fbpx 52182-001: Uzbekneftegaz Corporate Transformation | Asian Development Bank

Uzbekistan: Uzbekneftegaz Corporate Transformation

Sovereign (Public) Project | 52182-001 Status: Active

The state-owned enterprises (SOEs) have dominated in the industrial development of Uzbekistan with significant influence on performance of many sectors in the economy, including energy and natural resources. There are over 700 enterprises with majority state ownership accounting for 47% of industrial output and almost half of total employment in 2017. While some state enterprises have been nominally corporatized, the SOEs are incorporated in many different legal forms (Joint Stock Company, Unitary Enterprises, etc.) remaining the formal part of the government with insufficient quality of financial and performance disclosure and management autonomy. With mixed commercial and regulation functions, most of SOEs are incompliant with national requirements for international financial reporting standards (IFRS), international auditing standards (IAS), and corporate governance.

Project Details

Project Officer
Sarin Abado Central and West Asia Department Request for information
Country
  • Uzbekistan
Sector
  • Energy
 
Project Name Uzbekneftegaz Corporate Transformation
Project Number 52182-001
Country Uzbekistan
Project Status Active
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 9565-UZB: Uzbekneftegaz Corporate Transformation
Technical Assistance Special Fund US$ 225,000.00
TA 9565-UZB: Uzbekneftegaz Corporate Transformation (Supplementary)
Regional Cooperation and Integration Fund US$ 700,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Knowledge solutions
Partnerships
Private sector development
Sector / Subsector

Energy / Conventional energy generation - Energy sector development and institutional reform

Gender Equity and Mainstreaming No gender elements
Description

The state-owned enterprises (SOEs) have dominated in the industrial development of Uzbekistan with significant influence on performance of many sectors in the economy, including energy and natural resources. There are over 700 enterprises with majority state ownership accounting for 47% of industrial output and almost half of total employment in 2017. While some state enterprises have been nominally corporatized, the SOEs are incorporated in many different legal forms (Joint Stock Company, Unitary Enterprises, etc.) remaining the formal part of the government with insufficient quality of financial and performance disclosure and management autonomy. With mixed commercial and regulation functions, most of SOEs are incompliant with national requirements for international financial reporting standards (IFRS), international auditing standards (IAS), and corporate governance.

In 2017, Uzbekistan initiated comprehensive economic reforms liberalizing its exchange rate to solve long-standing difficulties associated with limited access to foreign exchange and requirements to surrender foreign exchange resulted in structural and economic distortions. The liberalization of the foreign exchange regime and local currency devaluation created significant challenges to SOEs massively distorting the value of assets, capital structures and revenue generation under existing governance and financial management frameworks.

Uzbekistan is the 8th largest producer of natural gas in the world and Uzbekneftegaz (UNG) is the largest state company (among 700 SOEs) and in charge of oil and gas production, transportation and distribution in Uzbekistan. Adversely impacted with foreign exchange liberalization, Uzbekneftegaz financial sustainability is crucial for Uzbekistan's economy and energy sector. At present, Uzbekneftegaz contributes to 20% of national tax revenues and about 10% of the country's GDP. As energy consumption of Uzbekistan is dominated by natural gas, Uzbekneftegaz is responsible for over 80% of the country's energy mix and 85% of electricity generation. Hence, Uzbekneftgas weak governance and financial management distorted by external economic shocks imposes much larger risk on the country's economic and energy sector performance.

The government recognizes the strong link between energy and economic growth, and the urgency to recover financial sustainability of Uzbekneftgas and strengthening its resilience to external economic shocks. In 2017, the government issued a special decree on a two-year moratorium on local debt repayments coupled with time-bounded recovery actions aimed at improving corporate governance and financial resilience. Separately, the government approved roadmap for strengthening Uzbekneftgas financial management requesting for: (i) IFRS compliant accounting; (ii) modernization of accounting and disclosure systems; and (iii) strengthening corporate governance.

Guided by the government's energy strategy and goals, Uzbekneftgas commenced preparation of its long-term development strategy, investment and financing priorities for 2018-2028. Among other things, the government and Uzbekneftgas prioritized modernization of its gas transmission network and SCADA infrastructure with total estimated cost is of $1,500 million requesting ADB support for financing of the project.

Project Rationale and Linkage to Country/Regional Strategy The corporate transformation of Uzbekneftegaz provide an opportunity for ADB to support the government's design and implementation of the comprehensive energy sector reforms. The TA aims to develop corporate transformation plan, which will help the government to restructure Uzbekneftegaz into standalone corporate legal entity with enhanced governance and financial management to run independently and efficiently, including implementation its capital investment program. Supporting the government's efforts on improving energy sector sustainability is in line with the country partnership strategy, for Uzbekistan and ADB's Energy Policy.
Impact Financial sustainability and energy sector performance achieved
Project Outcome
Description of Outcome Uzbekneftegaz corporate planning improved
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

Uzbekneftegaz corporate transformation plan prepared

Uzbekneftegaz IFRS compliant accounting procedures prepared

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Nation-wide
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Responsible ADB Officer Sarin Abado
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Energy Division, CWRD
Executing Agencies
Ministry of Finance
5 Mustaqiliik Square
Tashkent 100008
Republic of Uzbekistan
Uzbekneftegaz
Uzbekistan, 100047, Tashkent
Yashnabandski rayon, Str.
Timetable
Concept Clearance -
Fact Finding 31 May 2018 to 31 May 2018
MRM -
Approval 14 Aug 2018
Last Review Mission -
Last PDS Update 23 Aug 2018

TA 9565-UZB

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
14 Aug 2018 - 14 Aug 2018 15 Sep 2019 15 Jul 2020 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
925,000.00 0.00 0.00 0.00 0.00 0.00 925,000.00 14 Aug 2018 153,083.64

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Access to Information Policy (AIP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

None currently available.

Safeguard Documents See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.

Evaluation Documents See also: Independent Evaluation

None currently available.

Related Publications

None currently available.


The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.

Tenders

Tender Title Type Status Posting Date Deadline
Gas Development Master Plan - Uzbekneftegaz Corporate Transformation Firm - Consulting Closed 21 Jun 2019 05 Jul 2019
ERP Expert - Uzbekneftegaz Corporate Transformation Individual - Consulting Closed 22 Feb 2019 28 Feb 2019
Corporate Finance Expert (International) - Uzbekneftegaz Corporate Transformation Individual - Consulting Closed 10 Jan 2019 16 Jan 2019
IFRS Expert (International) - Uzbekneftegaz Corporate Transformation Individual - Consulting Closed 11 Oct 2018 17 Oct 2018
IFRS Expert (National -2) - Uzbekneftegas Corporate Transformation Individual - Consulting Closed 18 Aug 2018 24 Aug 2018
IFRS Expert (National- 1) - Uzbekneftegas Corporate Transformation Individual - Consulting Closed 18 Aug 2018 24 Aug 2018
IFRS Expert (International) - Uzbekneftegas Corporate Transformation Individual - Consulting Closed 15 Aug 2018 24 Aug 2018
Corporate Governance Expert - Uzbekneftegas Corporate Transformation Individual - Consulting Closed 12 Aug 2018 21 Aug 2018

Contracts Awarded

No contracts awarded for this project were found

Procurement Plan

None currently available.