment, substations, gas pipelines and other property required to deliver the service.
Once the new methodology takes effect, the cost of electricity generation is projected to rise by roughly 9 percent, transmission services by about 30 percent, electricity distribution by roughly 10 percent, and natural gas distribution by about 23 percent. These projections refer to the cost of individual links in the supply chain, not directly to prices charged to households. Any portion of production, transmission and distribution costs that exceeds the prices set for end users is expected to be covered by the state budget.
For a company managing regional electric networks, RAB regulation could serve as a mechanism for recovering investment through the tariff model. In practice, this means that a management company's spending on grid repairs, new transformers, digitalized metering, loss reduction and improved supply reliability could be included in the regulated asset base, provided the regulator deems those investments justified and efficient. In that case, the company becomes entitled to a set rate of return — for instance through WACC, which the Ministry of Economy and Finance has set at 14–16 percent after tax, depending on the enterprise.
Igor Alekseev, managing director and partner at Boston Consulting Group (BCG), said in October 2025 that the rollout of RAB-based prices had been planned for 2027–2028 — a timeline that leaves a narrow window for the "clarity" Dan said investors are waiting on before the end of this year.
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