In Uzbekistan, inflation has amounted to 66% since the last increase in gas and electricity tariffs. This was reported by Khurshed Mustafayev, director of the Department of Finance and Tariff Policy of Basic Industries, Fuel and Energy Complex and Mining and Metallurgical Enterprises (unofficial translation) of the Ministry of Economy and Finance, at a briefing at the Agency of Information and Mass communications (AIMC) under the Administration of the President of Uzbekistan on April 16, Gazeta.uz reports.
“For the past five years, electricity and natural gas prices for households have remained unchanged. However, economic and financial uncertainty escalated in 2021 due to the coronavirus pandemic and persisted in 2022−2023 amidst geopolitical conflicts worldwide. People’s incomes [over the past years] have increased, conditions have been created to increase their ability to pay. But during this period the inflation rate reached 66%. Therefore, it has become necessary to revise electricity and natural gas tariffs starting from May 1 of this year,” commented a representative of the Ministry of Economy and Finance.
Khurshed Mustafayev noted that the current cost of electricity stands at approximately 1,000 soums per 1 kWh, while gas is priced at about 2,000 soums per cubic meter. These figures include operational costs of enterprises, including those related to investment projects and loans repayments. In September of the previous year, the Ministry of Energy reported that the cost of 1 kWh of electricity is equal to 970 soums (a 21.2% increase from May 2022), and a cubic meter of gas was priced at 1,890 soums (reflecting a 35% increase).
“The [country's] leadership, of course, provides for social protection mechanisms of the population considering the changed tariffs. The base rate (social norm) is introduced, meaning that each household will pay according to their consumption,” he said.
The base rate will cover up to 200 kWh per month for electricity, and for gas from March to October. In Karakalpakstan and Khorezm region the base rate will include up to 100 cubic meters from March to September. During the heating season from November to February, and in Karakalpakstan and Khorezm region from October to February, the base rate will cover up 500 cubic meters.
“Approximately one trillion soums have been allocated from the state budget to support low-income families. These funds have been sourced transparently and will be allocated promptly, without any delays,” the department director assured.
Can the social norm be met?
In 2022, it was reported that Uzbekistan had a total of 7.3 million electricity consumers, 80% of whom consumed an average of up to 200 kWh of electricity per month. However, these households accounted for only 31% (5.7 billion kWh) of the total volume of electricity consumed by the population.
Regarding gas consumption, 85% of the four million gas subscribers consumed an average of up to 500 cubic meters of natural gas per month. However, they accounted for only 35% (4.5 billion cubic meters) of the total residential consumption.
How families will be assisted?
Low-income families and certain consumer groups in Uzbekistan will receive social assistance considering the rise in gas and electricity tariffs starting May 1. This was announced by Farrukh Pardaev, deputy head of the National Agency for Social Protection, during a briefing at the AIMC on April 16, Gazeta.uz reports.
In particular, the first stage will involve revising and updating the minimum expenditure basket (MEB), which is used to determine the poverty line in the country. Usually the poverty line is updated at the beginning of the year (as was done in January 2024 when the MCE was increased from 568,000 to 621,000 soums per person). However, due to the rise in tariffs, the MCE will be raised again until May 1. As a result, the minimum pensions and allowances for about one million people will be revised to ensure they are not below the new poverty line.
During the second stage, a lump-sum compensation of 270,000 soums will be allocated for additional social protection of those in need during the heating season (in November 2024). This compensation will be provided to families receiving child allowance and material assistance through the Unified Register of Social Protection.
Farrukh Pardeev. Photo: National Agency for Social Protection.
“This compensation will provide social protection for about 1.5 million low-income families. More than 200,000 families in need not included in the register will receive this compensation. The list of families in need will be compiled based on the results of door-to-door surveys conducted by ‘mahalla seven',” Farrukh Pardaev shared.
At the third stage, during the heating season, additional support will be provided to low-income families if they exceed the social norm for electricity and gas (up to 250 cubic meters and 150 kWh above the basic norm). The costs will be partially compensated. Compensation payments will be disbursed by the National Agency for Social Protection from the state budget of Uzbekistan, he noted.
This entails reimbursement of up to 450 soums for each kWh of consumption by such a family, up to 150 kWh per month (covering 50% of the increased tariff), as well as up to 850 soums per cubic meter of gas, up to 250 cubic meters per month (representing 56% of the increased tariff).
Farrukh Pardaev stated that overall, more than 65% of the population consumes electricity and natural gas within the social norm.
“However, during the autumn and winter seasons, when the heating demand is high, the most vulnerable segments of the population may need social assistance. According to the analysis, more than 85% of low-income families consume electricity within the social norm. During the heating season, this figure drops to 74%. Similarly, 81% of low-income families consume natural gas within the social norm in normal conditions, but during the heating season, this indicator drops to 71%,” he commented.
The deputy head of the department mentioned that these measures will ensure social protection of more than 90% of families listed in the social security register.
As a reminder, starting May 1, electricity and gas prices will be increased in Uzbekistan for the first time since August 2019. At the same time, social norms food the consumption of energy resources are introduced, as follows:
- Electricity — up to 200 kWh per month.
- Gas (from March to October, and in Karakalpakstan and Khorezm region from March to September) — up to 100 cubic meters.
- Gas (during the heating season from November to February, and in Karakalpakstan and Khorezm region from October to February) — up to 500 cubic meters.
