Uzbekistan to Restore Special State Rights After Privatization

Tashkent, Uzbekistan (UzDaily.uz) — Uzbekistan is introducing a mechanism allowing the state to retain special rights in strategically important companies after their privatization.

The provision is set out in a presidential decree dated 28 August aimed at reducing state participation in the economy and accelerating privatization.

Under the document, the special right may be used to protect national security, maintain economic stability and safeguard public interests.

Potential buyers must be notified of the state’s intention to retain such a right before the privatization process begins. However, the mechanism itself will be introduced immediately after the transaction is completed through a separate presidential decision.

The special right can also be abolished only through a separate decision by the president.

The decree does not specify the scope of powers that the state will receive under the new mechanism.

It also does not provide a separate list of companies whose privatization will involve the use of the mechanism.

The new provision effectively restores an instrument similar to the previously used “golden share” mechanism. Uzbekistan abolished the golden share system in 2022. It had allowed the state to participate in the management of privatized strategic companies, with a state representative able to join the supervisory board and veto certain key decisions.

The Agency for Management of State Assets said at the time that the golden share had effectively not been used for around a decade. The agency estimated that retaining the mechanism could reduce investor interest in privatization and limit the rights of other shareholders. The European Bank for Reconstruction and Development also recommended abandoning the golden share.

Strategic companies previously included businesses in the industrial, services and banking sectors. They included the Navoi Mining and Metallurgical Company, Almalyk Mining and Metallurgical Company, Uzmetkombinat, Uzbekneftegaz, Uzbekcoal, Hududgazta’minot, UzAuto Motors, Uzkimyosanoat, Navoiyazot, Uzbekhydroenergo, Thermal Power Plants, Uztransgaz and UzGasTrade.

The new mechanism is part of a large-scale program to reduce the state’s presence in the economy.

Under the program, the authorities plan to sell state stakes in 84 business entities, auction 1,242 real estate properties and around 8,000 hectares of land designated for business and urban development purposes.

The program also provides for the liquidation or reorganization of 85 state-owned or state-participated enterprises. Another 84 assets that could not previously be sold are to be put up for auction again with a starting price of 1 million soums.

The total value of the assets slated for sale is estimated at around 100 trillion soums. By the end of 2026, the authorities expect to raise at least 14 trillion soums from their sale.