Uzbekneftegaz strengthened control over joint ventures
Uzbekneftegaz has identified problems in the management of three joint ventures and has strengthened control over their finances, investments, and production.
Uzbekneftegaz JSC is tightening oversight of joint ventures in which it holds equity stakes after identifying deficiencies in management processes, financial discipline, and the reporting system. This issue was addressed under the leadership of Chairman of the Management Board Abdugani Sanginov.
The detailed analysis examined the activities of joint ventures Natural Gas-Stream, New Silk Road Oil and Gas, and ANDIJANPETRO. Preliminary results revealed a number of systemic problems in the organization of operations, accounting, and financial reporting.
Uzbekneftegaz also noted that the joint ventures' reporting mechanisms to the joint-stock company are not fully functioning. Against this backdrop, there is an annual decline in production volumes, questions about the effectiveness of investment, insufficient financial stability, and incomplete fulfillment of dividend payment obligations.
The company believes that these problems were exacerbated by the lack of proper oversight by the founder over the activities of the joint ventures. Uzbekneftegaz plans to strengthen corporate control over the companies in which it owns shares. These companies will be required to adhere to corporate governance principles, protect the rights and interests of the founder, and ensure transparency of production and financial performance.
The new system includes a re-analysis of the companies' production capacities, the effectiveness of geological exploration, and geological and technical measures. An inventory of outstanding debt to Uzbekneftegaz will also be conducted.
Particular attention will be paid to the digitalization of financial flow and procurement controls. All planned activities, investment projects, and work processes at joint ventures will be subject to approval by Uzbekneftegaz. Prior to implementation, the necessity, economic efficiency, and cost of each will be assessed.
The company will also review the financial position of the joint ventures and their dividend policy. The companies have been tasked with ensuring the full and timely payment of dividends for 2025–2026, repaying existing debt, and establishing systematic controls over the fulfillment of future obligations.
Uzbekneftegaz stated that the new measures are intended to prevent the misuse or ineffective use of funds and ensure control over expenses and decision-making.
The ultimate goal is to create effectively managed, financially sustainable, and profitable joint ventures with increased production performance and net profit.