The World Bank has allocated the first tranche of $7.5mn in grants aimed at mitigating the impact of energy tariff reforms on the country’s socially vulnerable population, Uzbekistan’s Ministry of Economy and Finance confirmed.
This grant is part of a larger initiative, spearheaded by the President of Uzbekistan, known as the Innovative Carbon Resource Application for Energy Transition Project for Uzbekistan (iCRAFT) project. The iCRAFT project, supported by the World Bank, aims to leverage innovative carbon resource management to advance energy reforms in Uzbekistan.
The $7.5mn tranche falls under the Emission Reductions Payment Agreements (ERPA) component of the iCRAFT project. The funds are intended to alleviate the financial burden on the most vulnerable segments of Uzbekistan’s population, who are likely to be most affected by the impending energy tariff reforms.
This financial support stresses the World Bank's commitment to ensuring that the transition to more sustainable energy practices does not disproportionately impact those least able to bear the cost.
The grant funds, which are designated for reducing greenhouse gas emissions, will eventually be returned to Uzbekistan in a process simulating the international greenhouse gas trade. This unique approach not only provides immediate financial relief but also integrates Uzbekistan into global carbon trading mechanisms, promoting long-term environmental and economic sustainability.
The iCRAFT project represents a pioneering global initiative to support comprehensive energy sector reforms. This collaboration between Uzbekistan and the World Bank sets a precedent for international cooperation in addressing climate change and fostering sustainable development.
In related economic forecasts, the World Bank projects robust growth for Uzbekistan's economy, with an expected expansion of 5.3% in 2024, 5.5% in 2025, and 5.7% in 2026.
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