Uzbekistan to Introduce RAB-Based Energy Tariff Model

Tashkent, Uzbekistan (UzDaily.com) — The Government of Uzbekistan plans to introduce a new methodology for setting electricity and natural gas tariffs based on the Regulatory Asset Base (RAB) model. The Ministry of Economy and Finance stated that the reform is aimed at improving pricing transparency and attracting long-term investment into the energy sector.

According to the ministry, the RAB model calculates tariffs not only on the basis of companies’ current operating costs, but also by taking into account the value of their regulated assets. These assets include networks, substations, equipment, gas pipelines, and other infrastructure used to provide services.

The ministry emphasized that the introduction of the new system is part of broader reforms in the energy sector aimed at strengthening energy security, improving management efficiency, and creating conditions for infrastructure modernization. It noted that rising demand for electricity and gas requires network expansion and private capital investment, which is not possible without a transparent regulatory framework.

According to the Ministry of Economy and Finance, the transition to RAB will make tariff regulation more predictable for both consumers and companies, and will increase the investment attractiveness of the sector. It is expected to improve the financial condition of fuel and energy enterprises, enhance their creditworthiness, and support the transition to international financial reporting standards.

The ministry also stated that implementation of the new model will be accompanied by a shift toward long-term tariff regulation periods. In the initial stage, the period will be one year, with a gradual extension to five years, which is expected to provide more stable conditions for businesses and investors.

Under the preliminary parameters, the regulated asset base will include fixed assets, intangible assets, and working capital defined on the basis of financial statements prepared in accordance with international standards. Assets received free of charge, unfinished construction projects, and equipment not put into operation within established timeframes will be excluded.

Operating expenses of companies will be reviewed by the regulator as part of tariff applications, taking into account inflation and targeted energy efficiency indicators. The weighted average cost of capital (WACC) after tax, according to the ministry, will range between 14% and 16% depending on the enterprise.

The Ministry of Economy and Finance noted that following the implementation of the system and previous tariff adjustments, a gradual move toward cost recovery levels in the sector is expected. At the same time, increases are projected for specific components: electricity generation by approximately 9%, transmission by 30%, electricity distribution by around 10%, and natural gas distribution by around 23%. The ministry clarified that these figures relate to separate stages of the value chain and do not represent a direct change in end-user tariffs.

Part of the costs exceeding current consumer tariffs is expected to be covered by the state budget. The ministry also noted that the RAB system will allow investment in network modernization, digital metering, and loss reduction to be included in the regulated asset base, provided such investments are approved by the regulator. This will enable companies to earn a regulated return on invested capital, which is expected to stimulate the modernization of the country’s energy infrastructure.