How to reform state-owned enterprises (SOEs) in the critical energy sector is one of the most important and difficult challenges for almost all governments in Central Asia and the South Caucasus. The most common operational hurdles are inefficiency, below-cost recovery tariff settings, poor performance, and continuously increasing state subsidies and privileges such as underpriced fuel and capital.

While unexpectedly many challenges have been encountered in this area, I have seen some positive developments in Uzbekistan since late 2017. Despite the impact of the recent foreign currency liberalization, the government has made notable commitments to reducing the excess capacity of the national power utility, Uzbekenergo, optimizing its balance sheets, and fixing its corporate governance structure. These are all very promising steps that can potentially help improve the company’s financial position. — blog.adb.org/blogs