China to finance Mulalak hydropower plant construction in Uzbekistan

A major hydropower plant, Mulalak, is set to be built on the Pskom River. According to Farrukh Nurullaev, Deputy Chairman of Uzbekhydroenergo, the project is being financed through loans from a Chinese bank. The contractor is also likely to be from China, as Chinese authorities have stipulated this condition in relevant agreements.

In 2024, Uzbekistan generated 8.2 billion kWh of electricity through hydropower plants, generating revenues exceeding 4 trillion UZS from sales. Overall, electricity production increased by 20% compared to 2023, driven by the expansion of Uzbekhydroenergo's hydropower plants to 77. This information was disclosed at a press conference held at AIMC on March 27.

Funding for hydropower plants near Charvak

During the event, a Kun.uz correspondent inquired about the funding sources for hydropower plants planned near and upstream of the Charvak Reservoir.

In response, Nurullaev cited Presidential Decree No. 332, which mandates that all projects implemented by state-owned entities (with a share of 50% or more) must undergo technical and economic feasibility studies. These studies must be reviewed by an expert center under the Ministry of Economy and Finance. Once approved, the projects are submitted to the government for final approval, after which a separate resolution is issued for their implementation.

According to Nurullaev, the Pskom and Chatkal hydropower plants in Tashkent region have successfully passed expert review and received approvals from both the government and the president. He confirmed that the investment payback period for these projects has been taken into account but did not disclose specific funding sources.

Mulalak hydropower plant financing and contractor selection

“Projects without confirmed financing sources do not receive separate government approvals. Recently, the government approved the construction of the Mulalak Hydropower Plant on the Pskom River. The necessary expert evaluations and agreement processes have been completed, and funding sources have been identified. The implementation of this project will now begin,” said Nurullaev.

The Mulalak Hydropower Plant project will be financed by a Chinese bank, and agreements between Uzbekistan’s Ministry of Finance and the Chinese government are currently being signed. Once expert evaluations are finalized, a tender will be announced.

Nurullaev noted that financing organizations, including Chinese banks, typically set conditions regarding contractor selection. “For example, when Chinese banks provide loans, they require that contractors be selected through tenders among qualified companies based in China. Other banks also impose similar conditions. The contractor for the Mulalak project has not yet been determined, as we are still in the selection stage,” he added.

Production costs and 2025 hydropower projects

Nurullaev also touched on the cost of generating 1 kWh of electricity at hydropower plants, stating that the current production cost is 185 UZS per kWh, considering all expenses. This figure may change annually based on new projects and implementation costs.

During the press conference, officials also outlined hydropower projects planned for 2025. A total of 15 projects have been included in the state investment program, with over $248 million allocated. These projects aim to increase electricity generation by 10% compared to the previous year.