Presidents of all countries like to leverage their state visits to sign investment deals — and Uzbekistan's President Shavkat Mirziyoyev is no exception.
Since coming to power in 2016, Mirziyoyev has made attracting international investment one of his top priorities: his government has opened new sectors of the economy to competitive tenders; tapped global debt markets with a $1 billion Eurobond; and signed a spate of investment contracts with companies from advanced industrial economies including France, Canada, and the United States. During a visit to Paris in 2018, Mirziyoyev inked 5 billion Euros in project agreements, and during his much-ballyhooed Washington visit in May 2018, his government signed over $4 billion worth of deals with major North American businesses.
But one agreement stands out, both for its sheer size and for what has since befallen a deal that Mirziyoyev’s government once heralded. During the President’s Washington visit, his team signed Uzbekistan’s largest-ever foreign direct investment (FDI) agreement with SkyPower Global, a Canada-based but majority American-owned energy company, which committed $1.3 billion to build solar energy generation capacity throughout Uzbekistan. This was not just the country’s biggest FDI deal but also the first Power Purchase Agreement on such a scale for the country.
Yet nearly two years since entering Uzbekistan, SkyPower Global is still waiting for a payment guarantee from Tashkent. In an exclusive interview with VOA’s Navbahor Imamova in Washington, the company’s CEO Kerry Adler says that without this insurance, SkyPower simply cannot work in Uzbekistan. What is needed, he says, is for the government to cover the costs if payments for generated energy are not received from SkyPower’s Uzbek state partner, UzbekEnergo.
SkyPower’s experience points to a pivotal problem facing major investors in Uzbekistan: despite considerable excitement about its transition from the late President Islam Karinov to a more open investment regime, the country still has a long way to go in terms of its credit ratings and business conditions.
For its part, SkyPower has yet to hear from the Uzbek government a formal explanation of what the problem is, even though VOA's reliable sources in Tashkent have revealed at least two major issues that the system may have with this deal now. First, the Uzbek side has had cold feet about the cost of generated power: SkyPower-produced energy will be priced a 6 cents per kilowatt hour (kWh) and more affordable offers have since come along. Second, Uzbek laws do not allow the Ministry of Finance to give a payment guarantee to a foreign company. President Mirziyoyev issued a decree in 2018, ordering the Ministry to provide such document and instructing relevant parts of the government to work with SkyPower but the legal system has not been rejiggered to permit it.
The U.S. government has urged Tashkent to honor its contracts, and hopes the issue will be resolved. The case is a crucial test for Mirziyoyev’s government, not least because of the size of the investment and the scale of the proposed project. What steps will Uzbekistan take next? VOA is expecting responses on this issue from the Ministry of Finance as well as the Ministry of Investments and Foreign Trade. As other present and potential investors anxiously watch the situation, the head of SkyPower is looking to President Mirziyoyev personally to help break the logjam.