Sunday, 25, February, 2024

Ministry of Energy posted a draft government resolution on the phased transition to market mechanisms in the energy prices for public input. The resolution unveils plans to liberalize gas and power prices for legal entities from October 1.

Power

The cost of 1 kWh of electricity for consumers of groups I and II - Navoi Mining and Metallurgical Combine, Olmaliq MMC, Uzbek Metallurgical Combine and their subordinate enterprises, budget-financed organizations, as well as pumping stations - will increase from 450 to 1000 soums, or up to 8 cents (2.2 times), for other legal entities (companies) - from 450 to 900 soums (2 times).

The cost of 1 kWh of electricity for the population will remain unchanged - at 295 soums, or 2.4 cents.

For households living in apartment buildings and dormitories centrally equipped with electric stoves for cooking, the price also remains unchanged - 147.5 soums.

Natural gas

The price of one cubic meter of natural gas supplied to households shall not change - 380 soums, as well as the price for liquefied gas - 1,120 soums.

In the absence of measuring meters, a cubic meter of gas supplied for cooking and hot water supply will cost 660 soums (does not change), for heating - from 380 soums (does not change).

The price of one cubic meter of gas for Navoi MMC, Olmaliq MMC, Uzmetkombinat and budgetary organizations will increase from 660 to 1800 soums (2.7 times). For other legal entities, the price will increase from 660 to 1,500 soums (2.3 times).

Attempt to liberalize the energy market

The last time gas and power prices were increased in Uzbekistan was in August 2019. Liberalization of energy prices and reform of the energy sector have been repeatedly postponed.

The government planned to increase electricity and gas prices in February-March 2020, but postponed this measure due to the coronavirus pandemic. In October 2020, the chairman of Regional Electric Networks, Ulugbek Mustafoev, reported that the president had set the task of not increasing electricity prices in 2021-2022.

In May 2022, authorities reported that there were 7.3 million electricity consumers in Uzbekistan, of which 80% consume an average of up to 200 kWh per month. However, these households account for only 31% (5.7 billion kWh) of the total electricity consumed by the population.

85% of 4 million gas subscribers consume an average of up to 500 cubic meters per month. However, they account for only 35% (4.5 billion cubic meters) of total population consumption.

The government had plans to introduce a social norm for energy consumption and caps from July 15, 2022, as the bulk of government subsidies go to those who consume more, but later delayed a decision on this.

At the end of last year, the president called it necessary to introduce market prices for energy resources with support for vulnerable segments of the population.

In February, Deputy Head of the Central Bank Bekhzod Khamraev reported that liberalization of prices for electricity and gas was expected in May. At the end of March, Deputy Head of the Ministry of Economic Finance Dilshod Sultanov said that there were no plans to increase energy prices in 2023, but this issue was being discussed.

Economist Bekhzod Khoshimov noted that the current energy pricing policy of Uzbekistan leads to the fact that the poor will be getting poorer while the rich will get richer. Billions of dollars in subsidies to energy companies to support non-market prices favor the rich, he said.

Moreover, due to low prices, energy companies are suffering multi-billion dollar losses.

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