COMMENT: Uzbek privatisation - this time it seems to be for real

COMMENT: Uzbek privatisation - this time it seems to be for real
Uzbekistan's privatisation programme has begun and the government is in a rush to start selling off its holdings. / Ben Aris for bne IntelliNews
By Fiezullah Saidov director of Uzbekistan Equities in Tashkent March 7, 2021

Privatisation efforts in Uzbekistan are moving to a practical level. The newly appointed State Asset Management Agency (SAMA) head has started to implement the Presidential decree #6096 that covers privatisation with a new zeal. SAMA has announced tenders to select sell-side advisors and valuation services for real estate assets and select state-owned enterprises (SOEs).

The decree has several appendices that list the SOEs to be transformed (including the likes of the national oil and gas corporation Uzbekneftegaz, the largest gold and uranium producer Navoi Mining Kombinat, Uzbekistan Airways, Uzbekistan Airports, gas pipeline operator Uztransgaz, and others). The management of this process has been moved to the Ministry of Finance from SAMA. 

A second appendix includes likes of Almalyk Mining, the second-largest gold and copper producer Uzmetkombinat, and similarly large and important companies. And the third is list of smaller companies to be privatised right away, with a fourth appendix including major real estate assets.

For the companies to be privatised, a special company, UzAssets, was created, certain assets were moved under its aegis and the young and capable management of this entity is spearheading initial, large-scale, privatisation of assets as part of the Uzbekistan 2.0 rejuvenation programme.

They want to do things right from the beginning, seeking sell-side advisors among international professional firms, working with international lawyers and audit firms. The first asset to be sold under the new framework is Coca Cola Uzbekistan, which is being conducted with the help of Rothchild & Co. and international legal practices and a Big Four consulting firm. This process has already attracted quite bit of an attention and has already attracted several bids.

Real Estate Assets

Included in the real estate assets is the infamous ex-KGB building in the heart of Tashkent, as well as several other assets located in prime locations of the city centre, such as the building formerly occupied by the Stock Exchange, a publishing house, the location of the largest electronics market, one of the operating business centres within spitting distance from the main Independence Square and the Turkistan hotel, which belongs to the President’s office in the centre.

Besides these central locations, the tender is out to value some resorts located near the mountains such as Sijjak and Pyramids. The government seems to want to start by selling off these prime real estate assets that are ready to be developed into landmark assets. Hyatt Hotel in the city centre was also included in the initial list; however, it does not seem to be for sale just yet.


Among the companies that are in the first block are: nine alcohol producers, the largest glass manufacturer in the region, the largest oil refinery, oil and gas service companies, a large plastic products producer, and more. SAMA would like these assets to be valued in accordance with international valuation methods, run a competitive bidding process and sell them fully, and see them grow under a private ownership. 

These asset sales are a pilot programme from the government’s point of view and if all goes according to plan, then there will be more companies added to the list and some of the crown jewels, that are being transformed at this stage, will be put on the block as well.


Banking reforms started slightly earlier than the transformation of companies with the acceptance of Roadmap on Banking Reform, with the IFC and EBRD leading with the transformation of several large banks of the country through their having invested or being in the process of investing in them.

Six banks are being prepared for privatisation this year, and in his address to Parliament, Uzbek President Shavkat Mirziyoyev stated that a European bank is considering acquiring one of the large banks in Uzbekistan. If this transaction closes successfully, it is going to be a major catalyst in upgrading of credit ratings of banks as well as proving the seriousness of government intentions. That will attract more investor interest into the country. The banks that will be prepared for privatisation are: Asakabank, Aloqa Bank, QQB, SQB, Ipoteka Bank and Turonbank. These banks trade on the Tashkent Stock Exchange now, although there are certain restrictions on the investor base.


Mirziyoyev decided that the key to promoting foreign direct investment (FDI) and employment in the regions is to have a stable and reliable power supply, hence the first area of economy that saw massive FDI is the power generation.

Uzbekistan has chosen a slightly different approach to attracting FDI into the power generation sector by choosing to sign PPP contracts with major international players. Focusing solely on the electricity purchase price has helped to lessen the burden of choosing equipment suppliers, production process and financing of projects.

The IFC’s Scaling Solar II programme has been expanded into Uzbekistan, which helped to attract investors such as ACWA Power from Saudi Arabia, MASDAR from UAE and France’s Total Eren, which are key players, into solar, wind and possibly hydro projects. Uzbekistan has announced that there will be 11 projects in hydropower in 2021. Some of these players, such as ACWA Power, are also active in producing electricity from natural gas in Uzbekistan, having signed for a 1,500-MW gas-powered plant in Syrdarya region in January 2021.

Need for a Streamlined Process.

Due to the speed and pace of the reforms, it seems like institutional capacity is having a hard time catching up. Even when presidential decrees and a decree of the Cabinet of Ministers have been issued authorising such privatisations, due to the sheer number of decrees issued (4,000 over the last two years), the execution of some of them is bound to fall behind.

This was noted in the presidential speech, and perhaps a more structured approach and the establishment of processes and systems will allow supporting the President’s intentions and beginnings at much wider level, than focusing on a single decree.


Fiezullah Saidov is the director of the Uzbekistan Equity Fund based in Tashkent and also a consultant to the International Financial Corporation (IFC).