Keynote speech by Shixin Chen, ADB Vice President (Operations 1) Asian Development Bank, at the Uzbekistan Gas Reform Roundtable, 23 October 2020

Distinguished Minister of Energy, Mr. Sultanov; Deputy Minister of Investment, Mr. Vafaev; World Bank Vice President, Ms. Anna Bjerde; EBRD Energy Director, Ms. Aida Sitdikova; Ladies and gentlemen; Good day to everyone!

It is a pleasure to participate in this forum with you after we last came together a year ago for the electricity reform roundtable in Tashkent. We are glad to see that the tradition of energy sector reform roundtables continues even if we cannot meet in person this year. On behalf of ADB, I would like to extend our utmost respect and admiration to the government of Uzbekistan which continues to prioritize the reform agenda with such strong dedication even under the extremely difficult circumstances of a global pandemic and economic downturn.

ADB clearly sees energy sector reform as a shared and joint task among all international financial institutions and the government. Please allow me to say that ADB’s door is open to work with all of you to deliver the most effective and well-functioning energy market possible in Uzbekistan.

Since the last roundtable, we have seen a strong and successful start to the reforms process in the power sector. Just a few weeks ago, ADB approved a $200 million loan for Uzbekistan's power sector reform. This is ADB’s first reform-targeted lending program of this kind in Uzbekistan’s energy sector and includes important milestones to achieve a well-functioning power market with private sector participation, scaling-up clean energy sources, and market oversight through an independent regulator.

Today, we also very much look forward to hearing the government’s vision for reforms in the gas sector. This is of fundamental importance as the gas sector is the backbone of the entire energy system in Uzbekistan and to a significant extent of the economy as a whole. We believe an efficient, forward looking and profitable gas value chain in Uzbekistan is an indispensable ingredient to achieving uninterrupted energy access for households and businesses.

The role of gas is however not the only key in achieving energy security on a national level. Effective management of the sector will have a much wider impact, particularly in relation to achieving global climate related goals. Uzbekistan as a large gas producing country and with a sizable gas distribution network, has one of the largest potentials for CO2 emissions reduction in the entire Central Asian region. In addition, successful gas sector reform can ensure Uzbekistan remains on track with its Nationally Determined Contribution under the Paris Agreement and contribute to enabling the global transition towards greener energy sources. It is essential to reduce the gas leakage throughout the gas value chain given it’s one of the important greenhouse gases. As a readily available, cost-effective back-up fuel, it can accompany and support renewable energy sources as part of countries’ low-carbon development pathways. Gas reform will also lead to adjusted gas prices allowing a level playing field for renewables to be developed.

Due attention to the gas sector will be important for Uzbekistan to complete energy sector reform and energy transition. Uzbekistan’s strong reform initiative is therefore commended. We have witnessed Uzbekistan’s efforts to promote energy sector reform on a domestic level and on a regional level. In this respect, we still vividly remember how Energy Minister Sultanov hosted a historic Energy Ministers Dialogue in Tashkent last year where Energy Ministers from Central Asia and beyond set a joint path to electricity and gas sector reform in the wider region. This reform momentum - which was created in Tashkent - will bring about a decisive transformation into a modern regional energy market with Uzbekistan as one potential regional hub.

Overall, we believe for gas and power sector reforms to succeed, we should pay particular attention to a few fundamental principles:

First: Ensure that all upstream, midstream and downstream segments are treated comprehensively and inclusively. While different reform actions will be required on each level, linkages between the segments need to be adequately designed for cross-cutting initiatives to be implemented with the participation, knowledge and ownership of stakeholders from the whole value chain.

Second: The reform actions should aim at creating conducive conditions to attract private investors to Uzbekistan. Energy market development shall be seen as one of the main objectives of energy sector reform.

Third: The impact on energy consumers should be carefully assessed and fully communicated. Reforms will only be considered successful if they yield visible benefits to consumers. Any reform effort must be felt through improved quality and reliability of energy supply. Adequate reform actions are key in this regard and need to be potentially coupled with improvements in physical infrastructure over the medium term as a parallel effort.

To conclude, I would like to stress that a well-planned and well implemented gas sector reform will be key in attracting investments at scale to accelerate the economic recovery after the severe economic setback from the global pandemic. In our view, holding this roundtable to launch and swiftly implement gas and power sector reform is very timely given the traditional significance of the sector in sustaining economic growth. We are delighted to be part of your effort to further develop the energy sector in Uzbekistan and are ready to provide our support to the government, the stakeholders of the energy industry and our development partners.

With this, I would like to thank the Government once again for inviting ADB to this roundtable and look forward to contributing to the next steps in the process.