ADB to allocate a $200 million loan to Uzbekistan to modernize its power grids

ADB to provide $200 million loan to upgrade electricity grid in Uzbekistan

The Asian Development Bank (ADB) is allocating a $200 million loan to modernize the electricity distribution system in Uzbekistan.

The loan agreement for this program was signed on October 15 in Bangkok, Thailand, by ADB President Masato Kanda and Deputy Prime Minister — Minister of Economy and Finance of Uzbekistan Jamshid Kuchkarov.

The program is directed at modernizing Uzbekistan's power distribution networks, reducing electricity losses, and improving supply reliability amid growing demand for electricity.

“Reliable power supply is one of the most basic obligations of a modern economy to its people,” said Masato Kanda. According to him, strengthened electricity networks will make it possible to provide families, businesses, and public institutions with reliable power, as well as to transmit more electricity generated from renewable sources.

Under the program, 60 critical power distribution substations across the country will be reconstructed and modernized. Digital systems will also be introduced to improve network management.

According to ADB, economic growth, urban expansion, and increasing demand for electricity among the population in Uzbekistan are placing higher loads on the grids. Aging infrastructure, electricity losses, and overloaded equipment are affecting the reliability of the power supply. This situation also makes it difficult to connect new renewable energy capacity to the grid.

As a result of the program, it is expected that electricity losses will be reduced, transformer overloads lowered, and the stability of the power supply increased. Conditions will also be created to connect renewable energy sources with a capacity of at least 3.3 GW to the power grid. Greenhouse gas emissions are planned to be reduced by nearly 23,000 tons of carbon dioxide equivalent per year.

The project is also aimed at enhancing the operational and management capacity of the networks of the joint-stock company "National Electric Grids of Uzbekistan". The program's tasks also include developing technical skills of staff, strengthening management and financial control systems, capacity building, and expanding the participation of women in the energy sector.

According to ADB, this is the bank's first program in the energy sector implemented under the Mutual Reliance Mechanism with the World Bank. It is also the first results-based lending program implemented in Uzbekistan's energy sector.

This mechanism allows ADB and the World Bank to rely on each other's comprehensive assessment results and project implementation procedures. This helps reduce duplication of work and transaction-related costs.

ADB acts as the lead lender in the program. The bank reported that World Bank management plans to submit a proposal for an additional $100 million in financing for approval by its board of directors by the end of this month.

Since 2010, ADB has provided a total of more than $3.4 billion in financing and guarantees to Uzbekistan's energy sector. The new program will also serve the goals of implementing the "Uzbekistan — 2030" strategy, developing renewable energy, and improving energy efficiency.

The program is also being implemented within the framework of ADB's Country Partnership Strategy with Uzbekistan for 2024–2028.

This program is being implemented against the backdrop of ADB's large-scale plans to develop energy infrastructure in the region. In May, the bank announced an initiative to mobilize $50 billion by 2035 to interconnect energy systems and expand cross-border electricity trade in the Asia and Pacific region.

In 2024, ADB announced the launch of a new partnership strategy with Uzbekistan for the period up to 2028.

Decarbonizing the economy is listed among the main tasks. The bank plans to assist in modernizing energy infrastructure, expanding the use of renewable energy sources, and reducing fossil fuel subsidies.