Behind-the-scenes trust management caused a loss of 1.5 trillion soums to Uzbekistan

After months of heat supply problems in the city of Angren, Tashkent region, and a series of accidents at the “Angren” thermal power plant, the station was taken out of trust management.

At the moment, it remains unknown whether or not the management of “Yangi Angren”, which is considered one of the largest thermal power plants in Uzbekistan, has returned to the state.

These two stations were entrusted to “Central Asia Energy” company a few years ago. It is known that the stations under the trust management of the private company have incurred huge losses over the past years.

100% founder of “Central Asia Energy” LLC – registered in Kazakhstan – “Gornye raboty” company. This company is said to be related to billionaire Fattokh Shodiyev.

Hidden trust management and oligarchs abroad

In January 2017, “SFI Management Group” LLC was established in Uzbekistan. In the same year, large state-owned enterprises - AMMC, Uzmetkombinat and Uzikkilamchiranglimetall were entrusted to this new company. Agreements in this regard were canceled in February 2021.

In the meantime, “Central Asia Energy” LLC was opened in Uzbekistan in 2019 at the founding of “Gornye raboty”, a small enterprise in Kazakhstan (the number of employees does not exceed 5 people). This company, like the previous one, soon after its opening, acquired the trust management of three large state assets: Angren and Yangi Angren thermal power plants and Uzbekkumir.

The Uzbek government has never disclosed why it handed over metallurgical plants to the SFI group, and two thermal power plants and a coal industry to a Kazakh company without any choice, and what obligations were imposed on them.

Billionaire Alisher Usmanov said in an interview with Russian Forbes in 2018 that his “Metolloinvest” holding company cooperates with the SFI group, which belongs to Kobul Shodiyev, the brother of another well-known billionaire Fattokh Shodiyev. There is information in open sources that Bobur Shodiyev (former president of FC Pakhtakor) was the chairman of the supervisory board of SFI Management Group LLC.

The possibility of SFI connection with the Shodiyevs is also important because at the time of the establishment of “Central Asia Energy” in 2019, its legal address was the same as that of “SFI Management Group” (42/1, Bunyodkor branch street, Tashkent). This indicates that the Shodiyevs can be the “reliable manager” of the TPP in Angren.

Profitable companies have lost trillions

Kun.uz covered the complaints of residents of Angren whose houses are not heated in the cold. After residents were forced to live in cold houses since November and after a series of accidents, in January 2023, the Cabinet of Ministers decided to take back “Angren TPP” JSC from the trusteeship.

Angren city prosecutor Ulugbek Khabiljanov told Kun.uz that this was due to the fact that funds were not allocated in time for preparing for the autumn-winter season. According to him, only one of the three boilers at the station is working.

“The company owned by Kazakhs completely ignored these thermal power plants. A failure was observed twice. 30 billion soums were allocated late to prepare for autumn and winter. Together with the city khokim, we have been protesting about this since the summer. Recently, they started to fix it after we complained.

It was reported to the prime minister, and on January 2, both TPPs were taken from external management and handed over to the Ministry of Energy. A new leader was also appointed. The money will be allocated to us after it has been fully transferred to us, now a working group has been involved to fix the malfunctions,” Ulugbek Khabiljonov said.

According to economist Otabek Bakirov, “Angren” TPP suffered a loss of 111.8 billion soums in 9 month of 2022. After the station was placed under trust management, the total amount of losses reached 577 billion soums. The value of the society’s net assets decreased by 117 billion soums. However, the company ended 2017, 2018 and 2019 with a profit.

“Yangi Angren” TPP ended the 3rd quarter of 2022 with a loss of more than 169 billion soums. Since the society was put under trust management, the accumulated losses have exceeded 875 billion soums. Net assets amounted to minus 440 billion soums.

According to Bakirov, these numbers mean that the thermal power plants “eat their capital up”: in 3 years, both stations accumulated a total loss of 1.5 trillion soums.

“Again, despite such catastrophic consequences, the state paid commission to these chauvinists for reliable management. The information about the paid commissions has never been disclosed,” the economist wrote.

Extremely expensive coal imports from Russia

In 2019, Ruslan Mubarakshin, the chairman of “Thermal Power Plants” JSC at that time, said that TPPs will be put under trust management for 3 years, the use of natural gas will be reduced to the maximum, and the use of coal will be increased.

Otabek Bakirov writes that thermal power plants in Angren are the largest importers of coal in Uzbekistan, but “there is no open information about where coal is imported, at what prices, how much is burned, and how much is going to where”.

 As Gazeta.uz reported, referring to the Statistics Committee, 2.39 million tons of coal worth $105.8 million were imported to Uzbekistan in 11 months of 2022. The average price of coal reached $44.1 per ton (15.3% higher than last year).

Coal imported to Uzbekistan from Russia is 8.8 times more expensive than coal imported from Kazakhstan, and 11.1 times more expensive than coal from Kyrgyzstan.

This can be seen in the following official statistics on coal imports in January-November 2022:

·        1.3 million tons of coal worth $51.1 million were imported from Kazakhstan (average $39.4 per ton);

·        1.03 million tons of coal worth $32.3 million were imported from Kyrgyzstan (31.2 tons per ton on average);

·        62,500 tons of coal worth $21.8 million were imported from Russia (average $347.8 per ton).

According to Otabek Bakirov, schemes like “damage to the state, profit to the pocket” were used and are being used in all assets entrusted to trust management.

“These schemes should be fully investigated and, at least, political evaluation should be given in order not to return to the mistakes again!” the economist wrote. He is asking the State Assets Management Agency to disclose all information, and the prosecutor’s office to open a case.

“There is a need for investigation and political accountability”

Blogger Kobil Khidirov (Davletovuz) emphasized that the state should completely abandon trusted managers who have not justified themselves.

“First of all, it is necessary to create the legal foundations of reliable management, to firmly define the priority of state security and national interests, and to resolve issues of responsibility. Until then, state assets should not be entrusted to trust management.

Secondly, it is necessary to conduct an audit of all state assets entrusted to trust management, to compensate for the damage caused based on the results of the audit, and to have political responsibility.

Thirdly, unscrupulous trust management organizations and their beneficiaries should not participate in the privatization process, should not participate in public procurement,” the blogger wrote.

Private management of “Yangi Angren” TPP may continue

Instead of the issue of responsibility demanded by the blogger, another issue may be considered – returning the “Yangi Angren” TPP to private managers, despite such losses.

Although the prosecutor of Angren said that both TPPs in the city have been taken back from the trust management, the “Yangi Angren” TPP has not yet returned to state management. In response to Kun.uz request, the press service of the Energy Ministry reported that “Angren” TPP has been transferred to “Thermal Power Plants” JSC, but did not clarify the issue of “Yangi Angren” TPP.

It should be noted that “Yangi Angren” TPP with a capacity of 2100 megawatts is one of the largest power stations in Uzbekistan. For comparison, the capacity of the “Angren” TPP, whose reliable control has been canceled, is much less – 393 megawatts.

According to Otabek Bakirov, “Central Asia Energy” LLC wants to continue the trust management contract for “Yangi Angren” TPP. “Among the officials, there are even those who agree to it,” the economist said.