Uzbekistan to get $1.28bn clean power plant

By bne IntelliNews June 15, 2010

Clare Nuttall in Almaty -

Long-held plans to expand Uzbekistan's Talimarjan power plant are at last being brought to fruition. The $1.28bn project will help the country achieve energy security and generate additional electricity for export, and - investors hope - set new standards for clean energy generation in Central Asia.

Plans to expand the existing gas-fired power plant at Talimarjan date back to the Soviet era, but after the collapse of communism they weren't shelved. The new project will see the installation of two additional combined cycle gas turbine (CCGT) units, adding around 800 megawatts (MW) of generating capacity to the existing plant.

Located in the Kashkardarya region of Uzbekistan, Talimarjan supplies the surrounding region as well as the area around Navoi, including the Navoi free industrial-economic zone. Set up in December 2008, the zone is one of the government's flagship projects in its effort to attract foreign investment. There are also big plans for the adjacent Navoi airport, which is intended to become a cargo transit hub with the facilities being built to serve Uzbekistan Airways, Korean Air and, in future, other international airlines. Surplus energy from Talimarjan will be delivered to other countries in the region, including Afghanistan.

Although Uzbekistan has by far the largest population in Central Asia, it currently lags behind Kazakhstan in economic development. Despite large reserves of natural gas, parts of the country are starting to see an energy deficit, which is set to increase if industrial activity is ramped up. "The Uzbek economy is growing, but needs more investments in energy production if it is to play a role in world markets. The Talimarjan Clean Power Project will increase energy supply and energy security for Uzbekistan, improve energy efficiency and increase energy trading within Central Asia," says Juan Miranda, director general of the Central and West Asia department at the Asian Development Bank (ADB), which is providing a $350m loan to help fund construction of the power plant.

Additional funding of up to $300m will be provided by the Japanese International Cooperation Agency (JICA), with the remaining $630m coming from domestic resources - the Uzbek government, the Fund for Reconstruction and Development of the Republic of Uzbekistan and state power company Uzbekenergo.

Cleaner and greener

The Talimarjan plant is the first CCGT power plant to be built in Central Asia. Currently, Uzbekistan wastes considerable amounts of gas due to low efficiency in power generation and losses during transmission and distribution.

Uzbekenergo also announced plans on June 1 to build the country's first wind energy power plant. The pilot plant, to be built in cooperation with South Korea's Doojin, will have capacity of 750 kilowatts.

According to the ADB, the country is extremely energy intensive, with around four times more energy used to produce each dollar of domestic product than the global average. Most of the country's energy infrastructure was inherited from the Soviet era. Power plants and other equipment are already obsolete and dilapidated, but a lack of investment has seen them kept in use. "We hope this power plant will encourage clean energy use, and will lead to other countries in the region launching similar projects to increase energy efficiency and the use of clean energy - either through this type of project or new hydropower plants," Miranda tells bne.

The funding package for the power plant was signed off during the ADB's 2010 annual meeting, which for the first time was held in Tashkent. According to Miranda, this is a sign of the bank's commitment to Central Asia. "Our key objective is to integrate countries through regional economic cooperation, to create new infrastructure - energy and transport - as well as 'soft infrastructure' such as trade agreements and facilitating border crossings," says Miranda.

Achieving energy security is one of the key challenges for Uzbekistan and the Central Asian region. "This means producing more and trading more. There used to be a healthy energy trade, but this is no longer the case," says Miranda.

Other priorities for the landlocked region are improving transport links, diversifying economies and creating conditions to attract investment.

In addition to the investment in the Talimarjan project, the ADB also plans to step up its investment into other Central Asian energy projects. Discussions on a major increase in investment in Kazakhstan are currently in progress, while investments in Kyrgyzstan and Tajikistan are underway.

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