WASHINGTON, April 26, 2013 – The World Bank’s Board of Directors today approved a US$100 million credit to the Republic of Uzbekistan as an Additional Financing to the Energy Efficiency Facility for Industrial Enterprises Project (UZEEF). The project is helping improve energy efficiency in the industrial sector resulting in reduction of power and fuel usage, and greenhouse gas emission. The proposed additional credit will co-finance energy efficiency sub-projects in industrial enterprises and ensure transfer of state-of-the-art technologies.
Uzbekistan is one of the most energy intensive countries in Eastern Europe and Central Asia and a large carbon dioxide emitter. Reducing energy consumption and conserving energy are top economic priorities of the government. There is a wide consensus that the potential for energy savings is huge through implementation of energy efficiency measures in the industrial sector that uses outdated machinery and equipment. The project’s objective is to improve energy efficiency in industrial enterprises by designing and establishing a financing mechanism for energy saving investments. Improving energy efficiency and reducing energy consumption in industrial enterprises will improve the overall competitiveness of the Uzbek economy, free up scarce energy resources, and reduce greenhouse gas emissions.
“The potential for energy savings through implementation of energy efficiency measures in industrial enterprises in Uzbekistan is large,” says Takuya Kamata, the World Bank’s Country Manager for Uzbekistan. “The use of financial intermediaries to promote energy efficiency investments is an approach which has been successfully applied by the World Bank in other countries including the original UZEEF project. The project initiated the development of a new business line by local Uzbek banks targeting energy efficiency investments.”
The original UZEEF project has been successful and it is expected that the credit will be fully disbursed by the end of 2014, about 12 months ahead of original plans. The original project finances sub-projects with estimated energy savings of more than 50,000 MWh. The additional financing would further enhance and scale up the development impact of the project by financing more energy efficiency sub-projects with approximately 200,000 MWh energy saving potential and 400,000 tons of CO2 emissions reduction cumulatively.
Two state-owned banks (Asaka Bank and Uzpromstroybank) and a private bank (Hamkorbank) are the financial intermediaries for the project. Although the industrial sector is quite varied, typical energy efficiency investments involve simple replacements or upgrades of boilers, replacement of outdated equipment and machinery, installation of variable speed drives, and the use of wasted heat for power generation. Energy intensive industries, such as metallurgy, chemical, building materials, and the food processing, with a relative high share of energy consumption in total production costs, are particularly good candidates for energy efficient investments.
The project will have two components:
- Component A - Development of Energy Efficiency Capacity (US$1 million)
- Component B – Credit Line to Participating Banks (US$99 million)
The proposed Additional Financing will be implemented over 5 years. The credit has 25 years of maturity including 5 years grace period.
Uzbekistan joined the World Bank in 1992. The World Bank’s mission in the country is to improve people’s livelihoods through supporting economic reforms, modernization of the country’s social sectors and infrastructure, and sharing Bank’s knowledge and experience with the Government and the people of Uzbekistan.
Total World Bank’s current active commitments as of April 2013 make about US$ 987.50 million for 11 projects.