TASHKENT
The Asian Infrastructure Investment Bank (AIIB) has approved a $100 million loan to ACWA Power Sirdarya LLC to support the construction of the 1,500-megawatt Sirdarya Combined Cycle Gas Turbines (CCGT) project.
The project, which is being developed by Saudi Arabian energy company ACWA Power, is to be implemented in the central Sirdarya region and aims to increase the availability of high-efficiency gas power generation capacity in the country.
Uzbekistan’s electricity system faces major supply gaps, at around 9.4 percent of the total electricity demand in 2019, and lacks the needed reserve capacity to balance the upcoming large share of intermittent renewable energy, such as solar and wind, AIIB said.
According to the lender, the construction of new, high-efficiency gas power stations, which would replace older and less efficient assets, is an important modernisation step that complements the early growth of renewable energy.
Uzbekistan’s government is implementing plans to meet the projected electricity demand and the long-term objective of ensuring reliable and efficient electricity supply while facilitating low-carbon transition toward carbon neutrality by 2050.
The project is also in line with Uzbekistan’s Nationally Determined Contribution, which aims to decrease specific greenhouse gas emissions per unit of GDP by 10 percent by 2030 from 2010 levels.
“This project sets an outstanding example of a private sector investment in our lower-middle-income Member, which will support its transition to a competitive energy sector,” Konstantin Limitovskiy, the AIIB Vice President, Investment Operations, said. “It is fully aligned with the Bank’s Energy Sector Strategy and will help Uzbekistan to reduce the carbon intensity of its energy supply.”
The project is AIIB’s largest nonsovereign-backed financing project in Central Asia and is the first large-scale independent power producer project in Uzbekistan to date, a product of the long reform and liberalisation process of Uzbekistan’s energy sector.
“Our partnership with AIIB on the Sirdarya CCGT power plant in Uzbekistan is a testament to the financial institution’s confidence in ACWA Power’s mission to provide power reliably and responsibly at the lowest cost possible,” said Rajit Nanda, Chief Portfolio Management Officer, ACWA Power. This project is yet another significant example of our commitment to supporting governments around the world in delivering on their ambitious decarbonisation efforts and energy transition journey.”
Along with AIIB, the other participating lenders are the European Bank for Reconstruction and Development, OPEC Fund for International Development and Germany’s DEG (Deutsche Investitions-Und Entwicklungsgesellschaft Mbh), with some commercial lenders backed by Multilateral Investment Guarantee Agency guarantees.
ACWA Power has become Uzbekistan’s closest partner to implement both traditional and clean energy projects. The two parties also signed an agreement to build a 1,500-megawatt wind farm in the country’s northwestern Karakalpakstan republic, which is expected to become the largest in Central Asia.
Last year, Uzbekistan’s Energy Ministry and the Saudi company signed a 25-year Power Purchase Agreement with a total investment value of $1.2 billion for the Sirdarya project.
Uzbekistan has been carrying out reforms in its energy sector to modernise ageing infrastructure and implement energy-efficient technologies, as well as to develop clean energy.
Uzbekistan, Central Asia’s largest country by population at 35 million, is taking steps to improve its investment climate after more than two decades of economic isolation that kept foreign and private businesses at a distance.