On September 28, 2023, President Shavkat Mirziyoyev of Uzbekistan signed a pivotal decree that marks a significant milestone in the country's energy sector. The decree, titled "On Measures to Carry Out the Next Stage of Reform in the Energy Sector," introduces a series of transformative changes aimed at modernizing and streamlining Uzbekistan's electricity market. Among the key provisions of this decree is the establishment of Uzenergosotish, which will play a central role in the centralized purchase and sale of electrical energy.
Uzenergosotish: Centralized Electricity Procurement and Sales
The newly created Uzenergosotish is tasked with the centralized purchase and sale of electrical energy within Uzbekistan. This move is expected to enhance efficiency and transparency within the energy market, ultimately benefiting both producers and consumers. The company is set to gradually assume control of these functions, starting from July 1, 2024.
National Electric Networks of Uzbekistan: Backbone Electricity Transmission
Under the reform decree, National Electric Networks of Uzbekistan is designated as the operator responsible for managing the unified backbone electricity transmission system. National Electric Networks of Uzbekistan will specialize in the transportation and transit of electricity, ensuring the seamless flow of power across the nation. However, its role in centralized purchase and sale of electricity will be phased out by July 1, 2024, as this function is transferred to Uzenergosotish. By January 1, 2025, National Electric Networks of Uzbekistan's responsibilities related to contracts for the export and import of electricity will also be transferred to Uzenergosotish.
During the initial stages of transitioning to a wholesale electricity market, Uzenergosotish will purchase electricity from producers and sell it to territorial power grid enterprises and large consumers at established tariffs. This step is crucial in ensuring a smooth and controlled shift toward a more competitive and market-driven electricity sector.
Online Trading Platform and Export-Import Operations
In the subsequent phase, electricity trading will occur through an online platform, where prices will be determined by supply and demand dynamics. Uzenergosotish will also oversee the export and import of electricity through contractual arrangements, contributing to Uzbekistan's energy market integration with neighboring countries.
The National Electric Grids, while relinquishing its role in centralized electricity procurement and sales, will continue to play a critical role in maintaining the reliability and stability of Uzbekistan's unified electric power system. Their responsibilities include providing electricity transmission services via main power grids at approved tariffs, developing backbone networks, and facilitating integration with neighboring energy systems.
Regulatory Framework and Agency for Energy Market Development
To support the transition to a more competitive and dynamic energy market, a comprehensive regulatory framework is set to be established. By March 1, 2024, a package of documents will be adopted to provide legal provisions for the wholesale and retail electricity markets, as well as licensing procedures for market participants. Furthermore, the decree creates the Agency for the Development and Regulation of the Energy Market, which will oversee the gradual formation of these markets, promote healthy competition, and approve tariffs and payment structures for electricity transmission and distribution.
Uzbekistan's energy sector is embarking on a transformative journey, driven by President Shavkat Mirziyoyev's decree to reform and modernize the industry. The creation of Uzenergosotish, the transition to a wholesale electricity market, and the establishment of regulatory mechanisms signal the country's commitment to fostering a competitive and efficient energy market.
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