Uzbekistan, ADB Sign US$200 Mln Deal to Modernize Power Distribution Networks

Tashkent, Uzbekistan (UzDaily.com) — Uzbekistan and the Asian Development Bank (ADB) have signed a memorandum under a results-based lending program for the modernization of the country's electricity distribution systems.

The document was signed by Ilkhom Norqulov, First Deputy Minister of Economy and Finance of the Republic of Uzbekistan; Alfredo Bano Lil, Senior Energy Specialist at the Asian Development Bank (ADB); and Feruz Qurbonov, Deputy Chairman of the Management Board for Investments of JSC “National Electric Grids of Uzbekistan” (NEGU), on the sidelines of the 59th Annual Meeting of the Asian Development Bank held in Samarkand.

Feruz Kurbonov, Deputy Chairman of the Board of JSC National Electric Grids of Uzbekistan (NEGU) for Investment, described the agreement as the next logical step in the systematic energy policy being implemented across the country.

"The goal has been set to bring the share of renewable energy sources to 54 percent by 2030," Kurbonov told UzDaily. "Certain results have already been achieved. Based on that, work is underway to transport the generated electricity — that is, to modernize high-voltage power grids and substations."

He said the latest initiative extends that effort to the final leg of delivery. "The logical continuation of these processes is getting that electricity all the way to consumers — meaning the modernization and reconstruction of medium-voltage networks," he said. "The primary goal is to create additional capacity for residential customers, manufacturing enterprises, and industrial facilities, while also ensuring the delivery of surplus generated electricity."

A New Financing Model

Kurbonov highlighted two key aspects of the agreement. The first is the results-based lending mechanism itself, which he described as a new approach for projects of this kind.

"Previously, conducting international tenders required significant time and resources. Under this model, advance funds are provided at the first stage, work gets underway, and further financing is disbursed in tranches as specific results are achieved," he said. "This is an important mechanism that accelerates the initial phase and ensures work can begin promptly."

The second notable feature is co-financing with the World Bank. Of the project's total value of US$300 million, US$100 million comes from the World Bank and US$200 million from the ADB.

Scope and Timeline

The project will be carried out in several phases. In the first phase, work will be conducted across 14 regions of the republic — those where medium-voltage networks are most in need of modernization or capacity upgrades.

The primary task is increasing reserve capacity up to transformer substations that supply power to mahallas (residential communities), households, and producers. This includes the modernization or replacement of medium-voltage transformer substations and power transmission lines.

The first phase specifically covers the modernization and reconstruction of 57 transformer substations across those 14 regions.

Kurbonov noted that NEGU's system contains more than 1,000 such transformer substations in total, and that approximately 50 percent of them can be considered outdated. Subsequent project phases will address additional substations beyond the initial 57.

Implementation is scheduled for completion by 2028. Work on the first phases is expected to begin before the end of the current year, with construction and installation activities made possible by the advance-financing mechanism.

Tender procedures are already underway in parallel. Kurbonov emphasized that these are being conducted under national standards, with local manufacturers and contractors involved.

The project is expected to reduce electricity losses by 3–5 percent at each upgraded substation.

Broader Investment Strategy

The ADB agreement is part of a wider investment drive. Kurbonov said the overall strategy envisions attracting more than US$3 billion in investments — spanning partnerships beyond the ADB.

He cited a separate World Bank project worth US$423 million that covers the modernization, reconstruction, and construction of 22 substations. Uzbekistan is also cooperating with the European Bank for Reconstruction and Development (EBRD) on projects involving the construction of high-voltage transmission lines and substations.