The increase scale of gas and electricity prices in Uzbekistan has been discussed

From 1 July 2022, it is planned to set the the cost of 1 kWh of electricity for the population up to 250 kWh per month - 325 soms, the price of 1 cubic meter of natural gas for the heating season up to 700 cubic meters per month - 410 som.  This is stated in the draft decision of the Cabinet of Ministers of the Republic of Uzbekistan «On change of prices for fuel and energy resources».

The social protection of the poor is the main criteria in the draft decision. On the basis of international experience, it is planned to introduce a system of «social norms» for the benefit of the needy and low-income people throughout the country in order to increase the effectiveness of social protection.

For reference, there are 7.3 million electricity consumers in the country, 80% of whom consume an average of 200 kWh per month.  However, these households account for only 31 percent (5.7 billion kWh) of total electricity consumption.

In addition, there are 4 million natural gas consumers in the country.  Eighty-five percent of these households, or 3.4 million consumers, consume on average up to 500 cubic meters of natural gas per month.  However, they account for only 35% (4.5 billion cubic meters) of total consumption.

«Since the above figures reflect the average monthly level of energy consumption during the year, a sample survey was carried out in the Tashkent city, Namangan and Tashkent regions to determine the exact average monthly consumption», -said in the commentary quoted in the decision.

According to the outcomes of the monitoring, 86% of old apartment buildings, 65% of new buildings, and 57% of courtyards consumed on average up to 250 kWh of electricity per month during the season when heating is not required.

During the heating season, 78 percent of old apartment buildings, 77 percent of new buildings, and 44 percent of yard buildings consumed an average of 250 kWh of electricity per month.

Also in the above-mentioned districts, during the year when heating is not required, all subscribers living in old apartment buildings, 99% of new buildings, and 86% of yard houses consumed an average of 200 cubic meters of natural gas per month.

During the heating season, all consumers living in old apartment buildings, 93 percent of new buildings, and 64 percent of courthouses consumed an average of 700 cubic meters of natural gas per month.

Therefore, the social norm is set up to 250 kWh on electricity consumption, up to 200 cubic meters for April-September, and up to 700 cubic meters for October-March depending on the seasonality of the supply of natural gas.

According to the draft decision, from 1 July 2022:

On electricity energy:

a) consumption of 1 kWh electricity for population up to 250 kWh per month - 325 soms, for every 1 kWh over 250 kWh - 650 som;

For example, the additional cost for consumers using up to 250 kWh of electricity at the offered differentiated prices is up to 7.5 thousand soms per month, for consumers using up to 300 kWh, up to 25 thousand soms and for consumers up to 400 kWh of electricity - up to 61,000 soms.

b) 1 kWh of electricity for Navoi MMC (mining and metallurgical complex), Almalyk MMC, and budget organizations - 800 soms and for other legal entities - 600 soms.
On natural gas:

a) consumption of 1 cubic meter of natural gas up to 700 cubic meters per month during the heating season - 410 som, for every 1 cubic meter over 700 cubic meters - 1200 som, up to 200 cubic meters during the heating season - 410 som, for every 1 cubic meter gas over 200 cubic meter - 1200 som;

For example, during the heating season, the additional cost for consumers consuming up to 700 cubic meters of natural gas is set at up to 21 thousand som per month, for consumers consuming up to 1000 cubic meters - up to 267 thousand som per month.

Also in the off-season, the surcharge for consumers consuming up to 200 cubic meters of natural gas is up to 6 thousand soms per month, for consumers consuming up to 300 cubic meters, is up to 88 thousand soms per month.

b) 1 cubic meter of natural gas for Navoi MMC, Almalyk MMC and budget organizations - 1,300 som, for gaz stations - 1,200 som, for thermal power plants - 1,000 som and for other legal entities - 1,150 som.

For the population, liquefied gas is set at 1,600 soms.  At the same time, taking into account the average monthly supply of 20kg of liquefied gas to per consumer, the additional cost for per consumer amounts to 9.6 thousand soms per month.  Enterprises of «Hududgazta’minot» (regional supply of gas) JSC together with district administrations provide a daily supply of liquefied gas to the population in accordance with approved schedules.

«To adapt enterprises to long-term planning, to improve operational efficiency and energy efficiency, as well as to show «a perspective goal» to reduce costs, it is proposed to approve new prices for the current year, as well as new prices which will be effective from April 1, 2023", - the statement says.

It is planned to introduce the following prices from 1 April 2023:

a) For electricity:

• maintaining a price of 800 soms for Navoi MMC, Almalyk MMC and budget organizations;

• for other legal entities - 700 soms.

b) For natural gas:

• for thermal power plants - 1,200 soms;

• Navoi MMC, Almalyk MMC and budget organizations - 1,350 soms;

• for compressor stations for fueling cars with gas - 1,400 soms;

• for other legal entities - 1,350 soms.

The prices of fuel and energy resources, which will be set from 1 April 2023, will be indexed only for inflation in 2024 and 2025, and from 2026 it is planned to transfer to the wholesale market of electricity, natural, and liquefied gas, and prices will be be liberalized.

In addition, it is noted that the draft decision is based on the following terms in the decree "The main directions of tariff policy in the electricity sector of the Republic of Uzbekistan until 2030", approved by the Cabinet of Ministers on 13 April 2019, No 310:

• approved electricity tariffs will be valid for at least three years from 2023;

• state support for low-income and vulnerable groups of the population will be provided through the application of the basic norm of electricity and compensation in case of an increase in electricity tariffs;

• Tariffs will be adjusted based on generally accepted macroeconomic indicators (inflation, consumer price index).

It is noted that the need for fuel and energy resources in the country is growing every year.  In particular, in the last five years, the volume of electricity supply to the population has increased from 11 billion kWh to 16 billion kWh (more than 1.5 times), and the volume of natural gas has risen from 10 billion cubic meters to 13 billion cubic meters (1.3 times more).

This requires the creation of new production facilities to meet the additional demand for energy resources due to power outages (2-3 billion kWh of electricity will not be supplied in 2021 compared to real demand), low quality of services, the unstable financial situation of enterprises in the sector, and the development of the energy resources market gradually to attract private investment.