February 5, 2019

On February 1, 2019 The President of Uzbekistan signed the decree and resolution on the establishment of a new Ministry of Energy. These novelties aim to reform the country’s Oil & Gas and Power sectors. Remarkably, and for the first time, the Government is bringing the Oil & Gas and Power sectors under a single ministry, which is largely logical and natural, considering that more than 80 percent of the country’s power production relies on natural gas.

The main tasks of the new Ministry are:

  1. To develop and implement a single state policy in the Oil & Gas and Power industry aimed to ensure the country’s energy security;
  2. To provide a sustainable supply to industries and consumers of fuel and energy resources, wide promotion and development of renewable energy sources;
  3. To implement state regulation of the production, transmission, distribution and consumption of electric and thermal energy and coal, as well as the extraction, processing, transportation, distribution, sale and use of Oil & Gas and their products;
  4. To implement a single regulatory and technical regulation of the power sector in Uzbekistan;
  5. To create and develop a balanced system of strategic planning and development of the Oil & Gas and Power complex, increasing and diversifying the production of energy resources;
  6. To increase the investment attractiveness of the fuel and energy industry through the development of PPPs;
  7. To improve the tariff policy stimulating the formation of a favorable competitive and business environment in the energy market;
  8. To coordinate the implementation of investment projects in the fuel and energy industry;
  9. To involve private capital actively in the processes of extracting and producing energy resources, establishing cooperation with international financial institutions, donor countries, companies, banks and other structures. 

In addition, as the authorized state agency, the Ministry is responsible for the implementation of:

  • Production sharing agreements on issues related to its main activities;
  • A unified state policy in the use of renewable energy sources;
  • A unified state policy and strategic directions in the development and use of nuclear energy;
  • Modern energy-efficient and energy-saving technologies in government agencies and organizations, as well as monitoring the efficiency of energy consumption. 

In this regard, the “National Energy Saving” company is to be liquidated. The following institutions previously subordinated to the Cabinet of Ministers were transferred to the structure of the Ministry of Energy:

  •  Atomic Energy Development Agency - Uzatom;
  • Inspectorate for the control of the use of petroleum products and gas (previously – the State Inspectorate for the control of the use of petroleum products and gas);
  • Inspection on control in electric power industry (previously – the State inspection on supervision in electric power industry). 

At the same time, there are plans to make the following amendments and additions to the law:

Planned amendment or addition Implementation date
development and approval of the restructuring model of the electric power industry as a whole (with technical assistance from the World Bank) by March 1, 2019
development and approval of the restructuring model of Uzbekenergo by March 15, 2019
development and approval of the restructuring model of Uzbekneftegaz by April 1, 2019
During the restructuring of Uzbekenergo and Uzbekneftegaz, provision was made for the formation of separate state-owned enterprises for the operation and development of the trunk gas transmission system and trunk electric networks.
a Concept for the Development of Renewable Energy Sources in the Republic of Uzbekistan for the period 2019-2023 by May 1, 2019
a portfolio of investment projects on the development of renewable energy sources by October 1, 2019

Under the Ministry, an extra-budgetary fund for the development of the fuel and energy sector is formed (without the status of a legal entity):

Sources of the Foundation Directions of use of the Fund
the amount of fines in full, charged by the Uzneftegazinspektsiya and Uzenergoinspektsiya in the manner prescribed by law from business entities, their officials and citizens for violating energy legislation; enhancing the material and technical base of the Ministry of Energy, Uzneftegazinspektsiya and Uzenergoinspektsiya;
proceeds from the placement of temporarily free funds of the Fund on deposits of commercial banks; material incentives and social protection of employees of the Ministry of Energy, Uzneftegazinspektsiya and Uzenergoinspektsiya;
other income not prohibited by law. training, retraining, advanced training and internships for employees of the Ministry, Uzneftegazinspektsiya and Uzenergoinspektsiya, including the organization of visits to foreign countries, participation in international conferences, seminars and other events;
  other activities aimed at developing the activities of the Ministry.

We believe that this, as a part of wider administrative and institutional reforms in Uzbekistan, will pave the way for the unbundling of the power sector, the creation of an energy market, privatization and introduction of IPPs. This in turn should help to diversify the energy mix and create a more sustainable institutional framework for the long term.

Your Key Contacts

Eldor Mannopov

Country Managing Partner, Tashkent

D +99 878 150 31 05

eldor.mannopov@dentons.com

 
Bobur Shamsiev

Partner, Tashkent

D +99 878 150 31 05
M +99 890 358 97 63

bobur.shamsiev@dentons.com