Uzbekistan's Tariff Policy For The Electricity Industry, Water Supply And Sewerage Services Gains Improvements

On April 13, 2019, the Cabinet of Ministers of the Republic of Uzbekistan adopted two resolutions that improve the tariff policy for the country's electricity industry (PKM-310), water supply and sewerage services (PKM-309).

Tariff policy in the electricity industry

PKM-310 approves "Major directions of the electricity tariff policy of Uzbekistan for the period until 2030 and Regulations on procedure for electricity tariffs formation" that will be implemented from January 1, 2020. "Major directions" are developed to ensure the security of electric energy in the country in the face of expanding generating capacities up to 20,000 MW until 2030 pursuant to the resolution of the President of the Republic of Uzbekistan No. PP-3981 dated October 23, 2018.1

According to PKM-310, "Major directions" include the following:

Ensuring access of customers to reasonable and competitive tariffs; Expanding Modernizing, diversifying generating capacities including on terms of public-private partnership; Establishing transparent, consistent and predictable regulation of electricity industry; Having a phased--until 2023—transition to the new methodology for tariff formation in accordance with international best practices. The Resolution provides for keeping established electricity tariffs unchanged for at least three years from 2023.

The pricing policy in the electricity sector is to be based on 17 principles, including accessibility, transparency of information, effective utilization, social support, flexibility of tariffs and environmental responsibility.

"Regulations on the procedure" for electricity tariffs formation provides for key definitions in the tariff policy, procedures for electricity tariff formation for various customer groups, procedures for tariff justification and state control over formation and application of tariffs. In particular, according to the Resolution, the Inter-agency Tariff Commission under the Cabinet of Ministers of the Republic of Uzbekistan serves as a regulatory authority in tariff formation, whereas the state antimonopoly body exercises control over the correctness of formation and the application of tariffs.

Annex No.3 to PKM-310 determines composition of the Inter-agency Tariff Commission that contains seven members. Deputy Prime Minister- Minister of Finance of the Republic of Uzbekistan, Kuchkarov D.A., is appointed as the Chairman of the Commission.

PKM-310 entails balancing interests of customers and electric energy...