Over a thousand gas leak sites have been discovered in Uzbekistan. The World Bank will provide a grant of $10.6 million to create a system for eliminating these leaks. This decision was formalized by a Cabinet of Ministers resolution dated August 18.
With the assistance of the World Bank, measures were taken to identify leaks at 'Uztransgaz' facilities across the country, during which more than 1000 defective sections were recorded. The total volume of these leaks is estimated at approximately 35 million cubic meters of gas.
World Bank representatives indicated that Uzbekistan's gas transportation system has deteriorated over time due to insufficient funding for maintenance and repairs, leading to financial losses from leaks. If the necessary work is not carried out, cumulative losses could reach 1.75 billion cubic meters of gas by 2030, equivalent to lost revenues of $228 million.
The project is planned for the period from 2026 to 2028. The majority of the allocated grant, about $9.6 million, will be directed directly to repairing gas infrastructure and reducing current gas losses. An additional $500,000 is designated for two purposes: developing a system for reporting and monitoring leaks and emissions, and forming a working group that will attract external experts and provide organizational support for the project.
'Uztransgaz' is obliged to open special accounts in commercial banks to receive these grant funds, with the World Bank's funds being deposited exclusively into a foreign currency special account.
The resolution establishes a special financial mechanism: the economic benefit derived from eliminating leaks will be used for further reduction of gas losses. It is planned that by 2029, repairs will prevent the leakage of about 47.5 thousand metric tons of gas annually, which will be available to consumers and enterprises. Furthermore, the reduction in losses will ensure a financial saving of approximately $18 million.
The volumes of saved natural gas after repair works must undergo independent verification. Based on this data, the monetary value of the saved gas will be determined. Funds calculated based on the volume of gas previously lost and subsequently saved after repairs will be accumulated in a special escrow account of 'Uztransgaz'. These accumulations can then be reused for finding and eliminating new leaks.
In the initial phase, these funds will supplement the World Bank grant. However, after the full utilization of the grant, the amounts accumulated in the escrow account must become the main source of financing for gas leak detection and elimination work. After all work is completed at 'Uztransgaz' facilities, the saved funds will also be directed towards eliminating losses in other parts of the country's gas infrastructure.
The document also provides for a separate tariff mechanism. The interdepartmental tariff commission under the Cabinet of Ministers must guarantee that after the elimination and independent confirmation of previous losses, the corresponding volumes of gas will continue to be accounted for in 'Uztransgaz' tariffs to cover its own needs and losses during transmission through the main pipeline system. This procedure must be maintained for at least two years after the confirmed savings in gas volume, allowing the financial effect of loss reduction to be retained within the system and directed towards future investments in gas infrastructure.
The project also includes measures to reduce methane emissions, with all volumes of reduced greenhouse gases remaining under state control. The financial mechanism is intended not only for repairs but also for developing measurement, monitoring, reporting, and verification systems, as well as for staff training, equipment modernization, and compliance with environmental standards.
'Uztransgaz' is required to submit quarterly lists of priority tasks for leak detection and elimination, as well as annual investment plans, which must be approved by the Ministry of Economy and Finance and the Ministry of Energy. The company must also provide independent reports containing information on the volume of saved gas, reduction in methane emissions, completed work, and financial indicators.
A specialized group of five permanent employees will be formed within 'Uztransgaz' to manage the project. The company also has the option to engage both local and foreign specialists, consultants, and experts, paying for these expenses from the grant funds. It is worth noting that the president previously reported that in the first half of the year, electricity losses in Uzbekistan amounted to 17.2% and natural gas losses to 7.6%, and that $8 billion would be required for energy infrastructure modernization over ten years.