For Uzbekistan, broad-based reforms in the energy sector is starting to yield results. The reform of the energy sector, which began in 2019, has continued at a steady pace.
Starting from a largely closed and monopoly-driven energy system, the reform has led to concrete steps to harness market forces to attract investments, increase transparency and rule of law, improve energy security, and strengthen the environmental sustainability of the energy sector, according to an IEA report. On July 4, Mubadala Investment Company (Mubadala) and Abu Dhabi National Energy Company PJSC (TAQA), one of the largest listed integrated utilities companies in the region, signed agreements to invest in the privatization of two gas-fired power generation plants in the Talimarjan power complex in Uzbekistan.
The binding agreements will see Mubadala and TAQA each acquire a 40% stake in two gas-fired power plants with a combined capacity of 1.6 gigawatts (GW) and the assumption of associated operations & maintenance activities, the compan said in a statement. The Talimarjan Issiqlik Elektr Stansiyasi JSC (TIES) will retain the remaining 20% stake in each plant, the statement added.
In the presence of Suhail bin Mohammed Al Mazrouei, Minister of Energy and Infrastructure, and Jamshid Khodjaev, Deputy Prime Minister of the Republic of Uzbekistan and Minister of Investments and Foreign Trade in Tashkent, Uzbekistan, the agreements were signed by Khaled Abdulla Al Qubaisi, Chief Executive Officer, Real Estate & Infrastructure at Mubadala, Jasim Husain Thabet, TAQA’s Group Chief Executive Officer and Managing Director, and Jamshid Khodjaev, Deputy Prime-Minister of the Republic of Uzbekistan and Minister of Investments and Foreign Trade and Yusupov Olim, General Director of Talimarjan TPP JSC.
The transaction remains subject to the satisfaction of certain conditions precedent, including obtaining any applicable regulatory or other approvals. Completion of this transaction is expected to occur during the second half of 2023. Suhail Mohamed Al Mazrouei said:
“The United Arab Emirates continues to be a leader in providing secure and sustainable energy across the world and is actively investing in markets where it can leverage its expertise to create value for all stakeholders. The strategic partnership between the Government of Uzbekistan, TAQA and Mubadala will serve as a vehicle for collaboration for both countries and will create a path for future growth and investment opportunities. I would like to congratulate all parties involved in this milestone agreement.”
The agreements follow the 2020 agreement with Uzbekistan’s Ministry of Investment and Foreign Trade, and JSC Thermal Power Plants of the Republic of Uzbekistan (JSC) relating to the proposed acquisition, development and operation of the Talimarjan Power Complex. The energy reform is part of the government’s broad structural and institutional reform package, introduced by President Shavkat Mirziyoyev, which aims to modernise Uzbekistan’s economy and society and bolster long-term growth through increased efficiency and productivity. The energy reform is being implemented in phases over the next few years.
Khaled Abdulla Al Qubaisi, Chief Executive Officer, Real Estate and Infrastructure Investments at Mubadala, said: “As a global and responsible investor, Mubadala is focused on supporting energy transition across the world. We are confident our partnership will contribute to Uzbekistan’s greater energy stability while preparing for a low carbon future. We look forward to working with TAQA, the Ministry of Investment and Foreign Trade and JSC Thermal Power Plants to advance the country’s energy ambitions.”
Farid Al Awlaqi, Executive Director of Generation at TAQA Group, commented:
“This major investment in a new country is an important step forward in the delivery of the 15GW of new international capacity we announced as part of TAQA’s 2030 growth strategy. Investment alongside Mubadala in these power plants means we will become a major generator in Uzbekistan. The deal also significantly expands our operation and maintenance activity, another key part of our strategy. Once the deal is complete, we will bring experience and expertise from our generation fleet around the world to help deliver the best possible performance from these plants. Now more than ever the health, wealth and success of every nation depends on reliable, efficient supplies of electricity and we are determined to play our part in providing that in Uzbekistan as we do in every country where TAQA operates.”
Energy innovation is necessary to help Uzbekistan maintain and improve the competitiveness of its economy and to diversify it away from natural gas and other fossil fuels, according to IEA. Uzbekistan has major potential to increase the efficiency and diversity of its domestic energy supply and use. Key to realizing this potential is a gradual transition to competitive markets with significant private-sector participation and energy prices that reflect the full cost of supply. Reforms are often complex. As long as there is a will, reforms are as complex as tying a shoe lace.