World Bank allocates $100 million to modernize power distribution systems in Uzbekistan

The World Bank allocated $100 million to upgrade electricity distribution systems in Uzbekistan

The World Bank Executive Board of Directors approved a $100 million loan on October 27 to improve the efficiency and reliability of the electricity distribution system in Uzbekistan.

The "Electricity Distribution System Modernization" program will be implemented by the "National Electric Grids of Uzbekistan" company. Under the program, investments are planned to modernize and digitize 60 key substations across the country to reduce electricity losses and increase power supply reliability.

Additionally, the program will serve to strengthen the institutional capacity of "NES of Uzbekistan" and increase the efficiency of the company's operations. This includes improving financial management systems, strengthening cybersecurity, enhancing compliance with environmental and social standards, and ensuring gender equality in employment at the company.

By 2031, as a result of the program, annual electricity losses at modernized substations should be reduced by 20,000 megawatt-hours (MWh). Furthermore, conditions will be created to connect at least 3.3 GW of renewable energy capacity to the power grid. The program will also allow preventing greenhouse gas emissions equivalent to approximately 23,000 tons of carbon monoxide annually.

Once the modernized power infrastructure facilities are commissioned, the program is also expected to help create nearly 11.7 thousand additional quality jobs over five years.

The World Bank is co-financing the program with the Asian Development Bank (ADB) under the Full Mutual Reliance Framework (FMRF). This framework provides a unified approach by the two financial institutions to prepare the program and supervise its implementation, thereby reducing transaction costs and avoiding duplication of procedures for the government of Uzbekistan.

On September 30, the ADB approved a $200 million loan to Uzbekistan.

Taking into account the WB's new loan and the government's contribution of $71 million from the state budget, the total volume of program financing amounts to $371 million.

“Uzbekistan aims to increase the installed capacity of renewable energy sources to 25 gigawatts by 2030. This requires a higher capacity and technologically advanced power grid infrastructure. Much of the distribution networks were built several decades ago, and many substations operate under overload. This leads to electricity losses and power supply interruptions that affect households, businesses, and social infrastructure facilities, including schools and medical institutions. In the context of rapid economic growth rates and increasing demand for electricity, modernizing the networks is becoming a priority task,” the WB statement says.