In a recent briefing, the head of the Department of Finance and Tariff Policy of Basic Industries at the Ministry of Economy and Finance, Hurshed Mustafaev, revealed that inflation in Uzbekistan has reached 66% since the last tariff hike on gas and electricity. The government last adjusted prices for these essential utilities in August 2019, and a new resolution issued on April 16 announced price hikes effective from May 1.
The decision to revise tariffs was driven by economic and financial uncertainties exacerbated by the COVID-19 pandemic in 2021 and geopolitical conflicts in 2022-2023. Despite stagnant prices for gas and electricity for the past five years, the need for adjustments became inevitable due to the significant rise in inflation.
Mustafaev highlighted that the current cost of electricity is around 1000 Uzbekistani som per kWh, while gas costs approximately 2000 som per cubic meter. These costs encompass operational expenses, investment project costs, and loan repayments. The government has introduced social protection mechanisms to mitigate the impact of tariff adjustments on the population, including the introduction of basic rates tied to consumption levels.
The social safety net includes assistance for approximately 1.5 million vulnerable families in Uzbekistan affected by the tariff increases. Measures such as raising poverty thresholds, pensions, one-time payments during the heating season, and compensations are part of the support package. The government assures that the allocated funds will be disbursed promptly and transparently.
With 7.3 million electricity consumers and 4 million gas consumers in Uzbekistan, the majority fall within the consumption brackets targeted by the new tariff structure. Efforts to increase transparency in the cost formation process of energy resources have been advocated by experts to ensure consumers understand the pricing mechanisms imposed by state-owned companies.
The government's proactive approach to addressing the economic challenges posed by inflation through targeted tariff adjustments and social support mechanisms reflects a commitment to safeguarding the welfare of its citizens amid evolving global dynamics.
