Uzbekistan to reform energy sector
18/05/2022 21:10
Uzbekistan to reform energy sector
18/05/2022 21:10
Tashkent, Uzbekistan (UzDaily.com) -- Over the past 5 years, the volume of electricity production in Uzbekistan has increased from 61 billion kWh to 72 billion kWh, or 1.2 times. At the same time, the volume of electricity delivery to the population increased from 11 billion to 16 billion kWh, or 1.5 times.
Despite this, according to calculations, the unfulfilled demand of the republic for electricity in 2021 due to the presence of problems with the supply infrastructure is 2-3 billion kWh.
In addition, the need to reform the energy market and the energy supply system is due to the following factors:
Most of the power units of thermal power plants (TPPs) have been in operation for more than 25 years, their coefficient of performance (COP) is low (25-35 percent) and consume 2 times more fuel than modern combined cycle equipment (COP - 55-60%).
In particular, over the past three years, the volume of natural gas supplied to thermal power plants to generate electricity has increased from 15 billion cubic meters to 17 billion cubic meters.
The volume of natural gas supplies to the population during this period also increased from 10 billion cubic meters to 13 billion cubic meters.
It should be noted that in order to meet the demand of the domestic market for natural gas, export volumes have declined sharply.
For example, in 2019, natural gas exports amounted to 12.2 billion cubic meters, and this year it is planned to reach 3.3 billion cubic meters. In addition, during this period, the volume of natural gas imports increased from 0.2 billion cubic meters to 4 billion cubic meters.
That is, the growing demand of consumers of the republic is satisfied from year to year by increasing the volume of natural gas purchased at free market prices.
This also increases the amount of direct and indirect costs to maintain the current level of subsidized (or below the actual cost) natural gas tariffs from the state budget.
The low capacity of the existing transmission lines and the main part of the transformers does not give consumers the opportunity to supply electricity in sufficient quantities.
This is also due to the high level of obsolescence of distribution networks and transformers, which leads to numerous power outages and deterioration in power quality indicators.
To date, in some areas, the level of loading of transformers exceeds the established technical standard of 80%.
Excessive loading of transformers in 101 cities and districts of the republic exceeds the established technical standards, which threatens to make it impossible to fully provide the population and new investment projects with electricity and increase the number of power supply failures in the regions.
In particular, the load level of transformers in Tashkent region is 95%, Andijan region - 92%, Tashkent city - 90%, Namangan region - 84%.
The fact that prices are not formed on the basis of market mechanisms and the obsolescence of fixed assets leads to a deterioration in the financial condition of enterprises in the industry.
In particular, in 2021, the Uztransgaz companies ended the year with a loss of 2.5 trillion soums and the National Electric Grids of Uzbekistan - 2.1 trillion soums.
It should be noted that the losses of these state-owned enterprises and their financial obligations will eventually lead to a direct and indirect increase in the state budget expenditures.
In terms of low electricity prices, Uzbekistan ranks 7th in the world after Libya, Angola, Sudan, Kyrgyzstan, Zimbabwe and Tajikistan (in Kyrgyzstan and Tajikistan, most of the electricity is generated by hydroelectric power plants, so it is cheaper).
Taking into account that the cost of 1 kWh of electricity is 800 soums, on average, households using 200 kWh of electricity per month receive a conditional subsidy of 101 thousand soums, and families using 400 kWh of electricity - 202 thousand soums.
In other words, the current tariffs mainly lead to the fact that subscribers whose incomes are relatively high and, accordingly, consume more energy resources, are provided with a large amount of conditional subsidy.
For example, users of 2-3 air conditioners, more than one refrigerator, computer and other electrical appliances at the same time, i.e. households with high solvency consume correspondingly more electricity. As a result, these homes receive more conditional subsidies.
In total, there are 4 million natural gas subscribers in the country. 85 percent of these households, or 3.4 million subscribers, consume an average of up to 500 cubic meters of natural gas per month. However, they account for only 35 percent (4.5 billion cubic meters) of the total consumption of the population.
There are also 7.3 million electricity subscribers. 80 percent of them consume an average of up to 200 kWh of electricity per month. However, these households account for only 31 percent (5.7 billion kWh) of the total electricity consumed by the population.
For example, if we take into account that today the cost of 1000 cubic meters of natural gas is 1.4 million soums, then on average households using 500 cubic meters of gas per month receive 500 thousand soums per month of conditional subsidies, but households using 1000 cubic meters of gas receive 2 times more or 1 million soums of conditional subsidy.
To meet the demand arising from population growth and the sustainable development of the economy, it is necessary to create additional capacities for the production of energy resources.
For example, it is calculated that by 2030 the annual demand of consumers of the republic for natural gas will increase from the current 54.2 billion cubic meters to 65 billion cubic meters.
In the electric power industry, this indicator is expected to increase from the current 74 billion kWh to 110 billion kWh. To provide 110 billion kWh of electricity per year, additional construction of new power plants with a capacity of 19 GW is required.
To create additional capacities for the above energy resources, at least US$25 billion is needed.
However, the current financial condition of JSC "Uzbekneftegaz" and JSC "Thermal Power Plants" does not allow the implementation of projects of this magnitude.
At the same time, the attraction of credit funds to these enterprises, in turn, will lead to an increase in the volume of the external debt of the republic.
Based on this, the widespread attraction of private investments to the industry, including on the basis of the principles of public-private partnership, is the only way to create new capacities in the future.
At the same time, one of the most important conditions for attracting private investment in the energy sector is the sale of electricity generated with their participation at cost-effective, that is, favorable prices.
Based on the foregoing, in order to ensure sustainable and complete satisfaction of the republic’s growing needs for energy resources from year to year and the inflow of private investment into the industry, it is necessary to gradually reform the republic’s energy market.
Of course, in this transitional period of reforms, based on the interests of the low-income and low-income segments of the population, social protection measures are being developed.
In addition, separate additional measures will be taken to support socially vulnerable segments of the population, including recipients of pensions and child benefits.
It should be noted that the practice of “conditional subsidizing” by the state of energy prices will continue. However, in order to increase the effectiveness of social protection in the distribution of “conditional subsidies”, the “social norm” system will be introduced throughout the country.
For information, the social norm of energy consumption is understood as a certain amount of energy paid by the population at a reduced rate. That is, it is sold at a relatively low (preferential) price up to a certain set amount, and above this amount it is sold at a free market price.
Reforms in the energy sector will lay the foundation for establishing tariffs for natural gas and electricity on the principles of social justice, as well as for ensuring the continuity and expansion of energy supply to the population and our businesses.
The corresponding draft normative legal act will be submitted for public discussion in the coming days. All opinions and suggestions will be studied.
25/04/2024Read more
$ 1 | 12697.00 | 0.000% |
1 | 13547.70 | 0.000% |
₽ 1 | 135.05 | 0.000% |