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 entities by adoption of mutually acceptable tariffs.
Tariffs in water supply and sewerage services
PKM-309 provides for the following measures:
- During the formation and adoption of tariffs - covering full prime costs of delivered services and accounting costs for development and modernization of water supply and sewerage entities;
- Until July 1, 2019 – an inventory of the equipment status and calibration of cold and hot water metering devices of all customer groups;
- Until August 1, 2019 – development of a program for the installation of cold and hot water metering devices;
- Until July 1, 2019 – revision and adoption of standards for potable water consumption for the population.
In addition, PKM-309 adopts the "Regulations on procedure for formation, declaration (approval) and establishment of administered prices (tariffs) for water supply and sewerage services". In accordance with the Regulations, the process consists of three stages that provide for the following actions:
- Development of a multi-year plan of investments and delivery of services;
- Submission of prepared plans to the Ministry of Housing and Communal Services as well as analysis of tariff calculation;
- Tariff negotiation.
PKM-309 and PKM-310 were published and entered into force on April 15, 2019.
1Resolution of the President of the Republic of Uzbekistan No.PP-3981 “On Accelerated Development and Provision of Financial Stability of Electricity Sector” dated October 23, 2018 envisages until May 1, 2019 developing long-term investment programs on the expansion, modernization and diversification of the generating capacity for the period until 2030, with the production of electricity up to 20,000 MW
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