Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: ICR188919-UZ
IMPLEMENTATION COMPLETION AND RESULTS REPORT
ON AN
IBRD PAYMENT GUARANTEE
IN THE AMOUNT OF US$5.1 MILLION
AND ON
AN IFC FINANCING CONSISTING OF
AN IFC “A” LOAN IN THE AMOUNT OF US$17.5 MILLION
A SENIOR LOAN IN THE AMOUNT OF US$17.5 MILLION FROM IFC
ACTING AS IMPLEMENTING ENTITY OF THE
CANADA-IFC BLENDED CLIMATE FINANCE PROGRAM
AND US DOLLAR INTEREST RATE SWAPS REPRESENTING A LOAN
EQUIVALENT EXPOSURE OF US$1 MILLION
TO UZBEKISTAN NUR NAVOI SOLAR IPP FOREIGN ENTERPRISE LLC
FOR THE
NAVOI SCALING SOLAR INPEPENDENT POWER PRODUCER (IPP) PROJECT
October 3, 2024
Energy and Extractives Global Practice
Europe and Central Asia Region, World Bank
Infrastructure Department
Europe and Central Asia Region, International Finance Corporation
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
CURRENCY EQUIVALENTS
(Exchange Rate Effective October 3, 2024)
Currency Unit = Uzbekistani Som (UZS)
US$1 = UZS 12,757
FISCAL YEAR
July 1 - June 30
Regional Vice President: Antonella Bassani
Country Director: Tatiana Proskuryakova
Regional Director: Charles Joseph Cormier
Practice Managers: Stephanie Gil, Sebnem Erol Madam
Project Task Team Leaders: Ferhat Esen, Maksudjon Safarov, Philip Lam
ICR Team Leader and Main Author: Bahodir Amonov
ABBREVIATIONS AND ACRONYMS
ADB Asian Development Bank
BESS Battery Energy Storage System
CCGT Combined Cycle Gas Turbine
COVID-19 Coronavirus Disease 2019 (SARS-CoV-2)
CPF Country Partnership Framework
DPO Development Policy Operation
DSCR Debt Service Coverage Ratio
EBITDA Earnings Before Interest, Tax, Depreciation, and Amortization
EBRD European Bank for Reconstruction and Development
EHS Environment, Health, and Safety
EIRR Economic Internal Rate of Return
EPC Engineering, Procurement, and Construction
ERR Economic Rate of Return
ESAP Environmental and Social Action Plan
ESDD Environmental Social Due Diligence
ESIA Environmental and Social Impact Assessment
ESMS Environmental and Social Management System
FASA Financial Advisory Services Agreement
GBV Gender-Based Violence
GDP Gross Domestic Product
GHG Greenhouse Gas
GoU Government of Uzbekistan
GSA Government Support Agreement
HPP Hydropower Plant
HSSE Health, Safety, Security, and Environment
ICR Implementation Completion and Results Report
IFC International Finance Corporation
IFI International Financial Institution
IFRS International Financial Reporting Standards
IPF Investment Project Financing
IPP Independent Power Producer
ISR Implementation Status and Results Report
IUCN International Union for Conservation of Nature
JSC Joint-Stock Company
L/C Letter of Credit
MIGA Multilateral Investment Guarantee Agency
MIIT Ministry of Investments, Industry and Trade
MoE Ministry of Energy
MoEF Ministry of Economy and Finance
MoF Ministry of Finance
NDC Nationally Determined Contribution
NEGU National Electric Grid of Uzbekistan Joint-Stock Company (Formerly ‘National Power
Networks of Uzbekistan Joint-Stock Company’)
NPV Net Present Value
O&M Operation and Maintenance
PDO Project Development Objective
PLR Performance and Learning Review
PPA Power Purchase Agreement
PPP Public-Private Partnership
PS Performance Standards (World Bank)
PV Photovoltaic
RPF Resettlement Plan Framework
SEP Stakeholder Engagement Plan
SOE State-Owned Enterprise
SPV Special-Purpose Vehicle
SSP Scaling Solar Program
TPP Thermal Power Plant
UE UzbekEnergo
UES UzEnergoSotish JSC
UNG UzbekNefteGaz
TABLE OF CONTENTS
DATA SHEET .......................................................................................................................... 1
I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ....................................................... 6
A. CONTEXT AT APPRAISAL .........................................................................................................6
B. SIGNIFICANT CHANGES DURING IMPLEMENTATION ..............................................................14
II. OUTCOME .................................................................................................................... 15
A. RELEVANCE OF PDOs ............................................................................................................15
B. ACHIEVEMENT OF PDOs (EFFICACY) ......................................................................................16
D. JUSTIFICATION OF OVERALL OUTCOME RATING ....................................................................19
E. OTHER OUTCOMES AND IMPACTS (IF ANY)............................................................................20
III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ................................ 22
A. KEY FACTORS DURING PREPARATION ...................................................................................22
B. KEY FACTORS DURING IMPLEMENTATION .............................................................................23
IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 25
A. QUALITY OF MONITORING AND EVALUATION (M&E) ............................................................25
B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE .....................................................26
C. BANK PERFORMANCE ...........................................................................................................28
D. RISK TO DEVELOPMENT OUTCOME .......................................................................................32
V. LESSONS AND RECOMMENDATIONS ............................................................................. 34
ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ........................................................... 37
ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ......................... 40
ANNEX 3. PROJECT COST BY COMPONENT ........................................................................... 42
ANNEX 4. EFFICIENCY ANALYSIS ........................................................................................... 43
ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ... 50
ANNEX 6. SUPPORTING DOCUMENTS .................................................................................. 51
The World Bank
Uzbekistan: Navoi Scaling Solar Independent Power Producer (IPP) Project (P170598)
DATA SHEET
A. Basic Information
Product Information
Project ID Project Name
IBRD: P170598 Navoi Scaling Solar Independent Power Producer Project
IFC: 42525
Country Financing/Lending Instrument
Uzbekistan Investment Project Financing/Guarantee, IFC A Loan, IFC
Blended Finance Senior Loan and IFC USD Interest Rate Swaps
Original Environmental Category Revised Environmental Assessment Category
B – Partial Assessment B – Partial Assessment
Joint IFC: Yes
Organizations
Borrower Responsible Agency (Financing)
Republic of Uzbekistan Nur Navoi Solar Foreign Enterprise LLC
Project Development Objective (PDO)
Original PDO
The Project Development Objective (PDO) is to increase and diversify electricity generation capacity through private
investment in Uzbekistan.
B. Financing
Original amount Revised Actual Disbursement
(US$) Amount (US$) (US$)
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Uzbekistan: Navoi Scaling Solar Independent Power Producer (IPP) Project (P170598)
World Bank Financing
IBRD Guarantee (G3240) 5,100,000 5,100,000 0.00
IFC Loan A 20,000,000 17,513,643 17,513,643
IFC Blended Finance Loan (loan equivalent 20,000,000 17,513,643 17,513,643
exposure)
IFC USD Interest Rate Swaps (loan equivalent 1,000,000 1,000,000 1,000,000
exposure)
Total 40,000,000 35,027,286 35,027,286
Non-World Bank Group Financing 70,000,000 75,898,280 75,898,280
Total Project Cost 110,000,000 110,925,566 110,925,566
C. Key Dates
Process Original Revised Actual
Concept Review: 29-Mar-2019 29-Mar-2019 12-Apr-2019
Decision Meeting: 27-Sep-2019 30-Jul-2020 30-Jul-2020
Approval: 27-Dec-2019 22-Sep-2020 22-Sep-2020
Signing: 31-Jan-2020 31-Jul-2020 19-Nov-2020
Effectiveness: 28-Feb-2020 04-Aug-2020 11-Dec-2020
Closing: 31-Dec-2023 31-Dec-2023 31-Dec-2023
Guarantee Expiration 31-Dec-2041 31-Dec-2041 31-Dec-2041
D. Ratings of Project Performance in ISRs
No. Date ISR Archived DO Rating IP Rating Actual disbursements (US$ M)
01 04-May-2021 Satisfactory Satisfactory 0.0
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Uzbekistan: Navoi Scaling Solar Independent Power Producer (IPP) Project (P170598)
02 19-Apr-2022 Satisfactory Satisfactory 0.0
03 18-Apr-2023 Satisfactory Satisfactory 0.0
04 23-Feb-2024 Satisfactory Satisfactory 0.0
D. ICR Ratings Summary
D.1. Performance Rating (by ICR)
Relevance of PDO: High
Efficacy in achieving PDO: High
Efficiency in achieving PDO: Substantial
Overall Outcome Rating: Highly Satisfactory
D.2. Rating of Quality of Monitoring and Evaluation (M&E)
Overall M&E Quality Rating: Substantial
D.3. Detailed Ratings of Bank Performance (by ICR)
Quality at Entry: Satisfactory
Quality of Supervision: Satisfactory
Overall Bank Performance: Satisfactory
E. Sector and Theme Codes
Practice Area (Lead): Energy & Extractives
Cross Cutting Areas: Climate Change, Public-Private Partnerships
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Uzbekistan: Navoi Scaling Solar Independent Power Producer (IPP) Project (P170598)
F. ADM Staff
Role At Approval At ICR
International Bank for Reconstruction and Development (IBRD)
Regional Vice President: Anna Bjerde Antonella Bassani
Country Director: Lilia Burunciuc Tatiana Proskuryakova
Regional Director: Lucio Monari Charles Joseph Cormier
Practice Manager: Sameer Shukla Stephanie Gil, Sebnem Erol
Madan
IBRD Team Leaders: Ferhat Esen, Zhengjia Meng, Ferhat Esen, Maksudjon
Maksudjon Safarov Safarov, Philip Lam
IFC Investment Officers: Waleed Saraf, Firouz
Khairoullaev, Dmytro
Vintsevych, Nurzhan Serik
ICR Team Leader and Main Author: Bahodir Amonov
International Finance Corporation
Regional Vice President: Georgina E. Baker Hela Cheikh Rouhou Ep Abid
Global Industry Director: Morgan J. Landy Valerie Levkov
Regional Director: Wiebke Schloemer Wiebke Schloemer
Blended Finance Director: Martin Spicer Aisha Williams
Regional Industry Senior Manager: Cheryl Edleson Hanway Marieme Travaly (Acting)
Blended Finance Senior Manager: Kruskaia Sierra-Escalante Pranab Ghosh (Acting)
Regional Manager: Cassandra Colbert Neil McKain
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Uzbekistan: Navoi Scaling Solar Independent Power Producer (IPP) Project (P170598)
Investment Officers: Waleed Saraf, Firouz Ekaterina Dolinina, Rustam
Khairoullaev Shamuradov
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Uzbekistan: Navoi Scaling Solar Independent Power Producer (IPP) Project (P170598)
I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES
A. CONTEXT AT APPRAISAL
Context
Strategic Context
1. Uzbekistan embarked on a comprehensive country-wide reform program that included and
prioritized the energy sector, with the goal to transition toward a market-oriented model. As a lead
partner, the World Bank Group (WBG) has been playing a vital role in supporting the Government of
Uzbekistan (GoU)’s energy sector reforms by leveraging WBG financial instruments and expertise through
strategic cooperation with the GoU and facilitation of private-sector participation. In this context,
Uzbekistan: Navoi Scaling Solar IPP Project (the Project, or Scaling Solar 1) was the first competitive public-
private partnership (PPP)-based, the first independent power producer (IPP), the first renewable energy,
and the first large-scale solar photovoltaic (PV), with 100 megawatts (MW) capacity, project in the country
and in Central Asia. It was also the first World Bank (the Bank) Guarantee and the first International
Finance Corporation (IFC) Advisory and Investment operations in the energy sector in Uzbekistan and in
Central Asia, as well as the first application of the WBG Scaling Solar Initiative outside Sub-Saharan Africa.
Country Context
2. Uzbekistan, a lower-middle-income country with a population of approximately 34 million, was
the most populous economy in Central Asia at the time of Project appraisal. With a gross domestic
product (GDP) of US$60.8 billion in 2019, which was at the project appraisal, and GDP growth averaging
five percent a year from 2000 to 2019, the country attained near elimination of extreme poverty and a
sustained reduction in the national poverty level. However, the economic growth was mainly supported
by public investment and exports of energy, mineral, and agricultural commodities, coupled with high
commodity prices.
3. The global COVID-19 pandemic severely slowed economic growth in Uzbekistan. In 2019,
economic growth in the country was projected to be 1.6 percent in 2020 (actual 2 percent), significantly
lower than the pre-crisis projection of 5.7 percent. The crisis wiped out tourism and high-value
horticulture exports in the first half of 2020. Social-distancing restrictions and mandatory closures brought
industrial output and commerce to a halt. Export-oriented sectors, such as natural gas, metals,
horticulture, light manufacturing, chemicals, and fertilizer, were severely affected due to lower global
demand and disruptions in trade and transportation and supply chain networks.
4. Despite the challenges posed by the COVID-19 crisis, Uzbekistan’s macroeconomic policy
framework remained robust due to significant fiscal and external reserves. Foreign exchange reserves,
which covered ten months of imports, and a relatively low public debt of approximately 34.4 percent of
GDP provided flexibility to access additional public debt as needed. These favorable macroeconomic
conditions enabled the GoU to maintain its commitment to ongoing reform efforts initiated in 2017 as
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Uzbekistan: Navoi Scaling Solar Independent Power Producer (IPP) Project (P170598)
part of its 2017–2021 Strategy 1, which focused on five priority policy areas: (i) enhancing state and public
institutions, (ii) securing the rule of law and reform of the judicial system, (iii) promoting economic
development, (iv) fostering social development, and (v) ensuring personal and public security through
inter-ethnic and religious tolerance and a constructive foreign policy.
5. Uzbekistan’s development strategy also included commitments to improving energy efficiency
and reducing fossil-fuel-use intensity — consistent with the GoU’s commitment to climate-change
mitigation. Uzbekistan’s voluntary commitments to climate-change mitigation and adaptation under its
Nationally Determined Contribution (NDC), submitted to the United Nations Framework Convention on
Climate Change in 2017, focused on improving energy efficiency and reducing the fossil-fuel-use intensity
of the economy. Uzbekistan also committed to continuing efforts toward climate-change adaptation to
reduce the risk of adverse climate-change impacts on various economic and social sectors. In its NDC,
Uzbekistan committed to decrease specific greenhouse gas (GHG) emissions per unit of GDP by 10 percent
by 2030 (as compared with 2010 levels).
Sector Context
6. Accounting for about 25 percent of production output and 8 percent of the country’s GDP in
2019, the energy sector served as a backbone of economic growth despite facing multiple challenges.
As highlighted in the World Bank's Growth Diagnostics for Uzbekistan Study (2018), uninterrupted
electricity supply emerged as one of the key priorities for support to further economic growth in the
country. The sector comprised a total of 46 power plants, representing an installed capacity of 14.1 GW,
although the available generating capacity was only 12.9 GW. Of this available capacity, 84.8 percent, or
11 GW, came from 11 thermal power plants (TPPs), which included three combined heat and power
plants. Additionally, 14.3 percent, or 1.85 GW, was generated by 42 hydropower plants (HPPs), including
12 large HPPs with a total capacity of 1.68 GW, accounting for 90.8 percent of overall HPP capacity.
7. In 2019, total power generation stood at 61.6 billion kilowatt-hours (kWh), with TPPs
responsible for 89.6 percent of that generation (mostly natural gas), and HPPs used mainly to provide
essential backup power during major electricity outages or disruptions, with only a 27-percent
hydropower utilization rate in the country. The available generation capacities were barely sufficient to
cover the national load of 8,000–9,000 MW, with a difference of 2,300 MW between the minimum and
maximum demand loads during the winter period (8,100 MW and 10,400 MW, respectively) and of 2,600
MW during the summer period (6,800 MW and 9,400 MW, respectively). A considerable shortage of
regulating capacity thus led to daily additional restarts of TPP generators, which in turn caused further
deterioration of assets, and an urgent need for new generation units, including renewables and efficient
combined-cycle gas turbines (CCGTs).
8. The electricity sector was grappling with several issues, including (i) low efficiency (25–35
percent) of TPP generators installed, on average, over 25 years ago, coupled with high fuel-consumption
rates compared to modern combined-cycle processes (double the consumption); (ii) extensive wear and
tear in distribution and transmission networks, leading to power outages and low electricity quality; (iii)
limited throughput capacity of many existing transmission lines and transformers, restricting the supply
1 Uzbekistan Action Strategy 2017-2021: https://strategy.uz/index.php?news=1478&lang=en.
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Uzbekistan: Navoi Scaling Solar Independent Power Producer (IPP) Project (P170598)
of electricity to consumers in needed quantities; and (iv) a low level of automation and digitization of
power-sector assets, impeding the ability to prevent and promptly address technical issues.
9. Moreover, a significant portion of electricity supply network had been in operation for over
three decades, including more than 60 percent of transmission and distribution grid networks, along with
more than 70 percent of substations and over 50 percent of transformers. The aging transmission and
distribution infrastructure was a contributing factor to the escalating technical losses, which stood at more
than 15 percent of net generation.
10. The electricity sector faced a structural cost recovery and cash deficit issues caused mainly by (i)
high technical and commercial losses in the sector, which were not fully recouped through normative
thresholds of losses established in tariff reviews; (ii) low collection rates; (iii) increasing foreign-currency
indebtedness, which added to the currency mismatch between UzbekEnergo (UE)’s revenues and
expenditures; and (iv) below-cost recovery tariffs. The GoU committed to move toward full cost-recovery
through gradual and regular adjustments of tariffs as part of its energy-sector reform process and
institutional and regulatory changes.
Institutional Context and Recent Reforms
11. To address such sectoral challenges, the GoU had initiated ambitious energy-sector reforms in
2017 that envisaged introducing market-based principles in sector management and operations with the
support of IFIs, including the WBG. Recent key reform measures include the following:
(a) The GoU approved a five-year Development Strategy for 2017–2021, which stipulated broad
market-oriented reforms in all key areas of the economy in February 2017. Subsequently, the
GoU conducted several reviews of the energy sector performance, identifying the following
key considerations for sector reform: (i) improving service quality and reliability, (ii) leveraging
private investment financing in power generation and distribution, (iii) enhancing the financial
viability of the sector, (iv) improving transparency and accountability of sector entities, (v)
unbundling UE as an initial step toward adopting a wholesale electricity market model in the
future, (vi) adopting good international practices, and (vii) implementing reforms as quickly
as practical while ensuring prerequisite actions were taken in a timely manner.
(b) Sector oversight functions were consolidated under the Ministry of Energy (MoE), that was
established in February 2019. The MoE has assumed singular responsibility for policy-making
and regulatory functions related to gas, coal, nuclear power, and electricity, while sector
entities have been delegated day-to-day operations in these areas. Finally, the MoE was
tasked with designing and implementing proposed reform measures, particularly in the
electricity sector, and creating an enabling environment for the establishment of a separate
regulatory authority in the short to medium term as a matter of priority. Currently, the
establishment of EMDRA is underway and expected to further streamline private sector
participation and renewable energy development as well as stringing of sector’s operational
and financial sustainability.
(c) The Presidential Resolution No.4249, adopted in March 2019, mandated the unbundling of
the vertically integrated UE into three separate companies by function: generation (Thermal
Power Plants Joint Stock Company (JSC) (TPP)), transmission (Uzbekistan National Electric Grid
of Uzbekistan JSC (NEGU)), and distribution (Regional Electric Power Network JSC (REPN)). The
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Uzbekistan: Navoi Scaling Solar Independent Power Producer (IPP) Project (P170598)
Resolution also decided on the divestment of 99 non-core assets and their transfer from
sector utilities to the State Asset Management Agency (SAMA). A similar Presidential
Resolution on the unbundling of UzbekNefteGaz (UNG), the state-owned oil and gas company,
was issued in July 2019.These reforms have facilitated the corporatization and
commercialization of key SOEs, including NEGU, which has been playing a pivotal role in the
development of renewables and PPPs, including the Project Company and signed Power
Purchase Agreement (PPA) under execution.
(d) The Cabinet of Ministers issued a resolution adopting a new electricity-tariff methodology and
establishing a separate tariff commission for the systematic and regular adjustment of tariffs
to full cost-recovery levels in April 2019. Building upon, the electricity-tariff reform has
commenced and remains a top priority for building a solid foundation for sector development
and private-sector participation. Compared to the weighted electricity price, the GoU has
been further encouraged to procure new renewable and solar capacities benchmarked with
the Project’s competitive low tariff.
Box 1. Prioritization of Renewable Energy in Uzbekistan
The scale-up of renewable energy in Uzbekistan is central to implementation of energy-sector
reforms, ensuring supply security, and achievement of carbon neutrality in the power sector by mid-
century, especially in light of the 2022-23 winter energy crisis in the country. As projected at the
design stage of the project, Uzbekistan has 4.7 TWh of wind and 2,058.6 TWh of solar technical
potential. Building on the success of the project, the GoU has recently increased its renewable-
energy target from 12 GW to 25 GW by 2030. In this context, the WB and IFC have been assigned
and thus delivered on their mandates to develop 1,000 MW of solar energy and 500 MW of wind
energy with private-sector participation. The Asian Development Bank (ADB) and the European
Bank for Reconstruction and Development (EBRD) have been providing similar support to the GoU
in solar and wind energy deployment. This trend has been further accelerated with the recent sharp
decrease of domestic natural gas production and inefficiencies in existing thermal power plants
motivating the GoU to deploy large-scale renewable energy capacities. In this effort, the GoU and
IFIs managed to mobilize major private sector developers and commercial banks to involve in the
Uzbekistan energy market. In parallel, this achievement has allowed the GoU and market
stakeholders and participants to sustain benchmark prices for solar generation in Uzbekistan.
(e) The GoU has also taken important initial steps to strengthen the financial transparency of
large state-owned enterprises (SOEs) and to address institutional weaknesses. The GoU
adopted measures requiring its two largest SOEs — UE and UNG — to adopt International
Financial Reporting Standards (IFRS) and produce updated audited financial statements
compliant with these new standards. Progress has been strong, with both utilities nearly up
to date on audits compliant with IFRS.
(f) In parallel to the design and tendering of the Project and subsequent renewables projects,
the GoU and NEGU have also initiated the development of transmission-expansion and
rehabilitation plans till the year 2030, aimed at improving grid reliability, facilitating the grid-
integration of planned large-scale renewable energy, and strengthening regional connectivity.
In this context, GoU/NEGU have mobilized financing to strengthen the electricity supply chain
and transmission grid, with IFIs, and developed ESTART (P171683) Project with the Bank in
order to extend and modernize network, implement digital solutions and accelerate the
integration of renewable energy, including the project.
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Uzbekistan: Navoi Scaling Solar Independent Power Producer (IPP) Project (P170598)
12. As a result, recent reforms have encouraged private investments in Uzbekistan's electricity
sector. Significant developments have occurred in renewable energy, with investments in solar and wind
power becoming pivotal to sector growth. Between 2019 and 2023, several power generation projects
were developed to build 44 power plants representing a total investment of $25.2 billion with a combined
capacity of 24 GW. Other key infrastructure developments during the period include the construction of
transmission networks spanning over 1,165 kms and distribution networks spanning over 29,540 kms, as
well as installation of 10,690 low-voltage transformers. These improvements have led to an additional 15
billion kWh of annual electricity production and a reduction in technical losses from 15.3 percent to 13.2
percent by the end of 2023 since 2019 2. New legal frameworks, including updates to the Electricity Law,
and unified technical regulations, are being introduced to further reform the sector. These measures aim
to attract foreign investment and liberalize the market.
13. However, key remaining challenges include meeting growing electricity demand, fostering
competition between state and private producers, and addressing insufficient reserve capacity. The
Uzbekistan 2030 Strategy 3 aims to double the economy size, boost deep processing, and increase
electricity supply to 120 billion kWh by 2030, with 40 percent to come from renewables. This will require
an investment of $52.3 billion, including $3.7 billion for transmission and distribution networks, $5.3
billion for substations and transformers, $26.7 billion for solar and wind power stations and energy-
storage capacities, and $16.5 billion for thermal and hydroelectric power stations. These goals can be
achieved by creating a competitive environment and organizing wholesale and retail electricity markets.
14. The new Presidential Decree No. 166 of 28 September 2023 approves a Concept for
Transitioning to Wholesale and Retail Electricity Market Mechanisms (2023-30) that sets the priorities
and steps for transitioning to wholesale and retail electricity market mechanisms. The action plans
envisaged in the Decree are already under implementation, accompanied by the support of the World
Bank through its First Inclusive and Resilient Market Economy Development Policy Operation (P180470)
in the country, the Support for Preparation of Energy Sector Strategy Advisory Services & Analytics (PASA;
P168487) and Electricity Sector Transformation and Resilient Transmission Project (ESTART; P171683),
with completion of (i) establishment of the Energy Market and Development Regulatory Agency (EMDRA
/ energy-sector regulator) to strengthen regulatory quality in the sector and, coupled with energy-tariff
reform, to help to scale up private-sector investment; (ii) separation of electricity purchasing and
transmission-system operational functions through unbundling of NEGU; and (iii) adoption of a new
Electricity Law that aims to foster competition, enhance the reliability, safety, and affordability of
electricity, and includes provisions for consumer protection through various social mechanisms.
Project Rationale
15. Despite substantial solar-energy potential (technical potential of 2,058.6 TWh/year), there
were no industrial-scale solar PV plants operational in the country at project-appraisal stage. To support
renewable-energy capacities, among other priorities, the GoU took significant steps, as also mentioned
above, to streamline the institutional aspects of the sector: (i) establishment of the MoE; (ii) unbundling
of the vertically-integrated UE into separate functions, generation (TPP JSC), transmission (NEGU), and
distribution (Regional Electric Network JSC); and (iii) creation of the PPP Development Agency under the
2 https://lex.uz/docs/6624455
3 https://lex.uz/ru/docs/6600404
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Uzbekistan: Navoi Scaling Solar Independent Power Producer (IPP) Project (P170598)
Ministry of Finance (MoF) (which, following administrative reforms, is now the PPP Department under the
Ministry of Economy and Finance (MoEF)). Moreover, the GoU developed the necessary legal and
regulatory framework to streamline the process of renewable energy scale-up. This process included the
adoption of the laws “On the use of renewable energy sources,” “On Investments and Investment
Activities,” and “On Public-Private Partnerships”, and the “Regulation on connection of businesses
generating electrical power to the integrated power-grid, including those utilizing renewable-energy
sources.”
16. To support the development of the renewable energy capacities, the GoU signed a Financial
Advisory Services Agreement (FASA) with IFC Advisory Services in May 2018 and became the fifth
country to join the WBG Scaling Solar Program, expanding it outside Sub-Saharan Africa for the first time.
Under FASA, IFC Advisory Services was assigned to support the develop 1,000 MW of solar power
generation through competitive tenders for the solar PV plants. As part of the WBG Scaling Solar program,
several WBG financial products (e.g., such as IBRD Guarantees, IFC Financing, and Multilateral Investment
Guarantee Agency (MIGA) Insurance) were offered as options for bidders to consider in preparation of
their proposals. In this context, the 100-MW Navoi Scaling Solar IPP Project was conceptualized as
innovation and first project in Uzbekistan and in Central Asia to benefit from WBG support through IFC
Advisory for competitive tendering, IBRD payment guarantee (US$5.1 million) and IFC financing (US$41
million).
17. The project was fully aligned with the first and third focus areas – private-sector growth and
public-service delivery – of the WBG’s Country Partnership Framework (CPF) for the Republic of
Uzbekistan for the period FY16–FY20 4. Further, the project was part of the World Bank’s Performance
and Learning Review (PLR) 5 of that CPF. The project has built upon the World Bank's energy program in
Uzbekistan and charted a new direction for the program, particularly in supporting private-sector
participation in the sector and diversifying supply from domestic resources.
4 Report No. 105771-UZ.
5 Report No. 126078-UZ.
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Uzbekistan: Navoi Scaling Solar Independent Power Producer (IPP) Project (P170598)
Theory of Change (Results Chain)
Figure 1. Theory of Change
Project Project Project Long-term
Challenges
Activities Outputs Outcomes Outcomes
- Electricity - GoU / NEGU - Power-generation - First renewable- / - Energy-sector
production securing capacity constructed solar-energy reform
efficiency competitively production in implementation
procured generation - Electricity generated
- System losses Uzbekistan
capacity supplied by the - Promotion of new
- Dependency on Project into the grid generation and PPP
- Strengthening of
natural gas - Renewable- / solar- capacities to reach
- Private capital security of supply and
- Demand growth energy supply by PPP national sector
mobilized saving of gas
/ IPP targets for 2030
- Operational and resources
financial - Long-term financing - GHG emissions
- Increased energy
sustainability mobilized by private avoided - First private-sector security by reducing
developer with help participation and reliance on fossil fuels
- Lack of adequate
of IDA Guarantee financing in the sector
investment and
private-sector
- Clean-energy
involvement
transition
18. The Theory of Change for the project as stated at appraisal stage (See Figure 1 above) set
ambitious outputs and outcomes through measures addressing the challenges in Uzbekistan’s energy
sector by competitively procuring renewable- / solar-energy generation capacity and mobilizing long-term
commercial financing with the support of an IBRD Guarantee. These efforts resulted in the successful
construction and operationalization of the 100-MW Navoi Scaling Solar IPP PV power plant, which now
supplies electricity to the grid, while also attracting private capital and mitigating GHG emissions. These
outputs have also led to outcomes such as the introduction of renewable-energy production,
enhancement of energy security, and pioneering of private-sector participation and financing in the
sector, thereby facilitating a transition to cleaner energy sources. Over the long term, the project is
expected to foster energy-sector reform implementation, promote new renewable-energy generation
and PPP capacities to meet national targets by 2030, and strengthen energy security by reducing reliance
on fossil fuels.
19. As part of the WBG Scaling Solar Program, IFC Advisory Services supports governments in
preparing competitive and transparent solar-power tenders based on template documents and
processes. Based on the bid package, the World Bank, IFC Advisory and Investment Services, and MIGA
provide term sheets for guarantees, financing, and political risk insurance, respectively. Bidders can decide
to use any or all of these WBG products. Bidders that pass technical and financial criteria are ranked based
on their offered tariff. For Uzbekistan, IFC Advisory supported the GoU in structuring and tendering the
Project under the WBG Scaling Solar Program. The prequalification phase was initiated in February 2019.
The Request for Prequalification stipulated specific criteria (including experience, and technical, financial,
and legal requirements) for this purpose. The GoU prequalified 11 investors out of 23 applications
received. The bidding phase was initiated upon issuance of the Request for Proposal (RfP) on June 20,
2019. All prequalified investors were invited, and five submitted technical and financial proposals. The
bidders were developers, investors, co-owners, and operators of power-generation assets, large solar-
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panel manufacturers, and IPPs. In this case, Masdar 6, the selected private developer, requested World
Bank and IFC Advisory and Investment support and did not request a MIGA product.
20. On the basis of an evaluation of technical (on a pass/fail basis) and financial proposals, the
private developer with the lowest proposed electricity-offtake fixed tariff of US¢2.679 per kWh for the
PPA period of 25 years at commercial close was selected as the winning bidder. Signing of the principal
Project commercial agreements, including PPA between NEGU and Masdar and the Government Support
Agreement (GSA) between the GoU and Masdar, took place on November 8, 2019.
Figure 2. Summary of Contractual Structure for the Navoi Scaling Solar IPP
21. IBRD provided a payment guarantee of 20 years for the project in the amount of US$5.1 million
(representing the equivalent of six peak months of PPA payments from the off-taker, NEGU, to the Project
Company). The payment guarantee backstops the security mechanism (that is, a Letter of Credit (L/C)) in
the event of a draw on the L/C that the GoU or NEGU has not reimbursed within 12 months of the draw.
Further, Masdar opted to use IFC’s stapled debt-financing package offered under the WBG Scaling Solar
Program, which included IFC long-term financing and concessional funding (See also figure 2 above; details
of the IFC financing are set out in the subsection on Mobilizing Private Sector Financing below (paragraph
49)).
Project Development Objective (PDO)
22. The PDO, as presented in the Project Appraisal Document (PAD), was to “increase and diversify
electricity generation capacity through private investment in Uzbekistan”.
6 Masdar (Abu Dhabi Future Energy Company JSC) established in 2006 by the UAE Government.
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Key Expected Outcomes and Outcome Indicators
Table 1. Original PDO Indicators
Indicator Name Baseline (FY20) End Target (FY24)
(i) Power generation capacity constructed (renewable / solar) 0 100 MW / year
(ii) Electricity supplied by the Project into the grid (renewable / solar) 0 270 GWh / year
(iii) Private capital mobilized (equity / debt) 0 US$63.5 million
(iv) GHG emissions avoided 0 156,000 tCO2 / year
Table 2. Original Intermediate Results Indicators
Indicator Name Baseline End Target
(i) Physical implementation progress in generation project capacity 0 100 percent
constructed
(ii) Project-commissioning test completed No Yes
Components
23. The project comprised a single component consisting of the development, design, financing,
construction, ownership, and operation and maintenance (O&M) by a special-purpose vehicle (SPV),
Nur Navoi Solar Foreign Enterprise LLC (the Project Company / Developer), of a new 100-MW solar PV
plant located in the Navoi region of Uzbekistan. The Navoi Scaling Solar IPP reached financial close on
December 23, 2020, following a second extension of the deadline for financial close given COVID-19-
related supply-chain disruptions and logistics uncertainties. Navoi has contributed to the diversification
of the country’s energy mix through deployment of clean-energy resources and leveraging of private and
commercial financing in Uzbekistan. The electricity generated from the Project is sold to the Uzbek state-
owned power transmission utility, NEGU, under a 25-year PPA. The Project has increased installed power-
generation capacity in the country by 100 MW (first large-scale renewable / solar capacity), supplying an
incremental average of 270 GWh per year of renewable electricity to the grid, avoiding GHG emissions of
156,000 metric tons per year on average, and mobilizing approximately US$110 million in total financing
in the Uzbek energy sector as a result.
B. SIGNIFICANT CHANGES DURING IMPLEMENTATION
Revised PDOs and Outcome Targets
24. The PDO remained unchanged throughout implementation of the project.
Revised PDO Indicators
25. The PDO indicators remained unchanged throughout implementation of the project.
Other Changes
26. There were no other changes to the project either.
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II. OUTCOME
A. RELEVANCE OF PDOs
27. The overall relevance of the PDO is rated High.
Assessment of Relevance of PDO and Rating
28. The PDO remained highly relevant to the WBG CPF for Uzbekistan for FY16–20 7, as it does at
the time of project closing to the WBG CPF for Uzbekistan for FY22–26 8. The project contributes to
Objective 1.1 (Expand competitive access to market), Objective 1.2 (Enable private-sector growth and
investment), and Objective 1.4 (Improve the infrastructure for competitiveness and connectivity) under
High Level Outcome 1, and Objective 3.1 (Decarbonization and the greener development of industry and
the economy) and Objective 3.2 (More efficient use of natural resources) under High Level Outcome 3 of
the FY2022-26 CPF. Moreover, the project contributes to the achievement of several CPF objectives
indicators, including (i) private-sector investment in renewable-energy projects enabled; (ii) 100 MW of
the green solar-generation capacity installed by private sector with World Bank support; and (iii) increase
in the share of renewable energy supported by the World Bank in power-generation mix. The project not
only attracted private-sector capital but also demonstrated itself as a driver of integrated green, resilient,
and inclusive development in Uzbekistan. Its alignment with the World Bank’s green, resilient, and
inclusive development approach signified a commitment to sustainable and inclusive growth while
transitioning to cleaner energy sources.
29. Alignment with the GoU’s Development Programs and Strategy. The PDO remained highly
relevant to the GoU’s own sectoral strategy and priorities as reflected in the Uzbekistan 2030 Strategy. 9
The PDO is highly relevant to key targets and indicators under the Strategy, specifically those relating to
increasing electricity supply to 120 billion kWh by 2030 as well as increasing the share of renewable-
energy supply capacity to 25,000 MW. The project contributed directly to achieving various targets for
increasing renewable-energy capacities and rationalizing use of natural resources, including natural gas,
set out in the Strategy.
30. The project has also contributed to the World Bank Climate Change Action Plan commitment to
increase climate financing to 35 percent of total World Bank financing 10 and the GoU’s updated
NDC target. In particular, the GoU revised its target for the reduction of specific GHG emissions per unit
of GDP, increasing it from the previously set 10 percent (2018) to 35 percent (2021) below 2010 levels by
2030. Deployment of renewable energy is among the key drivers facilitating the GoU’s ambitious climate-
change targets.
31. The project highlighted the importance of energy-mix diversification, especially during the
winter of 2022–23, when Uzbekistan experienced a series of electricity blackouts and disruptions in
7 Report No. 105771-UZ.
8 Report No. 170931-UZ.
9 https://lex.uz/ru/docs/6600404.
10 https://climatepromise.undp.org/what-we-do/where-we-work/uzbekistan.
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heating caused by seasonal gas shortages, arising from several structural issues in the energy sector.
Mismatch between growing energy demand fueled by economic growth, significant subsidies in the
natural gas sector, overdependence of power and heating on gas, and decreasing gas supply (~50 bcm
over the past 10 years 11) due to weak exploration performance were key reasons, among others, of the
major energy-supply crisis in Uzbekistan at the time. These factors, along with structural infrastructure
limitations and unexpectedly harsh cold weather, led to a major energy crisis in the country. This crisis
further emphasized the urgent need to diversify energy sources and scale up renewable energy as the
centerpiece of energy-sector reform, security of supply, and achievement of power-sector carbon-
neutrality by mid-century.
32. PDO relevance is rated High as the PDO remained highly relevant to the country’s national
development goals as well as the World Bank’s country strategy. Furthermore, the project contributed
to increasing Uzbekistan’s share of renewable-energy sources, thus reducing reliance on coal-based
natural gas, and subsequently GHG emissions in the sector and the country, contributing to Uzbekistan’s
NDC target. More specifically, the project has generated mitigation and adaptation co-benefits and, with
other World Bank-supported operations, strengthened climate resilience by (i) including climate-change
adaptation and mitigation themes in the design of new capacity-building activities and (ii) ensuring that
the design of new renewable-energy plants considers climate-change-related risks and vulnerabilities.
B. ACHIEVEMENT OF PDOs (EFFICACY)
33. The overall efficacy of the project is rated High.
34. The overall PDO, as mentioned above, was to “increase and diversify electricity generation
capacity through private investment in Uzbekistan.” This objective can be split into two outcomes and
assessed separately as follows:
(i) to increase electricity generation capacity; and
(ii) to diversify electricity generation.
35. The overall efficacy of the project in achieving these two objectives, including evidence of the
achievement of pertinent PDO and results indicators, is discussed below.
Assessment of Achievement of Each Objective / Outcome
Outcome 1: To increase electricity generation capacity.
36. Masdar, the private developer, has completed construction of the 100-MW solar-power plant
in the Navoi region of Uzbekistan. The power plant commenced its commercial-operations phase on
December 10, 2021. It produces a maximum of 100 MW of electricity, one of the PDO indicator targets,
enough to supply approximately 35,607 households or cover the needs of over 180,000 individuals and
plays an important role in the local and national power supply. The project has thus become the first in a
series of WBG guarantee operations facilitating development by the private sector of 2,350 MW of new
11 bp Statistical Review of World Energy, 2022: https://www.bp.com/content/dam/bp/business-
sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2022-full-report.pdf.
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solar and gas-fired generation capacities in Uzbekistan that are currently at different stages of
implementation, from construction to operation.
37. Between the commercial operations date of December 10, 2021, and the WB/IBRD project
closing / completion date of December 31, 2023, the Navoi Scaling Solar IPP Project generated a total
of 565.7 GWh of renewable energy over almost 25 months of operation. Annual generation in
2022 (277 GWh) and 2023 (274 GWh) exceeded the PDO indicator target, which was set at 270 GWh/year.
For illustration purposes, Table 3 below sets out installed capacity in (i) 2018, when there was no large-
scale renewable capacity installed in the country, (ii) 2022, when the project started operation, and (iii)
2023, when it reached closing / completion, to demonstrate how the renewable installed capacity
increased over the relevant period. For example, the project constituted 0.6 percent of Uzbekistan’s total
installed capacity and 44 percent of solar-power supply in the country in 2022. While the former figure is
relatively small, the generation output underscores the project’s contribution to Uzbekistan’s electricity
supply and its role in supporting the avoidance of GHG emissions. This achievement highlights not only
the project’s positive impact on environmental sustainability, but also its role in terms of enhancing
energy security and diversifying the electricity-generation mix in the country.
Table 3. Installed Capacity and Power Generation by Source of Energy in Uzbekistan
for 2018, 2022, and 2023
By Energy Source Installed Capacity (in MW) Generation (in GWh)
2018 2022 2023 2018 2022 2023
Coal 1,210 1,210 1,360 9,666 — —
Hydro 1,672 2,072 2,232 2,731 3,384 3,645
Natural gas 9,585 12,203 14,783 35,085 50,723 46,921
Oil 250 274 274 133 1,064 1,064
Solar PV 0 200 1,497 0 626 4,688
Wind 1 1 101 3 3 450
Imports — — — 13,324 13,324
Total 12,717 15,960 20,247 60,943 69,125 70,092
Navoi Scaling Solar IPP 0 100 100 0 277 274
Share (percent) 0 0.6 0.5 0 0.4 0.4
38. The project, which cost a total of US$110 million, secured funding from various sources as
follows: IFC provided an ‘A’ Loan of US$17.5 million, while the Canada-IFC Blended Finance Program
contributed another US$17.5 million. Additionally, Asian Development Bank (ADB) provided an ‘A’ Loan
of US$9.5 million and a fixed-rate tranche of US$8 million from the Canadian Climate Fund for the Private
Sector in Asia. Before the project, accessing debt financing for infrastructure projects in Uzbekistan was
challenging, with only seven US dollar-denominated syndicated loans provided to Uzbek companies in the
country between 2015 and 2020, none of which were for infrastructure. The term of IFC’s financing
(totaling US$35 million) matched the PPA period and asset lifespan, and IBRD provided a Guarantee of
US$5.1 million. Long-term financing was crucial for the development of PPPs / IPPs in Uzbekistan’s power
sector, given its early stage and limited PPP / IPP track record, and to ensuring competitive Project tariffs
and sector sustainability. The equity portion of US$58 million came from the European Bank for
Reconstruction and Development (EBRD) in the form of an equity bridge loan to the Navoi Project
Company, Nur Navoi Solar Foreign Enterprise LLC, thus enabling the project sponsor, Masdar, which
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provided a corporate guarantee for that equity bridge loan, to invest equity in the power plant
construction and operation.
Outcome 2: To diversify electricity generation.
39. The project was the first large-scale and competitively procured PPP, IPP, renewable-energy
(excluding hydropower) and solar-power plant in the country, set against a backdrop in which electricity
generation relied predominantly on aging TPPs run by domestically produced and subsidized natural gas,
accounting for 9.5GW of the generation capacity out of 12.7GW of total capacity in 2018. When the
Project started operation as the first large-scale solar PV plant in operation in 2022, it emerged as a model
of diversification.
40. The successful implementation of this first renewable-energy private project led the GoU to
significantly elevate its ambitions in renewable-energy deployment, toward more aggressive clean-
energy transition and decarbonization targets and contributed to attracting large-scale private-sector
interest. From initial targets of 5,000 MW of solar- and 3,000 MW of wind-generation capacities as of
2020, the national target now stands at a remarkable 25,000 MW of installed renewable-energy capacities
by 2030 12. Concurrently, the GoU has initiated a next wave of energy-sector reforms, focusing on
liberalizing the energy market, encouraging private-sector participation, and fostering infrastructure
investment to facilitate renewable-energy integration.
41. In line with these endeavors, the WBG has delivered successfully on several of its mandates for
support in the development of 1,000 MW of solar capacity, mirroring similar efforts from IFC for
additional 500 MW of wind capacity as well as ongoing ADB and EBRD mandates for an additional 2,000
MW of solar and wind capacities. As of January 2024, total operational solar PV generation capacity in
Uzbekistan stood at 1,497 MW, with an additional 100 MW from wind sources (See Table 4 below).
Looking ahead, the GoU had reached agreement or signed agreements with the private sector for the
development of 5,677 MW of solar and 5,100 MW of wind capacities by 2030 as of March 2024,
underscoring its commitment to sustainable energy development, clean-energy transition, and
decarbonization as well as its recognition of the pivotal role that renewables will play in Uzbekistan’s
energy future in Central Asia.
Table 4. World Bank Group and Development Partners’ Support on
Operational Renewable Energy Deployment as of January 2024 (competitive / non-competitive basis)
Developer Supporting Competitive / Project Capacity (MW) Payment
Institution Non- guarantee
competitive provided
(Yes / No)
Masdar WBG Competitive Navoi Scaling Solar IPP 100 Yes
Masdar WBG Competitive Scaling Solar 2 (220 MW in 440 Yes
Jizzakh and 220 MW in
Samarkand)
Masdar ADB Competitive Sherobod Solar IPP 457 Yes
Masdar IFC Non- Zarafshan Wind 100 (out of No
12 Presidential Decree “On the Strategy of Uzbekistan – 2030,” No.11.09.2023, https://lex.uz/ru/docs/6600404.
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Developer Supporting Competitive / Project Capacity (MW) Payment
Institution Non- guarantee
competitive provided
(Yes / No)
competitive total 500)
Gezhouba N/A Non- Solar IPP in Bukhara and 400 (out of No
Group competitive Kashkadarya regions 1000)
ACWA EBRD Competitive 100 MW wind farm in the 100 Yes
Power Republic of Karakalpakstan,
Uzbekistan
Justification of Overall Efficacy Rating
42. Following from the rating of High for the efficacy of the project in terms of achievement of the
two outcomes described earlier, the overall efficacy rating of the project is High.
Table 5. PDO, outcomes and indicators
PDO Outcomes PDO Indicator Plan Actual
(2023)
To increase and To increase Power-generation capacity constructed 100 100
diversify electricity electricity (renewable / solar) in MW / year
generation capacity generation Electricity (renewable / solar) supplied by 270 274
through private capacity the Project into the grid in GWh / year
investment in To diversify Private capital mobilized (equity / debt) in 50 63.5
Uzbekistan electricity US$ million
generation HG emissions avoided in tCO2 / year 156,000 158,212
C. EFFICIENCY
43. Efficiency is rated Substantial.
Assessment of Efficiency and Rating
44. At approval of the IBRD guarantee and the IFC financing for the project by the IFC / World Bank
Boards, the project was efficient, surpassing the threshold of a positive net present value (NPV) at a
9.8-percent economic hurdle rate (as determined by the World Bank for assessment of the economic
viability of a project), with an economic internal rate of return (EIRR) of 11.7 percent and an EIRR with
GHG benefits of 20.1 percent. Due to a short delay in financial close, which affected the length of the
construction and operation periods, at completion the project’s EIRR was 10.5 percent and its EIRR with
GHG benefits was 17.4 percent (See Annex 4 for details), which is still higher than the economic hurdle
rate. Thus, overall project efficiency is rated as Substantial.
D. JUSTIFICATION OF OVERALL OUTCOME RATING
45. The project is assigned an overall Highly Satisfactory outcome rating, given the relevance, efficacy,
and efficiency ratings described above and summarized below in Table 6.
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Table 6. Summary of Outcome Rating
Relevance of PDO High
Efficacy in achieving PDO High
Efficiency in achieving PDO Substantial
Overall Outcome Rating Highly Satisfactory
E. OTHER OUTCOMES AND IMPACTS
Gender
46. This operation was not gender-tagged as per IFC/World Bank Guidelines for Guarantee
Operations. In terms of the World Bank Performance Standards (PS), the last World Bank project
supervision mission, carried out in December 2023, observed that the Project Company provided
dedicated facilities for female employees, such as separate toilets, rest rooms, and water points, at the
project site in order to ensure a safe and comfortable working environment for women. Additionally, an
anti-sexual harassment policy with a complaint-and-response mechanism has been implemented that
aims to protect female employees from sexual harassment and gender-based abuses, especially during
the construction period. During the construction period, annual training on the creation of a gender-
sensitive and respectful work environment and communicating zero tolerance for sexual harassment and
gender-based violence (GBV) was carried out for all staff and contractors.
Institutional Strengthening
47. The project supported capacity building of the World Bank’s counterparts on the Uzbekistan
side, including the MoEF, the MoE, the Ministry of Investments, Industry, and Trade (MIIT), the PPP
Department under the MoEF, and NEGU in preparing, negotiating, and implementing similar WBG-
supported transactions, such as the Scaling Solar 2 Project (Jizzakh and Samarkand, 2 x 220 MW)
(P174323), Uzbekistan Syrdarya Efficient Power Generation Project / Syrdarya 2 CCGT IPP (1,573 MW)
(P174323), Uzbekistan Solar and Renewable Energy Storage Project (Bukhara, 250-MW PV and 63-MW /
126-MWh BESS) with private-sector participation, including in conducting analogous tender processes and
documents (expression of interest, request for qualification, request for proposal, and so on) as well as
preparing and executing the Project documents (for example, PPA and GSA). As part of this capacity
building, major international financial institutions (IFIs), including the World Bank and IFC, supported the
government stakeholders, from relevant ministries and agencies, to attend APMG’s PPP Certification
Program 13 and obtain qualifications in preparing and executing PPP projects.
Mobilizing Private-Sector Financing
48. At the time of financial close, the project was estimated to cost US$110.9 million. The debt
portion of the funding totaled US$52.5 million, consisting of IFC’s ‘A’ loan (US$17.5 million) and blended
financing from the Canada-IFC Blended Finance Program (US$17.5 million), as well as ADB’s ‘A’
loan (US$9.5 million) and its fixed-rate tranche under the Canadian Climate Fund for the Private Sector in
Asia II (US$8 million). The World Bank / IBRD provided a six-month payment guarantee (US$5.1 million)
using a Letter of Credit (LC) structure with Natixis Bank (France) providing the LC. Masdar’s equity portion
13 APMG - Agile Project Management Practitioner; https://ppp-certification.com/.
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of the funding consisted of US$58.2 million. At financial close, Masdar was solely owned by Mubadala 14,
a sovereign wealth fund created to generate sustainable financial returns, with Masdar operating on a
commercial basis and focused on making investments in clean or renewable energy. The private capital
mobilization for the project was estimated at US$63.5 million, attributable to the equity of US$58.4 million
from Masdar and the standby LC of US$5.1 million from Natixis.
Table 7. Financing Sources of Navoi Scaling Solar IPP Project
Sources of Funds US$, millions %
Equity sources 58.38 52.6
IFC A Loan 17.51 15.8
IFC Blended Climate Finance Program 17.51 15.8
ADB parallel 9.51 8.6
ADB concessional 8.00 7.2
Debt sources 52.54 47.4
Total sources before value added tax 110.93 100.0
Poverty Reduction and Shared Prosperity
49. The project had an indirect impact on poverty reduction and shared prosperity in Uzbekistan.
With the project’s tariff set at US¢2.67 per kWh (flat with no indexation over the 25 years of the PPA
period), the weighted average electricity purchase cost of NEGU was forecasted to grow to UZS 492.5 per
kWh (US¢3.2 per kWh equivalent) by 2030, from UZS 285.3 per kWh (US¢2.7 per kWh equivalent) in
2021. 15 The project’s implementation of a fixed tariff structure without indexation facilitates stability in
electricity supply, thereby indirectly fostering poverty reduction through subsidy rationalization and
private-sector engagement in Uzbekistan. By ensuring predictability in electricity generation cost for 25
years, particularly beneficial to vulnerable households and businesses, the Project supports financial
resilience and economic stability. Moreover, the transition away from subsidized electricity pricing signals
a move toward market-based approaches, freeing up fiscal space for targeted poverty alleviation
measures as well as directing state budget to other priority areas including health care, education, and
transport. At the project level, over 170 (cumulative) workers were involved in the project and 25
employees currently working on the site responsible for O&M of the project. Additionally, by providing a
transparent and stable investment climate, the project encourages private sector participation in the
energy sector, promoting efficiency gains, innovation, and economic growth, all contributing to shared
prosperity and poverty reduction.
Other Unintended Outcomes and Impacts
50. Following the successful preparation and implementation of the project, the GoU established
an ambitious objective for its energy transition, aiming to guarantee power supply stability and overhaul
the energy infrastructure by integrating significant renewable energy sources, far exceeding the initial
plans of 8 GW of renewable capacities by 2030 16. According to the data from MoE, since 2019, Uzbekistan
14 https://masdar.ae/en/our-company/our-shareholders
15 PAD for Navoi Scaling Solar IPP Project (P170598): https://projects.worldbank.org/en/projects-operations/document-
detail/P170598?type=projects.
16 Concept Note For Ensuring Electricity Supply In Uzbekistan In 2020-2030: https://minenergy.uz/en/lists/view/77.
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has entered into agreements (such as PPAs, framework agreements, and memoranda of understanding)
for renewable energy projects amounting to over 20 GW. While these ambitions have positioned
Uzbekistan as a prominent center for renewable energy advancement not only within Central Asia but
also on a global scale, balancing capacities and grid flexibility are becoming priority challenges in the GoU
agenda.
III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME
A. KEY FACTORS DURING PREPARATION
51. The objectives of the project were largely realistic with a simple and well-structured generation
component and a clear line of sight between project activities and development objectives. Based on
this and other information, this Implementation Completion and Results Report (ICR) is able to recreate a
sound and logical Theory of Change to, among others, assess the efficacy and efficiency of the project.
The Results Framework—including most of the indicators, both PDO-level and intermediate—is aligned
with the operation’s objectives, with baselines and target values specified. The monitoring and evaluation
(M&E) plan was mostly sound and reasonable, with beneficiaries and the project risks discussed in
reasonable detail. The following factors affecting the preparation of each component, however, need to
be noted.
52. To accelerate deployment of renewable energy potential, the GoU has embarked on major
reforms and adopted several legislative acts to stimulate renewable energy investment: adopting the
“On the use of renewable energy sources” (#LRU-539 dd.22.05.2019), strengthening energy sector
institutions, and establishing supportive investment legal and regulatory frameworks including the Law
“On investments and investment activity” (#LRU598 dd.25.12.2019) and the Law on “Public-private
partnerships” (#LRU-537, dd.10.05.2019). The aforementioned laws were instrumental in smooth
preparation and implementation of the project.
53. Legal and regulatory framework. At the time of project preparation, the GoU was implementing
a significant portion of its ambitious energy sector reforms that envisaged introducing market-based
principles in sector management and operations with the support of IFIs, including the WBG. The energy
sector, as a backbone of the economy, was chosen as one of the key reform areas. That momentum and
reform implementation progress were key aspects in the successful preparation of the Project.
54. The following IFC / World Bank Performance Standards (PSs) were relevant to the project: PS1
- Assessment and Management of Environmental and Social Risks and Impacts, PS 2 - Labor and Working
Conditions, PS 3 - Resource Efficiency and Pollution Prevention, PS 4 - Community Health, Safety, and
Security, PS 5 - Land Acquisition and Involuntary Resettlement, and PS 6 - Biodiversity Conservation and
Sustainable Management of Living Natural Resources. This was a Category B project according to IFC’s
Policy on Environmental and Social Sustainability. The project was expected to have limited impacts that
were site-specific and temporary. These impacts could be avoided or mitigated by adhering to applicable
PSs, procedures, guidelines, and design criteria.
55. COVID-19 pandemic. As a result of the travel restrictions arising from the COVID-19 pandemic,
appraisal of the Project Company and the project was conducted through a partial desktop and virtual
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appraisal (conducted via a series of video/phone conferences). IFC conducted its appraisal on July 7, 2020,
which consisted of a desktop review of available information, including an Environmental Social Due
Diligence (ESDD) Report developed during the IFC Scaling Solar Uzbekistan Advisory Project, the
preliminary ESIA for the project, the Project Company’s SEP, the ESDD developed by the Lender’s Technical
Advisor (LTA) following a two-day site visit, as well as the company’s responses to a series of ESHS
questionnaires. IFC’s appraisal focused on the company’s capacity to manage ESHS risks and compliance
with Uzbek regulatory requirements and IFC’s PS and EHS guidelines. Specific items reviewed included
(a) the company’s and contractor’s capacity to manage ESHS risks under the project; (b) human resource
policies and procedures, especially on working conditions and terms of employment; (c) construction-
related occupational health and safety for its staff, contractors, and any primary labor supply chain issues
associated with migrant and/or seasonal workers that is forced and child labor; (d) water resource
availability; (e) community health and safety and security; (f) provision of adequate alternate land to
previous land users; and (g) early engagement with surrounding communities and other stakeholders.
56. The appraisal considered the environmental and social management planning process and
documentation for the project and gaps, if any, between these and IFC/WB’s requirements. Where
necessary, corrective measures, intended to close these gaps within a reasonable period of time, were
identified. Through the implementation of these measures, the Project was designed and operated in
accordance with PS objectives. A preliminary Environmental and Social Impact Assessment (ESIA) and a
complete Environmental and Social Review Summary (ESRS) reflected in annex 4 with detailed Action and
Stakeholder Engagement Plans (SEPs) were disclosed on the World Bank and IFC websites on August 14,
2020.
57. The implementation of resettlement activities for the project involved the acquisition of land
with consideration for economic displacement, offering land-for-land compensation, and ensuring
alternative land for lease to affected parties. Additionally, some types of compensation for livelihood
restoration were also provided to the project-affected farms. A stand-alone resettlement plan was not
developed; instead, the final ESIA included a section on resettlement, acting as an abbreviated
Resettlement Plan Framework (RPF) to meet the World Bank requirements.
B. KEY FACTORS DURING IMPLEMENTATION
58. In order to ensure successful preparation of the project, the GoU established an inter-
ministerial working group led by the MIFT. This collaborative initiative, led by MIIT, enabled cooperation
among various stakeholders and facilitated multi-stakeholder dialogues throughout the project
preparation and implementation phase. These efforts served as a key instrument for timely risk resolving
any pending issues and contributing to the successful realization of project objectives and the attainment
of predefined outcomes. During the implementation, the project team alongside with the stakeholders,
including inter-ministerial working group, conducted regular multi-stakeholder discussions to ensure
timely mitigation of arising risks, successful implementation of the Project, and the achievement of
targeted outcomes.
59. At the sector level, the GoU has demonstrated its intention to cope with new sector conditions
and adjust its reform plans accordingly. The Presidential Decree PD-4664 dated April 4, 2020, approved
a set of key policy measures on wholesale energy (electricity and gas) market creation, operational
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performance of gas state-owned enterprises (SOEs), compliance control systems, and price liberalization
of petroleum products to improve the operational efficiency and financial sustainability of the energy
sector, which was affected by the COVID-19 related reduction of export volumes and price decreases due
to the economic slowdown in the markets. The Project benefited from an ongoing comprehensive reform
program and a good track record with measures and actions taken in Uzbekistan.
60. At the project level, during the construction period, the private developer required the
engineering, procurement, and construction (EPC) contractor charged with the accommodations of
workers to undertake daily inspections of the accommodations block to ensure that all COVID-19
pandemic-related requirements were being fulfilled. In addition, the EPC contractor was required to
consider more general compliance with the Worker Accommodation Management Plan. Particular
attention had to be paid to general food hygiene standards and the condition of welfare facilities.
61. Preliminary and full environmental and social assessment identified the flora and fauna in the
area that would be disturbed and removed during construction. There have been some sightings of the
Central Asian tortoise, which has been categorized by the International Union for Conservation of Nature
(IUCN) as a vulnerable species. The June 2020 environmental surveys identified 1–3 residential holes per
hectare within the proposed project site. Further surveys in October 2020 recorded five individuals on a
15-ha area. However, this did not trigger critical-habitat criteria in terms of IFC / WB PS6, as it is not listed
as Critical or Endangered on the IUCN Red List nor is it a restricted-range species or endemic to Uzbekistan.
The environmental management plan included general and specific mitigation measures as instruction to
drivers during site leveling and construction—holes to be cut in selected parts of the perimeter fence to
enable free movement of tortoises during plant operation. Monitor and snake species were also recorded
in the wider area. The IUCN-listed endangered steppe eagle was observed during the March 2020 surveys
— 11 species flying along the boundary of the Project site. Other bird species of concern were also
identified based from desk review but not observed.
62. The GoU initiated the process of acquiring land for the project in March 2020, following
consultations with the State Cadastre. The land identified for the project was previously leased to two
farmers (A and B), who surrendered their leases upon government notification. The land was
subsequently allotted as a single plot for the project purposes. Farms A and B experienced economic
displacement due to the loss of available grazing areas, with Farm A reducing to 46.20 percent of its former
area and Farm B to 2.33 percent. To address this, like-for-like compensation was offered. Farmer B
accepted alternative land as compensation, while Farmer A was offered a plot of land with electric water
pump system. The offered land would come from another Farmer (C) who had voluntarily surrendered
(the reason to return the land was that the land had an electric water pump with high electricity bills, and
they wanted to reduce their bills). Farmer A considered this option. Additionally, Farmer A and his wife
have been hired to work in the project by the contractors. As part of the agreed Environmental and Social
Action (ESAP 22) in November 2022, Nur Navoi/Masdar provided the World Bank letters of satisfaction
from the affected farmers concerning the options considered for land acquisition. During the mission in
December 2022, the World Bank team conducted meetings with the affected farmers. In this meeting, the
World Bank team confirmed that the farmers had no objections or unresolved issues related to the land
acquisition and involuntary resettlement.
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IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME
A. QUALITY OF MONITORING AND EVALUATION (M&E)
M&E Design
63. Overall, the project presented a sound results chain, clearly linking the inputs, activities, and
outputs to the intended objective. The role of IBRD Guarantee within the framework of the project
provided a logical sequence of the outputs necessary to achieve the PDO. The intended results were
generally well reflected in the project’s Results Framework, which presented a set of valid indicators to
measure the attainment of the PDO. The indicators were specific, measurable, achievable, and time
bound.
M&E Implementation
64. Progress on the Results Framework indicators was measured through supervision missions and
properly reported in Implementation Status and Results Reports (ISRs) and Aide Memoires. The
project’s biannual and annual reports produced and shared by the private developer served as the primary
source of data for the indicators and provided reliable and good-quality data to measure progress. They
were produced on time and following the guidance of the World Bank staff and best practices.
M&E Utilization
65. The World Bank team used the information provided in the annual reports and on informal
interactions to report on project implementation. On top of the formally agreed reports, a good
communication channel was established between the World Bank staff and the Project Company.
Ministries, including the MoE, MIIT, and MoEF, and the implementing agency - NEGU were also helpful in
arranging missions. A good working relationship and collaborative behavior was the tool to access relevant
information when needed. To raise awareness of the project at the government level, the World Bank
team was able to include the guarantees in the annual Country Program Portfolio Review (CPPR) with the
GoU. As guarantees do not have typical Investment Project Financing (IPF) implementation modality
(procurement, disbursements, and so on) and are not part of the World Bank portfolio monitoring tools,
they tend to be out of the radar for portfolio supervision, while the World Bank team pursued the IPF
rules and practices in terms of implementation support and supervision. Recently, the World Bank
management has allocated additional budget to further strengthen the project supervision and
implementation support for subsequent guarantee operations.
Justification of Overall Rating of Quality of M&E
66. Based on the above assessment of the M&E design, implementation, and utilization, the overall
quality of M&E is rated Substantial. While full implementation of the M&E system was delayed, once in
place, it was well designed and utilized effectively to report on bottlenecks faced during implementation.
The Project Company was effectively providing reports in a timely manner, which was instrumental for
the World Bank Project team to keep the project on track toward making progress on planned activities
and deliver its development objective.
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B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE
Environment and Social
67. The Navoi Scaling Solar IPP Project was classified as Category B according to IFC’s Policy on
Environmental and Social Sustainability at approval and did not change risk categorization during
implementation.
68. Environmental safeguards. The project was implemented in compliance with IFC/WB
Performance Standards as well as national environmental, occupational health, and labor safety
requirements. Applicable studies such as ESIA, ESAP, Environmental and Social Management and
Monitoring Plan (ESMMP), and other sub-plans were developed. Masdar established and maintained a
functional Environmental and Social Management System (ESMS). Environmental, health, and safety
performance during project implementation were satisfactory, with nonconformities recorded and
addressed. No major environment, health, and safety (EHS) incidents have been reported on the Project
site.
69. Social safeguards. The project, categorized as a Category B project under IFC / WB's PS on
Environmental and Social Sustainability, and the Project Company, demonstrated satisfactory
performance in terms of implementation of social safeguards throughout the Project life. The ESMS,
developed by Masdar and operated by Nur Navoi Solar, has effectively addressed social risks and impacts
throughout the Project lifecycle. During the design stage, a stand-alone resettlement plan was not
developed; instead, the final ESIA included a section on resettlement, acting as an abbreviated RPF to
meet the World Bank requirements. The other land impact of the project was the restriction in access to
a footpath crossing the project site after the fencing is installed. According to the ESIA report, cutting off
this footpath had no economic impact nor implied any legal aspects—but only affects time spent on small-
scale local mobility between the connected locations.
70. The project is currently in the operational phase, managed and operated by Nur Navoi Solar
Foreign Enterprise (FE) LLC. The O&M team at Nur Navoi Solar FE LLC consists of 25 employees, including
a dedicated health, safety, security, and environment (HSSE) engineer, with the engineer serving as the
focal point for such matters throughout the Project’s operational phase.
71. The HSSE specialist (deputized by the developer) regularly conducted health and safety
inductions for workers during the construction phase and periodically shared environment and social
compliance progress reports with the World Bank. At the corporate level, the company adheres to the
Mubadala Code of Conduct, which outlines principles related to core company values and ethics. All 25
employees have completed training on Masdar’s corporate Code of Conduct for Workers as well as on
GBV and sexual exploitation, abuse, and harassment in the workplace.
72. The operating company has established a functional grievance redress mechanism (GRM), with
grievance boxes installed at the sites for workers and nearby communities. The project’s solar PV plant is
secured with a perimeter fence topped with barbed wire and is further protected by security personnel.
Dedicated facilities, including separate toilets, restrooms, and water points, are provided for women
employees at the Project site, demonstrating a commitment to gender-sensitive considerations.
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73. In summary, the project has met the social safeguards requirements of the IFC / World Bank
PSs. An SEP was developed at the design stage and is being implemented to engage and build robust
relationships with project stakeholders. It is important to note that stakeholder engagement is a
continuous process. The power plant is maintained by Nur Navoi (the owner) throughout the life cycle of
the project or until Nur Navoi transfers the ownership of the project to a different party once the PPA
expires. The main engagement tools under the SEP include notification, disclosure, and consultation, and
an external grievance mechanism.
Fiduciary
74. Financial management. The Navoi Scaling Solar IPP benefited from an IBRD payment guarantee
over 20 years of the 25-year PPA. The payment guarantee will backstop the security mechanism (that is,
an L/C) in case of a draw on the L/C that the GoU or NEGU has not reimbursed within 12 months of the
draw. In case a guaranteed event takes place, and a valid demand notice is submitted, the World Bank
will make the payment to the L/C bank. Therefore, the provisions of paragraph 7 on Financial Management
of the World Bank Policy on Investment Project Financing (October 2018) do not apply.
75. The privately owned Project Company hired a dedicated financial manager supported by
qualified accountants to perform financial management duties including accounting, reporting
planning, managing auditing, and internal controls. The Project Company’s annual financial statements
were prepared in accordance with International Financial Reporting Standards (IFRS) and were audited in
accordance with International Standards on Auditing (ISA). Copies of the authorized audit reports and
Management Letters were provided to the World Bank within six months after the end of the reporting
period.
76. Procurement. The World Bank’s Procurement Regulations for IPF Borrowers, dated July 2016,
revised in November 2017 and August 2018, do not apply to guarantees (as stipulated in paragraph 2.2,
Section II: General Considerations of the Regulations). The project is, however, required to be consistent
with the World Bank’s over-arching fiduciary requirement with respect to economy and efficiency.
77. The GoU (through the MoEF, MoE, and MIIT, as appropriate) conducted a competitive bidding
process for selection of an investor to design, finance, construct, and operate the Navoi Scaling Solar
IPP. IFC Advisory advised the GoU on structuring and tendering the Project using the WBG Scaling Solar
approach. The prequalification phase included criteria such as experience, and technical, financial, and
legal requirements. The GoU prequalified 11 investors out of 23 applications received. The bidding phase
was initiated upon the issuance of the Request for Proposals on June 20, 2019. All prequalified investors
were invited, and five submitted technical and financial proposals. The bidders were developers,
investors, co-owners, and operators of a portfolio of power generation, large solar-panel manufacturers,
and IPPs. On the basis of an evaluation of both technical (on a pass/fail basis) and financial proposals,
Masdar, with the lowest proposed electricity offtake tariff of US¢2.679 per kWh, was selected as the
winning bidder. Signing of the main project commercial agreements (PPA and GSA) between the GoU and
Masdar took place on November 8, 2019. No complaints were received on the outcome of the tender
process. Finally, that procurement was determined to be consistent with the principles of economy and
efficiency.
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C. BANK PERFORMANCE
Quality at Entry
78. The design of the project served as strong support for the World Bank’s Country Partnership
Strategy for Uzbekistan, catalyzing private-sector participation in the power-generation segment of the
electricity value chain. The WBG’s financial instruments increased the attractiveness of this
solar/renewable IPP investment opportunity in the country and demonstrated the preparation and
implementation of the country’s first private sector-led large-scale solar PV plant. The objectives of the
project were realistic with a balanced level of ambitiousness, given that the success of the Project was
expected to facilitate future renewable energy projects and mobilize quality international and private
investors, resulting in enhanced energy-supply sustainability and increased competition and lower tariffs.
Accordingly, quality at entry is rated as Satisfactory.
79. The WBG, as a lead partner, has been supporting the GoU in designing, prioritizing, and
implementing energy reforms, scaling up renewables, and promoting the PPP agenda as follows:
(a) The government’s Five-year Development Strategy for 2017–21 stipulated broad market-
oriented reforms in the country’s governance and in key areas of the Uzbekistan economy;
(b) Establishment of the MoE, which assumed consolidated responsibilities for policy-making and
regulatory functions in relation to gas, coal, nuclear power, and electricity, while day-to-day
operations were delegated to the sector entities such as UE and UNG;
(c) Unbundling of the vertically integrated UE into separate functions: generation (TPP JSC),
transmission (NEGU), and distribution (Regional Electric Network JSC). The same approach
was adopted with UNG unbundling in June 2019;
(d) Adoption of a new electricity-tariff methodology and establishment of a separate tariff
commission, setting out a path for tariffs to be systematically adjusted to full cost-recovery
levels on a regular and systematic basis;
(e) Adoption of a Renewable Energy Law and Grid Code with an explicit focus on increasing
private investment in renewable-energy generation;
(f) Adoption of measures requiring its two largest (and costliest in terms of explicit and quasi-
fiscal deficits) SOEs — UE and UNG — to adopt IFRS and produce updated audited financial
statements compliant with the new standards;
(g) Development of electricity-transmission expansion and rehabilitation plans for the period up
to 2030 and an energy-sector digitalization strategy.
80. The GoU’s energy-sector reform initiatives supported by the World Bank further contributed to
creating a favorable environment in smooth preparation and implementation of the project. In fact, the
IBRD Guarantee operation for the solar PV plant was designed in parallel with other operations that
supported improvements in the financial situation of the power-sector value chain. NEGU’s financials have
been programmed into the World Bank’s support through PASA implemented since 2018 and a sequence
of stand-alone DPOs 17. The relevant policy-reform actions supported under the aforementioned three
DPOs included electricity-tariff increases, transparency measures in utility financial management,
17 Uzbekistan Reforms for a Sustainable Transformation toward a Market Economy DPO (P166019) approved in June 2018;
Sustaining Market Reforms in Uzbekistan DPO (P168280) approved in June 2019; COVID-19 Crisis Emergency Social Safety Nets
Project (P173984) approved in June 2020.
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adoption of renewable-energy laws, and introduction of first renewable generation into the power mix
(that is, the commercial close of Navoi Scaling Solar IPP), which were all successfully implemented by the
Government, demonstrating the GoU’s commitment to the sector reform process.
81. Technical aspects. World Bank assistance supported the development of the Navoi Scaling Solar
IPP PV plant design in accordance with the Renewable Connection Code then recently adopted by the
GoU. Consequently, the PV plant, along with subsequent solar PV plants, was designed to minimize
impacts on the power system and adopt modern generation technologies. The introduction of significant
variable renewable energy, such as solar and wind, into the grid network posed operational challenges.
The World Bank conducted power flow and short circuit studies, confirming that connecting the initial
100-MW solar power plant did not cause overloading of or voltage violations in the national transmission
network. The site selection involved NEGU identifying cities with suitable daily-load profiles for the
proposed solar PV plant’s electricity-generation supply and the GoU’s confirmation of land availability,
further validated by an assessment from IFC Advisory.
82. Economic and financial aspects. The economic rate of return (ERR) and NPV of benefits were
calculated using the World Bank standard cost-benefit analysis methodology. The country-specific
economic discount rate stood at 9.8 percent, in line with the World Bank guidelines on discount rates
(twice the long-term average annual real per capita GDP growth). A detailed economic analysis of the
Project was conducted with certain assumptions described in Annex 4. The financial analysis conducted
by the World Bank indicated that the project was expected to generate sufficient cash flows to cover O&M
expenditure and debt service and allow for regular dividend payments, providing shareholders with a
reasonable return for this kind of project. The lenders’ base case further confirmed that debt service
coverage ratios (DSCRs) were consistent with precedents for a project of this nature.
83. Risks. Overall risk under the Navoi Scaling Solar IPP was rated Substantial. Details of the risks and
the related risk-mitigation measures and their implementation status are set out in Table 8 below.
Table 8. Project Risks Summary
Risks Risk Risk Mitigation Measures Risk Realization Status
Rating
Political and Substantial The GoU established a tariff Continues to be substantial. The tariff increase
governance: Poor commission and a is a continuous process and needs to be
implementation of governmental working group managed and communicated carefully.
increase in electricity to ensure that major reforms, Following a series of tariff increases in 2023
and gas tariffs including tariff increases, are and 2024, the GoU is aiming to achieve energy
enacted based on expert tariff cost recovery level by the end of 2026. At
advice and communication the same time, the GoU is paying a special
campaigns to collect citizens’ attention to protect vulnerable part of the
feedback. population from negative impacts of the tariff
increase.
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Risks Risk Risk Mitigation Measures Risk Realization Status
Rating
Macroeconomic: Substantial The World Bank closely Continues to be substantial. Given the GoU has
Rising risks of monitored through fiscal signed several large-scale solar and wind
unaffordable impact assessments and will projects bilaterally, there is a need to continue
contingent liabilities in continue to advise the GoU monitoring contingent liabilities.
the sector due to a on the sector policy and
growing number of planning.
IPPs with directly
negotiated,
unsolicited proposals
lacking transparency,
not always aligning
with sector
investment plans
Sector strategies and Substantial As part of the ongoing World While the risk remains to be substantial, so far,
policies: High pace Bank support for the energy the reforms have been successfully managed
and sequencing of sector reform, it continued and implemented by the GoU. These reforms
priority reforms could assisting the GoU in broader are expected to improve the financial viability
become a risk if not electricity sector reforms. of the energy sector overall.
managed well by the This included implementing
GoU. adopted tariff setting
methodologies and regular
tariff adjustments and
integrating social protection
measures for the poor and
vulnerable, alongside
effective communication
strategies.
Technical design of Moderate The World Bank team Not realized
the project: Grid-scale prepared and implemented
renewable energy is capacity building and support
new to the country program for institutional
and national grid development, including for
system operator/off- national grid system
taker may not be able operator.
to manage the
variability of
renewable energy.
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Risks Risk Risk Mitigation Measures Risk Realization Status
Rating
Institutional capacity Substantial The WBG team regularly Not realized
for implementation engaged senior officials of the
and sustainability: GoU and sector stakeholders,
The GoU or NEGU is clearly presenting the Project
not sufficiently scheme and success versus
equipped to manage risk factor and providing
and implement the technical assistance and
Project, including institutional development
interactions with support on several areas such
international as sectoral, legal/regulatory,
investors, which may technical, fiduciary,
result in poor environmental and social, as
coordination and needed over time.
deviations from sector
policies and plans.
Quality of Supervision
84. Project supervision was thorough and diligent, with four ISRs recording progress since 2022. The
World Bank’s supervision and implementation support of the project, in coordination with IFC, was
satisfactory. Also, due to the COVID-19 conditions and restrictions (that is, missions, site visits, and so on)
and a short delay in project implementation (that is, delivery of solar PV panels, delayed construction and
installation works, and so on), the project team submitted four ISRs instead of six. During the World Bank’s
site visits as part of supervision missions, Environmental, Social and Energy Specialists were always
participating. In a series of site visits, the World Bank team focused on biodiversity, spill, and waste
management systems as per IFC’s Policy on Environmental and Social Sustainability, and in coordination
with IFC proposed corrective recommendations when needed. Quality of supervision is rated Satisfactory.
85. The composition of the project team from the IBRD side has remained largely unchanged during
implementation. The Project Task Team, including the Task Team Lead (TTL), co-TTLs, and Environmental
and Social Specialists, stayed relatively constant from the Project's early preparation and implementation
stages. This continuity has been a key factor in the Project's success. Despite the COVID 19 travel
restrictions, the Bank and IFC teams have successfully exchanged the project progress reports and
relevant implementation documentation as well as the missions and site visits’ assessments.
86. Positive aspects of supervision are as follows:
(a) Regular supervision missions, with a focus on technical aspects and environmental and social
safeguards, were carried out individually but in a coordinated and informed way by the World
Bank and IFC teams;
(b) Responsiveness of the developer in addressing comments and guidance provided by the World
Bank’s environment and social specialists;
(c) Based on World Bank missions and site visits and information in the latest Progress Report (Q4
2023), the project is meeting and exceeding the social safeguards requirements under the IFC /
World Bank PS. The suggested improvements in reporting and continued training efforts are
aimed at further enhancing the Project’s social safeguards performance.
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Justification of Overall Rating of Bank Performance
87. The design of the project was adequate to meet PDO. The overall rating of World Bank
performance on the project is Satisfactory.
D. RISK TO DEVELOPMENT OUTCOME
88. In a guarantee operation such as this, the overall rating of the risk to development outcome at
project completion is composed of two types of risk: (a) risk that the PDO of increasing the supply of
electricity will not be sustained and thereby also undermining the longer-term outcomes of increasing
investor confidence in sector reforms and putting private investment at risk and (b) the risk that there will
be a call on the guarantee, which can also have an impact on the sustainability of development outcomes.
89. The substantial risk to the sustainability of the development outcome is the electricity payment
risk. NEGU has faced a challenging financial situation over the last three years, failing to break even on an
operating-cost basis in 2022. In the absence of a regulated cost-plus transmission-tariff regime, NEGU’s
revenues did not rise enough to offset increases in operating costs in 2022. That said, cognizant of its
external payment obligations, NEGU has prioritized timely payments to IPPs, including the project. It is
also noteworthy that existing and proposed renewable IPPs have a lower cost than Uzbekistan’s current
inefficient generation fleet, so it is expected that renewable IPPs improve NEGU profitability over time. If
the electricity payment risk were to materialize, the risk of a call on the guarantee would also have
substantially increased.
90. Another risk is related to the potential transfer of signed PPP/PPAs (including the project) from
NEGU to the newly established single buyer, UzEnergoSotish JSC (UES), if the required contractual
changes are not properly managed and, therefore, create uncertainty for investors and financiers. UES
was established by Presidential Decree No. 166 dated September 28, 2023 18 as part of the next phase of
reforms in Uzbekistan's energy sector. The new phase of reforms aims to create a competitive
environment and attract foreign and private investment by forming wholesale and retail electricity
markets with transparent pricing mechanisms. Key provisions include approving a transition concept and
roadmap, establishing entities for centralized power purchase and transmission network operation, and
setting up an energy market regulator. The decree also mandates tariff reforms, staffing adjustments, and
various financial arrangements.
91. Decree No. 166 has set ambitious targets by expecting (a) amendments to the investment
contracts and state-support agreements concluded by NEGU with private investors of power plants by
May 2024 to a re-registration of PPAs signed by NEGU to UES, and (b) transfer by January 2025 of
obligations of NEGU under electricity export and import contracts, as well as under PPAs signed with
privately-owned power project companies, to UE. Before any reorganization related to NEGU as the off-
taker under the Project, as a risk mitigation measure and to provide greater certainty, the ministries,
including MIIT, MoEF, MoE as well as NEGU will need to conduct broad-based consultations with investors
and IFIs involved in the development or operation of private power plants in Uzbekistan, including the
World Bank and IFC, to introduce amendments to the concession, offtake, and related agreements
required in light of Decree No. 166. Ultimately, following such consultations and investors’ due-diligence
18 Presidential Decree No.166 dated September 28, 2023: https://lex.uz/ru/docs/6624455.
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processes, including those of the World Bank and IFC, all concerned parties will need to agree on revised
arrangements and amend the documents to comply with the decree.
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V. LESSONS AND RECOMMENDATIONS
WBG Scaling Solar Approach and Role of WB Guarantee
92. As the first Scaling Solar program outside of Sub-Saharan Africa, the project validated that an
integrated approach – consisting of policy reform support, technical assistance, standardized bankable
transaction documents, and standardized WBG financing – can globally unlock private renewable
energy investment in new markets at low cost. As in Sub-Saharan Africa, the standardized processes and
documentation reduced transaction times and costs and facilitated seamless commercial close of the
Project not long after the tender. The competitive process resulted in a tariff of 2.679 US$c/kWh, setting
a benchmark for future renewable energy tenders in Uzbekistan and Central Asia more broadly. In
addition, the policy reforms support and technical assistance help build capacity of the GoU in developing
renewable energy transactions, which was then replicated in a series of follow-up transactions.
93. As the first IBRD guarantee operation in Uzbekistan, the project provided a critical additional
layer of security for investors and thus enabled the development of this first PPP in Uzbekistan and
supported the GoU and NEGU in building its track record with payments to private investors. Neither
the GoU nor NEGU had experience as off-takers and counterparts of private investment in the energy
sector, and the GoU’s new PPP framework had not yet been tested at the time of appraisal. Market
sounding suggested that this lack of track record would represent a critical barrier that would either lead
to substantial risk premiums being priced into bid submissions or preventing best-in-class investors and
lenders from participating in the program altogether. The World Bank assessed that, if policy reform
support and technical assistance were provided in parallel, the risk of non-payment was actually much
smaller than how it was perceived by investors, which made the program an ideal case for IBRD
guarantees. Experience with implementation of the investments has confirmed this assessment. The
guarantee represented an extremely efficient use of IBRD resources and was highly effective in improving
the creditworthiness of the off-taker, NEGU, increased investor interest in the tender, improve
competition tension, and reduce bid prices.
94. The choice by the GoU of a relatively low-risk solar energy generation IPP project with a
derisked site was appropriate for the country’s first PPP. Solar energy generation IPPs have proven
globally to be relatively straightforward compared to other PPP investments in the energy sector (such as
hydropower, or transmission and distribution). Experience globally also suggests that E&S risks can derail
first-of-its-kind PPPs. The GoU chose the first PPP well, with a project that had relatively small project-
specific risks. Site identification was conducted with the support from the WB, which supported an
assessment of risks related to E&S, geotechnical, hydrology, design, logistics requirements, infrastructure
access, and solar radiation. The de-risked nature of this first PPP made it a good test case that could then
be used to gradually expand the application of PPP modalities to more complex sectors and other, more
complex segments of the energy sector.
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Uzbekistan: Navoi Scaling Solar Independent Power Producer (IPP) Project (P170598)
95. The demonstration effect of the first renewable energy tender built the GoU’s confidence in the
renewable resource base and in its ability to attract renewable energy investment at low cost, which
helped overcome concerns about variable renewable energy and contributed to raised ambition of the
GoU’s 2030 renewable energy target. The GoU, NEGU, and investors were satisfied with the outcome of
the tender and financial close negotiations, which demonstrated the potential of Uzbekistan's market for
future renewable energy deals. Subsequently the GoU raised the ambition of the 2030 renewable energy
target, from 8,000 MW in 2019 to 25,000 MW in 2023. The standardized tender and transaction
documents have since been re-used in follow-up operations. This experience underscores the importance
of investing time and effort into “getting the first operation right” when it comes to unlocking new
markets for privately-owned renewable energy.
96. In hindsight, a programmatic approach to providing IBRD guarantees under an MPA framework
could have reduced transaction costs and helped improve the policy and investment framework of the
overall renewable energy investment program. Given early days of the sector reform and GoU renewable
energy program, the choice of the World Bank decision review process was made on stand-alone basis,
instead of Series of Projects (SOP) and the Multiphase Programmatic Approach (MPA) options, as a
programmatic approach to guarantee operations, which would have likely resulted in operating and cost
efficiencies, as well as streamlined negotiations, for the various parties involved. When there is a robust
pipeline of similar IPPs projects and a strong, demonstrated government commitment to reform,
consideration should be given to processing such projects involving a payment guarantee in a
programmatic manner.
97. Where possible, WBG support for specific PPP transactions should be paired with
complementary development policy operations and investment project financing. The GoU’s continued
commitment to sector reform and private sector participation was crucial to unlocking private investment
for the Navoi IPP despite setbacks and numerous roadblocks that had to be removed along the way. The
continuity of the GoU’s commitment was reinforced by parallel DPOs, which supported critical reforms
that reduced country risks and counterparty risks for private investors, including the unbundling of
Uzbekenergo, establishment of MoE, PPP Agency and Energy Regulatory Authority, tariff/subsidy reform,
adoption of key sector laws and decarbonization and master plans, etc. The parallel PASA provided
necessary technical assistance for reforms and capacity building. The World Bank also mobilized
investment project financing and technical assistance to strengthen the transmission network and reduce
the risk of curtailment through specific projects such as ESTART.
98. The project piloted a joint WBG approach to attracting private energy investment in Uzbekistan
that has since been replicated in other operations. The WB and IFC teams closely coordinated together
from the project identification stage to ensure a smooth project preparation, during which some of the
decision and credit committee meetings were co-chaired by decision-makers from both institutions. The
project was presented for final approval to a joint session of the WB and IFC Boards of Directors and used
the same E&S performance standards to help leverage expertise and promote efficiency. This approach
adopted under Scaling Solar is therefore an example of successful WBG collaboration platform.
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Uzbekistan: Navoi Scaling Solar Independent Power Producer (IPP) Project (P170598)
Lessons Learned for Future Renewable Energy IPPs and PPPs
99. The World Bank should proactively approach L/C banks to increase participation in the L/C
tender. Given the lack of track record for off taker, NEGU and early days of the sector reforms, by the
deadline for the submission of proposals, only one commercial bank proposal was received, even though
18 banks were approached, for an L/C, and it was directly awarded for the transaction. Key lessons learned
to promote competition and interest from the potential L/C banks in the market include: (a) engaging with
potential L/C banks at an early stage to understand their concerns and limitations to adjust the RfP
requirements; and (b) assessing the feasibility of the RfP requirements to ensure that the financial
thresholds and client risk assessments align with the capabilities and risk appetites of potential bidders.
100. A pre-bid conference with ample lead time before the tender can help increase investor
interest. WBG, specifically IFC Advisory confirmed market interest early by organizing a pre-bid investor
meeting on November 20, 2018. This event, attended by potential investors and key GoU and WBG
counterparts, provided a platform to discuss project-related issues, boosting GoU's confidence in the
project's attractiveness. As a result, the meeting led to strong investor interest, with 23 prequalification
applications, 11 prequalifying companies/consortia, and 5 bidders submitting offers. Early investor
engagement was crucial in measuring market interest and raising awareness about the upcoming tender
in the country, confirming investor appetite and bolstering GoU's confidence, which led to the successful
commercial and financial closure of the project and timely implementation.
101. First-of-a-kind IPPs benefit from formalized and structured intra-government coordination. GoU
established an efficient coordination mechanism through Presidential Decree No. 4677 dated April 14,
2020, which assigned, among others, allocated the role for different government entities involved in
implementation of the Navoi IPP. This approach proved to be highly efficient for the case of Uzbekistan
and recommended to be considered for countries where Scaling Solar Program or similar first-of-a-kind
IPPs are considered.
102. The government ministry in charge of finance needs to be engaged very early in the process. To
avoid delays later on, the WBG must engage early on with the World Bank’s legal counterpart in
government (typically the Ministry of Finance, or equivalent), which will sign the guarantee documents
and must fully agree with the financial implications of a World Bank guarantee and conduct the proper
due diligence of the legal and regulatory framework of the process and authorization to sign the Indemnity
Agreement.
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Uzbekistan: Navoi Scaling Solar Independent Power Producer Project (P170598)
ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS
A. RESULTS INDICATORS
A.1 PDO Indicators
Objective/Outcome: The PDO is to increase and diversify electricity generation capacity through private investment in Uzbekistan
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Power generation capacity Megawatt-hour 0 100 N/A 100
constructed (MWh)/year
(renewable/solar)
01-Sep-2020 31-Dec-2023 31-Dec-2023
Comments (achievements against targets): Fully achieved.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Electricity supplied by the Gigawatt-hour 0.00 270.00 N/A 273.83
Project into the grid (GWh)/year
(renewable/solar)
01-Sep-2020 31-Dec-2023 31-Dec-2023
Comments (achievements against targets):
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Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Private capital mobilized US$ million 0.00 63.50 N/A 63.5
(equity/debt)
01-Sep-2020 31-Dec-2023 31-Dec-2023
Comments (achievements against targets): Fully achieved.
Objective/Outcome:
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Greenhouse gas emissions tCO2/year 0 156,000 N/A 158,212
avoided
01-Sep-2020 31-Dec-2023 31-Dec-2023
Comments (achievements against targets): Slightly overachieved.
A.2 Intermediate Results Indicators
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
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Physical implementation Percentage 0.00 100.00 N/A 100.00
progress in generation
project capacity constructed 01-Sep-2020 31-Dec-2022 31-Dec-2022
Comments (achievements against targets): Fully achieved.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Project comissioning test Y/N N Y N/A Y
completed
01-Sep-2020 31-Dec-2022 31-Dec-2022
Comments (achievements against targets):
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Uzbekistan: Navoi Scaling Solar Independent Power Producer Project (P170598)
ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION
A. TASK TEAM MEMBERS
Name Role
Preparation
Ferhat Esen (ADM), Zhengjia Meng, Maksudjon Safarov Task Team Leader(s)
Husam Mohamed Beides Team Member
Sameena Dost Guarantee Lawyer
John Bryant Collier Environmental Specialist
Suryanarayan Satish Social Specialist
Fasliddin Rakhimov Procurement Specialist
Elbek Yusupov Financial Management Specialist
Hiwote Tadesse Operations Specialist
Anthony Molle Team Member
Koji Nishida Team Member
Razvan Purcaru Team Member
Aimonchok Tashieva Team Member
Veronika Pak Team Member
Asta Olesen Team Member
Rokhila Yuldasheva Team Member
Georgiy Egamnazarov Team Member
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Uzbekistan: Navoi Scaling Solar Independent Power Producer Project (P170598)
Supervision/ICR
Ferhat Esen (ADM), Philip Lam, Maksudjon Safarov Task Team Leader(s)
Bahodir Amonov ICR Task Team Leader and Main Author
Nodira Akhmedkhodjaeva Environmental Specialist
Tolmasbek Boltayev Social Specialist
Sameena Dost Guarantee Lawyer
Tamar Morchiladze Guarantee Lawyer
Serdar Jepbarov Operations Specialist
Nurgul Tatybekova Financial Management Specialist
Fasliddin Rakhimov Procurement Specialist
Elcin Akcura Team Member
Veronika Pak Team Member
B. STAFF TIME AND COST
Staff Time and Cost
Stage of Project Cycle
No. of staff weeks US$ (including travel and consultant costs)
Preparation
FY20 62.07 343,417.44
FY21 47.01 274,361.57
Total 109.08 617,779.01
Supervision/ICR
FY22 1.15 4,199.45
FY23 0.75 1,173.90
FY24 0.59 1,162.72
Total 2.49 6,536.07
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Uzbekistan: Navoi Scaling Solar Independent Power Producer Project (P170598)
ANNEX 3. PROJECT COST BY COMPONENT
Table 3.1 Project cost by component
Component Amount at Approval Actual at Project Closing Percentage of
(US$, millions) (US$, millions) Approval (%)
IBRD Guarantee 5.1 0.00 100
Construction and operation of Navoi 110.0 110.93 100
Scaling Solar IPP Project
Total 115.1 110.93 100
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Uzbekistan: Navoi Scaling Solar Independent Power Producer Project (P170598)
ANNEX 4. EFFICIENCY ANALYSIS
A. Economic Analyses
At Appraisal
1. The economic evaluation assessed the financial feasibility of the Navoi Scaling Solar IPP’s PV plant
(100 MW). An analysis of its integration into the grid involved evaluating load flow and voltage violation
studies across the transmission network. It was found that the Navoi SPV plant did not cause any network
overloads or voltage issues, allowing for up to 300 MW of PV capacity to be connected at the site.
2. Using the WBG's standard cost-benefit analysis methodology, the ERR and NPV of benefits were
calculated during the assessment. The country-specific economic discount rate, in accordance with World
Bank guidelines, was set at 9.8 percent, derived from doubling the long-term average annual real per
capita GDP growth.
3. Economic costs and benefits. The economic cost of the Navoi Scaling Solar IPP captured (a) EPC
costs, (b) Project development costs, and (c) O&M costs during the economic life of the power plant. The
main economic benefit is the avoided cost of the power plants displaced by the Project. Specifically, the
Project was planned to displace some of the generation from the Syrdarya TPP. The rationale for this was
that the variable operating cost of the project was close to zero, and the Syrdarya TPP was identified as
the plant with the highest marginal fuel cost in the country’s merit-order dispatch system.
4. Results of economic analysis. With estimated average annual electricity generation of 270 GWh
over its 25-year life (P50), the Project demonstrated economic viability both with and without considering
GHG impact. The NPV of the project amounted to US$13.5 million, rising to US$79.1 million when factoring
in the cost of carbon. The EIRR stood at 11.7 percent, increasing to 20.1 percent when considering GHG
impact, surpassing the hurdle rate and indicating positive economic returns.
5. Estimations of the benefits derived from avoided GHG emissions were based on reductions in
emissions from gas-fired electricity supply and anticipated low-case shadow carbon prices. The Project
was estimated to contribute to a reduction of approximately 3.9 million tons of CO2 over its lifespan,
averaging about 156,000 tons per year.
At Completion
6. At completion, the total cost of the Navoi Scaling Solar IPP Project, funded by debt from IFIs and
equity from the private developer, was US$110.93 million (including EPC costs of US$79.43 million and
financing costs of US$4.93 million). This was in line with the expected capital costs at appraisal.
7. The project began operating in December 2021, with a total installed capacity of 115 MWac/132
MWdc. Table 4.1 below summarizes monthly generation amounts from January 2022 until December
2023, the project closing / completion date for purposes of the World Bank Guarantee. Due to a delay in
the project’s financial close, the plant started operation late, and the first year’s generation amount
(energy sent out) was therefore significantly lower than expected.
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Uzbekistan: Navoi Scaling Solar Independent Power Producer Project (P170598)
Table 4.1. Monthly Net Generation Data
Month Net Generation Net Generation
(MWh) 2022 (MWh) 2023
Jan 9,392.9 13,483.8
Feb 15,339.5 13,387.0
Mar 16,921.3 24,207.7
Apr 26,533.1 28,175.4
May 31,863.7 33,676.5
Jun 33,618.2 24,501.4
Jul 34,294.7 34,740.2
Aug 35,482.7 33,621.5
Sep 28,537.3 28,184.2
Oct 22,096.8 18,789.1
Nov 12,039.5 11,080.3
Dec 11,365.2 9,982.5
Total 277,484.9 273,829.6
8. The actual generation for 2022 is 2.2 GWh more than planned (275.25 GWh) and 0.76 GWh less
than estimated (274.56 GWh) generation amount in the economic analysis.
9. Table 4.2 provides a detailed comparison of project costs and benefits at appraisal and at Project
close (completion).
Table 4.2. Comparison of key indicators at appraisal and completion
General At Appraisal At Completion
Assumptions
Discount rate 9.8% 9.8%
PV generation capacity 100 MW 100 MW
Construction period 1 year 1 year
Commercial operation year 2021 December 10, 2021
Project lifetime 25 years 25 years
Costs
Capital expenditure US$79,395,000 US$79,425,669 (EPC)
O&M cost US$1,386,000 US$1,033,454 (first year)
Other costs (for example, Debt Service Reserve Account US$35,614,100 US$4,931,923
[DSRA], interest, and front-end fee)
Benefits
EIRR (excluding GHG impact) 11.5% 10.5%
EIRR (including GHG impact) 20.5% 17.4%
Net economic benefits US$10,829,000 US$514,800
Net economic benefits (including environmental benefits) US$7,519,300 US$63,991,000
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Uzbekistan: Navoi Scaling Solar Independent Power Producer Project (P170598)
B. Financial Analysis
At Appraisal
10. A financial analysis of the project was undertaken to evaluate its financial viability from both the
sponsor/SPV’s perspective and the sector’s perspective.
11. The analysis indicated that the project was anticipated to generate adequate cash flows to cover
O&M expenses and debt service and enable regular dividend payments, providing shareholders with a
reasonable return for this type of project. The lenders’ base case further confirmed that DSCRs were in
line with precedents for a project of this nature.
12. The Navoi Scaling Solar IPP was projected to bolster the power sector’s financial sustainability by
reducing the average power-purchase cost for NEGU, as the off-taker. While the proposed Project’s tariff
was set at US¢2.67 per kWh (flat with no indexation over 25 years of the PPA period), the weighted-average
electricity-purchase cost of NEGU was projected to increase to UZS 492.5 per kWh (US¢3.2 per kWh
equivalent) by 2030 from UZS 285.3 per kWh (US¢2.7 per kWh equivalent) in 2021. The Navoi Scaling Solar
IPP was expected to deliver a positive NPV for NEGU and the sector at US$10.4 million (when applying a
discount rate of 5.375 percent, the yield of the 10-year Eurobond issued by the GoU in 2019).
Sector Financial Analysis
13. Following the unbundling of UE JSC, the functions of wholesale electricity buyer (off-taker) and
transmission company were transferred to NEGU, which was established in June 2019. During the
inaugural year of operation, NEGU recorded a modest profit of UZS 23 billion (US$2.6 million),
corresponding to a profit margin of 0.26 percent in 2019. From June to December 2019, NEGU generated
revenue of UZS 8,891 billion (US$997 million). Power purchase costs for 2019 amounted to UZS 8,308
billion (US$931 million). The main cost items included finance costs (UZS 203 billion) and operating
expenses (UZS 171 billion), among others. Investments in property, plant, and equipment totaled UZS
69,648 million (US$7.8 million). The nearly break-even net income in 2019 was facilitated by a significantly
improved collection rate (over 95 percent), stable export revenues, and the implementation of two tariff
increases in 2018 and 2019, notwithstanding the overall sector tariff failing to achieve full cost recovery
(currently at about 92 percent, including partial [equity] capital costs).
14. NEGU’s balance sheet was solid. NEGU’s total assets stood at UZS 9,181 billion in 2019, with an
equity position of UZS 3,883 billion. The remaining balance sheet was funded by debt and payables.
NEGU’s total outstanding debt stood at UZS 2,235 billion (approximately US$251 million), with most of it
being long-term IFI loans. In 2019, NEGU recorded net foreign-exchange losses of UZS 174 billion (around
US$20 million), primarily due to foreign currency-denominated loans.
15. COVID-19 impact on NEGU. COVID-19 has had an adverse impact on NEGU financials, especially
its cash position, as a result of (a) changes in the sales/consumption mix (that is, higher residential
demand, which has a lower tariff, and lower non-residential demand, which has a higher tariff, collectively
leading to a lower weighted-average tariff/revenue), (b) a decline in demand and sales, and (c) reduced
bill-collection efficiency. The World Bank conducted a stress test jointly with NEGU to assess this impact.
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Uzbekistan: Navoi Scaling Solar Independent Power Producer Project (P170598)
The preliminary results of the study suggest that COVID-19 is expected to result in a NEGU cash deficit of
UZS 176 billion (approximately US$17 million) under the baseline scenario in 2020, on top of an expected
UZS 240 billion (approximately US$24 million) cash deficit in 2020 not related to COVID-19.
At Completion
16. The post-completion financial analysis of the project was carried out using the same conceptual
approach as during the appraisal.
17. The post-completion financial analysis of the project confirmed its financial viability, with project
cash flows adequately covering O&M expenses and debt service obligations and enabling regular dividend
payments to the SPV, thereby retaining the expectation of earning reasonable rates of return from the
Project, going forward into the Project operating term. Due to its low tariff of US¢2.67 per kWh, the Project
led to an estimated savings of US$2.4 million for NEGU during 2022 and 2023.
18. Financial performance of NEGU. NEGU has faced a challenging financial situation over the last
three years, failing to break even on an operating-cost basis in 2022. In the absence of a regulated cost-
plus transmission-tariff regime, NEGU’s revenues did not rise enough to offset increases in operating costs
in 2022, which grew by 17 percent, primarily driven by cost of electricity purchased as a result of an
increase in generation tariffs for domestic power plants. On the other hand, NEGU’s revenues witnessed
an increase of 13 percent driven by recovery in demand from COVID-19 pandemic and tariff increases (for
example, among some categories of nonresidential consumers — who pay higher tariffs than residential
consumers — in May 2022), balanced by a decrease in export revenues by 31 percent. Notably, operating
costs represented 107 percent of total revenues in 2022, resulting in earnings before interest, taxes,
depreciation, and amortization (EBITDA) of UZS −1,424.5 billion (~−US$127 million equivalent) at an
EBITDA (operating) margin of negative 7 percent. Figure 4.1 below illustrates NEGU’s costs as a percentage
of revenues, averaged for 2021 and 2022.
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Uzbekistan: Navoi Scaling Solar Independent Power Producer Project (P170598)
Figure 4.1. Snapshot of NEGU's Costs as Percentage of Revenues
(numbers are average for 2021 and 2022)
Source: NEGU financial statements and World Bank team analysis
19. Negative profits have adversely affected NEGU’s ability to ensure recovery of capital and debt-
service costs from operations. NEGU has been unprofitable for the last two years, reporting net losses of
UZS 2,344 billion (US$220 million equivalent) and UZS 3,768 billion (US$335 million equivalent) in 2021
and 2022, respectively. In 2021, NEGU registered a negative EBITDA margin of 8 percent, not generating
enough revenues to cover electricity cost and (debt) interest costs and for reinvestments into building the
transmission grid. The challenging situation continued in 2022 as NEGU’s EBITDA margins remained
negative, and it experienced a shortfall of UZS 800 billion (US$71 million equivalent) in the recovery of
capital and debt-service costs. NEGU plugged this shortfall through sovereign on-lent / subsidiary loans
from multilateral development banks and an accumulation of payables to state-owned generation
companies.
20. NEGU is yet to access commercial debt markets, and its existing debt is primarily from
development banks, including the World Bank, in the form of on-lent loans made through the GoU’s MoEF
and guaranteed by the sovereign. As of end-December 2022, NEGU’s outstanding debt stood at
UZS 3,477 billion (US$309 million equivalent), of which the World Bank (IBRD and IDA) accounted for the
largest share at 63 percent, followed by the ADB at 22 percent. A major proportion of NEGU’s existing
loans are in foreign currencies, which could entail substantial foreign-exchange and interest-rate risks,
especially in the context of increasing volatility expected across global financial and currency markets in
the short/medium term.
21. A major weakness of NEGU’s balance sheet relates to rising accounts payables, indicating
challenges in meeting timely payments to power producers, which are currently primarily state-owned
electricity-generation companies. NEGU’s accounts payables increased by 42 percent during 2022 as
against 2021 to UZS 10,617 billion (US$943 million equivalent), equivalent to 183 days of power-purchase
costs. Notably, payables accounted for 35 percent of NEGU’s aggregate liabilities. Accumulation of
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payables to power producers is seen as a temporary measure to help NEGU manage its short-term liquidity
situation while tariffs move toward cost-reflective levels.
22. Due to sustained losses since its establishment in June 2019, NEGU’s equity reached minus
UZS 4,349 million (minus US$386 million) at the end of December 2022. Negative equity stock is usually a
cause for concern, though given NEGU’s full state ownership, strategic position in the country’s energy
sector, and implicit support from the sovereign, it is expected to be able to sustain operations while the
MoEF implements cost-recovery tariffs.
23. The GoU is fully aware of NEGU’s current challenging financial situation and has guaranteed all of
its ongoing liabilities, including payments to IPPs and debt-service obligations. Recent developments in the
country’s energy sector are also expected to improve NEGU’s financial standing. These include a rebound
of economic activity post COVID-19 leading to a rise in electricity demand, the recovery of tariff increases,
and the launch of initiatives such as smart metering that will help maintain high bill-collection efficiency
rates, which are expected to further improve through advanced metering. As end-consumer tariffs become
more cost-reflective, NEGU’s payables to state-owned generation entities are expected to come down in
line with enhanced revenue collections. Lastly, the implementation of IPPs, which have a lower cost than
Uzbekistan’s current inefficient generation fleet, is also expected to improve NEGU profitability.
24. NEGU’s financial projections, prepared based on feedback received from key GoU stakeholders,
including MoEF and MoE, and NEGU itself, highlighted improvement in NEGU’s financial performance in
the medium/long term as sector reforms are implemented. The following key assumptions around
electricity demand, tariffs, investment plan, and other key parameters form the basis of NEGU’s financial
forecast:
(a) As per least-cost generation expansion plan and dispatch-efficiency analysis for Uzbekistan,
baseline electricity demand for the country is expected to rise at a compound annual growth rate
(CAGR) of 6.4 percent, to reach about 132 TWh by 2030, from about 85 TWh in 2023.
(b) NEGU’s financial performance has been gradually improving since 2023, and it is expected to reach
full cost-recovery by 2026 on the back of upward revisions of end-consumer tariffs by the
GoU/MoEF in accordance with cost-plus tariff methodology. During the transition period from
2022 to 2025, it is assumed that NEGU’s tariff will gradually increase to enable it to improve cost
recovery to 100 percent in 2025.
(c) Implementation of over 10 GW of IPP projects that are planned to be operational over the next
five years. By 2030, these IPP projects are expected to meet about 50 percent of Uzbekistan’s
electricity demand. Notably, the majority of these IPPs have lower electricity generation costs
compared to Uzbekistan’s current fleet of old, inefficient gas plants. Therefore, increasing the
share of IPPs in its electricity mix will help NEGU reduce operating costs and, in turn, improve
financial performance over the medium/long term.
(d) NEGU is able to stabilize its working capital situation by 2026.
25. The financial forecasts indicate improved EBITDA margins for NEGU over the next few years (2023–
25) as sector reforms, particularly on tariffs, are implemented. During these years, NEGU is not expected
to generate adequate cash flows to meet interest costs or for reinvestments and would need additional
financial support. That said, from 2026-27 onward, NEGU’s operational performance is expected to
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improve due to cost-reflective tariffs, enabling it to generate adequate resources to not only service debt
but also channel reinvestments.
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Uzbekistan: Navoi Scaling Solar Independent Power Producer Project (P170598)
ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS
The draft ICR was shared with the GoU (Borrower) and Nur Navoi Solar FE LLC (Responsible Agency,
Financing). Representatives of Nur Navoi Solar FE LLC responded that they do not have comments on the
ICR. The GoU, through representatives of the Ministry of Economy and Finance, shared the following
feedback:
First of all, we would like to extend our deepest gratitude to the World Bank Group for their continued
support of Uzbekistan’s economy and energy sector development. We are grateful for the opportunity to
review the Implementation Completion and Results Report (ICR) for the Navoi Scaling Solar IPP Project
submitted by the World Bank [#0494o/24 dated 05.09.2024]. We would like to highlight below some
additional development impacts made by the Project:
As outlined in the initial concept, the project’s impacts align well with Uzbekistan’s Development Strategy
for 2017–2021, which aims to increase the share of renewable energy sources in the country’s energy mix
and improve access to electricity through the construction of new electricity-generating capacities.
The Project created 2,700 jobs and employed 65 women during the construction. Priority for employment
opportunities was given to residents of the Karmana district and other Navoi districts, who made up 70
percent–80 percent of the workforce. Local workers were provided with housing and meals. Those hired
received job training on various types of equipment and installation.
In terms of bolstering the local economy, the project made substantial contributions, with $18.3 million
spent on domestic purchases and $6.1 million paid to the government during the construction and
operation stages from 2021 to 2023. In total, the company contributed $24.4 million, exceeding the target
of $13.7 million by 77 percent due to the purchase of locally produced equipment instead of imported
ones for interconnection facilities. This modification was made at the request of the offtaker to ensure
compatibility with the grid and the successful evacuation of power from the plant.
Overall, the Navoi Scaling Solar IPP project supported by the World Bank payment guarantee combined
with IFC advisory and investment had further triggered private sector participation in the generation
sector.
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Uzbekistan: Navoi Scaling Solar Independent Power Producer Project (P170598)
ANNEX 6. SUPPORTING DOCUMENTS (IF ANY)
Borrower’s ICR
1. The Project Development Objective (PDO) relevance to the Borrower’s needs
1.1. Was the Project Development Objective (PDO) - to increase and diversify electricity generation
capacity through private investment in Uzbekistan, as stated in the PAD, well aligned with the
Borrower’s needs at the time of Project preparation (2019 and 2020)? Please respond with 1-2
sentences of text, including references/internet links to relevant documents on Uzbekistan’s
development strategy.
The PDO, “to increase and diversify electricity generation capacity through private investment in
Uzbekistan” was well-aligned with the Government of Uzbekistan (GoU)’s needs at the time of project
preparation. In fact, during the project preparation, the Ministry of Energy published a “Concept Note
for Ensuring Electricity Supply in Uzbekistan in 2020-2030” in April 2020, wherein the GoU stated an
ambitious goal of reaching 5 GW of solar PV generation capacity by 2030. In this context, the 100 MW
Navoi Scaling Solar IPP in Karmana district of Navoi region was the first large solar PV installation in
the history of Uzbekistan and a critical test to demonstrate that the country is open to the private
sector investing in renewable projects to facilitate in achieving 5 GW solar PV goal.
2. The Project component adequacy in achieving the PDO
2.1. Was the Project component, as described in the PAD, well designed to achieve the PDO, taking
into consideration the type of investment (physical infrastructure), relative size of the project
components, their interaction, etc.? Please respond with 1-2 paragraphs of text, clearly stating
the point of view and providing supporting arguments.
The Project to design, finance, construct, and operate the 100 MW Navoi Scaling Solar IPP was
adequate to contribute to increasing overall generation capacity and diversifying generation mix of
Uzbekistan’s power sector.
3. Beneficiary participation in project preparation
3.1. To what extent did the key project interested parties (including ministries, other government
agencies, representatives of municipalities, electricity distribution companies, and
representatives of households and enterprises supplied with electricity generated from 100 MW
Navoi Scaling Solar IPP Project) participate in discussions about the project and in its preparation?
Please respond with 1-2 paragraphs of text.
Since the Project was a pilot and first IPP project, the project progress was closely monitored by the
high-level representatives of the GoU. During the preparation of the Project, key ministries including
the Ministry of Energy, Ministry of Investments and Foreign Trade (currently MIIT), Ministry of Finance
(currently MoEF), and PPP Agency (currently PPP Department of MoE), National Electric Grids of
Uzbekistan (NEGU) as well as the Navoi Khokimiyat were active and were involved in all phases of the
project preparation on a daily basis. During the tender for the construction of a 100 megawatt (MW)
solar photovoltaic plant in Navoi region, Masdar was offered the lowest tariff of 2.679 US cents per
kilowatt-hour. After which, the Ministry of Investment and Foreign Trade of Uzbekistan granted the
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Masdar company the right to implement this project.
4. Notable changes in the implementation arrangements
4.1. How did the institutional changes take place between 2021 and 2023 affected the
implementation of the Project (e.g. reorganization of the Public-Private Partnership Development
Agency under the Ministry of Finance into a Department under the Ministry of Economy and
Finance)? Please respond with 1-2 paragraphs of text.
4.2. Are there any existing or expected implications for the project following the establishment of
"Uzenergosotish" JSC, the single off-taker as outlined in Presidential Decree PD-166 (dated
28.09.2023)? How might this institutional change impact the project during its operation? Please
respond with 1-2 sentences of text.
4.3. Were there any other changes to the project implementation arrangements that affected its
results, negatively or positively? Please respond with 1-3 sentences of text.
There were some institutional changes that were relevant to the Project implementation, including
the Presidential Decrees “On Measures to Implement Administrative Reforms of the New Uzbekistan”
(PF No.269 dated 21.12.2022). However, the Project implementation was not affected by the changes.
It is noteworthy that in accordance with Presidential Decree No. 166, "On the Next Stage of Energy
Sector Reforms and Implementation Measures" (PF No. 166 dated 28.09.2023), centralized
purchasing and selling of electricity shall be conducted by the single off-taker, "Uzenergosotish" JSC,
starting from July 1, 2024. In this regard, all obligations under the Power Purchase Agreement (PPA)
signed by the National Electric Grid of Uzbekistan JSC shall be transferred to "Uzenergosotish" JSC.
The Project Company, "Nur Navoi Solar LLC" (a foreign entity), was duly notified about the transfer in
February 2024, and discussions are underway between NEGU, MoE, MIIT, MoEF and the project
stakeholders to ensure a smooth transition of obligations.
In summary, to date there were no significant changes affecting the Project positively or negatively,
and the Project is progressing as it was planned.
5. Other events and circumstances affecting project results
5.1. What other events or circumstances have affected the implementation of the project and its
results, negatively or positively? Please respond with 1-3 paragraphs of text.
The Project has generated electricity of around 15 GWh in 2021, 277 GWh in 2022 and 274 GWh in
2023, which is in line with the expected results.
6. Operational results in the 100 MW Navoi Scaling Solar IPP Project
6.1. Please comment (in 1-2 sentences) on the results achieved so far during the operation of the
project.
The Project has generated electricity of around 15 GWh in 2021, 277 GWh in 2022 and 274 GWh in
2023, which is in line with the expected results.
7. Results vs Outcome Indicator Targets
7.1. Have the Results been achieved according to the Outcome Indicator Targets in the PAD? Please
provide a table of actual end-of-project results vs PAD targets for each indicator.
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Project results have been achieved according to the Outcome Indicator Targets set out in the PAD.
Please see the table below for the actual end-of-Project results vs the PAD targets for each indicator.
Outcomes PDO Indicator Plan Actual Actual Actual
(2021) (2021) (2023)
To increase Power generation capacity 100 100 100 100
electricity- constructed (renewable /
generation solar) in MW
capacity Electricity supplied by the 270 14.7 277 274
Project into the grid
(renewable / solar) in GWh
/ year
To diversify Private capital mobilized 50 63.5 63.5 63.5
electricity (equity / debt) in
generation US$ million
GHG emissions avoided in 156,000 N/A 156,000 156,000
tCO2 / year
8. Results vs the Intermediate Outcome Indicator Targets
8.1. Have the Results been achieved according to the Intermediate Outcome Indicator Targets in the
PAD? Please provide a table of actual end-of-project results vs PAD targets for each intermediate
results indicator.
Yes, all Intermediate Outcome Indicator Targets have been achieved. Please see the table below:
Indicator name Baseline End Target
Physical implementation progress in Project 0 100 percent
generation-capacity constructed
Project-commissioning test completed No Yes
9. Economic performance of the project
9.1. Have the economic results of the project lived up to the expectations expressed at the time of
appraisal? Please respond with 1-2 paragraphs of text (plus summary tables as appropriate),
clearly stating the point of view and providing supporting arguments and calculations, if
available.
The economic results of the project have met the expectations expressed at the time of the project
appraisal. The planned Project cost of around US$111 million has been maintained, and the Project is
operating well.
10. Government support to the Project
10.1. How would you evaluate the degree of the project support by the Government at the
project preparation stage? Please respond in 1-2 sentences for each Ministry responsible for the
project.
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10.2. How would you evaluate the degree of the project support by the Government at the
project implementation stage? Please respond in 1-2 sentences for each Ministry responsible for
the project.
In order to ensure successful preparation of the Project, the GoU established an inter-ministerial
working group led by the MIFT. This collaborative initiative, led by MIIT, enabled cooperation among
various stakeholders and facilitated multi-stakeholder dialogues throughout the project preparation
and implementation phases. These efforts served as a key instrument for timely risk resolving any
pending issues and contributing to the successful realization of project objectives and the attainment
of predefined outcomes.
The sustainability of the project is linked to the comprehensive support extended by the GoU, both
directly and indirectly, during the preparatory phase. Noteworthy contributions include the provision
of public land to the private developer by the Khokimiyat of the Navoi region, the establishment of an
enabling investment environment through Presidential Decree (No. 4677 dated 14 April 2020).
Additionally, the delineation of roles among government counterparts, including MIIT's
representation of GoU under the GSA, MoEF's oversight of fiscal aspects, MoE’s provision of policy
direction, NEGU’s facilitation of site selection and PPA structuring, and the Navoi Khokimiyat’s signing
of the Land Lease Agreement, collectively underscored a cohesive and strategic approach towards
project sustainability and success.
11. The World Bank’s performance
11.1. How would you evaluate the World Bank's performance during project preparation?
Please respond in 1-2 sentences.
11.2. How would you evaluate the World Bank's performance during project implementation?
Please respond in 1-2 sentences.
The World Bank team was highly satisfactory during Project preparation and implementation. Alongside
with the technical guidance that the World Bank team provide, they were proactive and provided support
on a timely manner.
12. Lessons Learned
12.1. What are the most important lessons learned from this project, including lessons for future
investment projects in Uzbekistan’s renewable power generation sector and broader lessons for
Uzbekistan's electricity sector, the potential role of international financial institutions, etc.? What
should be done differently in a potential follow-up project to achieve better results? Please
respond with 1-3 paragraphs of text.
One of the key lessons learned from the 100-MW Navoi Scaling Solar IPP Project is the significant impact
international financial institutions (IFIs) can have in catalyzing renewable-energy development in a
country like Uzbekistan. IFIs’ involvement not only provides crucial financial support but also brings
expertise in project structuring and risk mitigation, essential for attracting private investment. Moving
forward, it is vital for Uzbekistan to continue leveraging partnerships with the development partners while
also strengthening the regulatory framework to create a more conducive environment for renewable-
energy investment. Streamlining legal and regulatory processes and providing clearer guidelines for
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project development can further accelerate progress in the renewable power generation sector.
In planning future investment projects, there should be a greater emphasis on holistic approaches that
consider the broader implications for Uzbekistan's electricity sector. This includes integrating renewable
energy projects with grid modernization efforts to enhance overall efficiency and reliability. That’s why,
currently MoE jointly with other ministries finalizing “Power System Planning Study in Uzbekistan”,
generation mix master plan by 2030.
Additionally, prioritizing local capacity building and technology transfer can ensure that the benefits of
these projects are maximized within the country, leading to sustainable long-term development.
Community engagement and thorough social impact assessments should also be incorporated into follow-
up projects to address any potential concerns and ensure alignment with local needs and priorities. By
adopting these strategies, Uzbekistan can achieve better results in its transition towards a cleaner,
greener and more resilient energy system.
13. Plans for future operation
13.1. Do you anticipate any difficulties in regular operations of any project participant
(ministries and agencies, municipalities, distribution companies, etc.) during the term indicated
in Power-Purchase Agreement (PPA)? If you do, what has been done or what has been planned
to do to have transition to regular operations and to retain advantages gained during the project?
Please respond with 1-2 paragraphs of text.
The Project is operational since December 2021 and anticipated to sell electricity to the off-taker until
2046. So far there is no potential difficulties that may be cause by project participant during Project’s
operation term, and it is expected the Project will continue achieving set indicators.
14. Need for a follow-up project, if any
14.1. Has there been an assessment of the need for a potential follow-up project? Please
respond in 1-2 sentences.
Given the GoU’s plans for further scaling up renewables, including implementation of 8.6 GW of solar, 10
GW of wind as well as 4.1 GW BESS capacities by 2030, it would be great if the World Bank could consider
further support to these projects through payment guarantees.
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