Energy Ministry: The state cannot forever subsidize electricity production

Electricity production in Uzbekistan remains unprofitable due to low tariffs subsidized by the state. This cannot go on forever, the Ministry of Energy says.

According to the ministry, the current price for electricity is about 250 soums per kilowatt hour. In reality, 450 soums are spent on electricity production. The government has to subsidize the production of electricity.

Unprofitability of the industry leads to a gradual deterioration of equipment, for the full replacement of which there is not enough money, the ministry notes.

“Grants, as a rule, are temporary. If they continue for many years, as in the case of payment for the use of electricity in our country, it may lead to power outage,” the ministry points out. “Investments are not enough to cover the expenses and they will be never enough if the state continues to subsidize the energy sector.”

“There is only one way out - to make the industry profitable. And it will be cost-effective only with the application of market laws, that is, when consumers pay at least the cost of electricity. This transition will be gradual and the state, taking into account the interests of people, will increase the price little by little,” the report says.

How much do residents of other countries pay?

If a resident of Uzbekistan today pays for electricity 1.9% of the salary, then the share of electricity costs in the salary of a resident of Azerbaijan is 2.6%, Georgia - 3.2%, USA - 2.9%, South Korea - 3. 8%, Germany and India - 5.3%, Japan - 5.4% and Portugal - 6.2%.

That is, with a change in tariffs, citizens of Uzbekistan will begin to pay about 295 soums per 1 kW and still do not reach the costs of their neighbors.

Worldwide, energy savings are closely linked to rising costs. In the case of Uzbekistan, the increase in electricity prices will not be practically noticeable if, for example, the use of an ordinary light bulb of 26 kW is reduced in a house or an air conditioner is used for an hour or a half or less, the Ministry of Energy said.