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Background

Uzbekistan has been one of the most energy- and carbon-intensive countries in the world, both of which were over six times the global average in 2011.  To address the situation, the government called for drastic increases in energy efficiency and the development and use of renewable energy.  With the country’s high solar irradiance and abundant land for solar development, the Asian Development Bank (ADB) and the government deemed solar energy as the most suitable renewable energy resource to bridge the existing supply–demand gap, diversify the mix, and reduce greenhouse gas emissions. 

Under the ADB-financed Solar Energy Development policy and advisory technical assistance (TA) project, approved in December 2011, feasibility studies were conducted in six provinces, which are geographically spread across the country, and prioritized according to solar resources and the supply–demand gap that needed to be met. Of the six provinces, Samarkand was given priority because of its historical significance, proximity to the capital Tashkent, and tourism potential. Using rigorous selection criteria, a site was chosen for the Samarkand Solar Power Project, approved by ADB in November 2013 for two loans with an aggregate amount of $110 million.  The project was to quickly meet the energy demand of Samarkand, some areas of which then had grid electricity for an average of only 1–2 hours per day in winter and 16–18 hours per day in summer.  Available land, proximity to a substation that can connect the photovoltaic (PV) power plant to the national grid, PV technology’s compatibility with local conditions, and other factors were considered.

After thorough due diligence to develop solid project design and implementation arrangements, the project was not implemented. The loans were cancelled 3.5 years after they became effective in February 2014.  The cancellation followed the protracted procurement of the design–build–operate (DBO) contractor for the PV power plant, which took over 2 years. Procurement was delayed mainly to allow for additional activities required by the government to ascertain the integrity of the bidding and selection processes, and because ADB and the government were using the International Federation of Consulting Engineers’ Conditions of Contract for Design, Build and Operate Projects for the first time. After the contract was signed but before it was to be registered with the Ministry for Foreign Economic Relations, Investments and Trade (MFERIT) for it to become effective, the new government dissolved the MFERIT and created the new State Committee of the Republic of Uzbekistan for Investments (SCI) in March 2017. The SCI ordered another review of the feasibility study, which was approved by the government in June 2013.

The Ministry of Finance (MOF) then requested an independent expert to review the DBO contract to verify its cost-competitiveness and confirm that the technology offered was the latest technology. A special project administration mission was fielded in June 2017 at the MOF’s further request following the findings of the review. The independent expert joined the mission, explained the findings to the government, and confirmed that (i) the DBO contract was still cost-competitive despite the delays, (ii) the technical and technological specifications were the latest proven technology, and (iii) there was no need to amend the specifications. Despite the support and clarifications provided by the mission and the independent expert, the contract was still not registered by the SCI, and no clear explanation was given for delaying the registration.

On 30 August 2017, ADB received the official request from the MOF and the ADB Governor for the Republic of Uzbekistan to cancel the loan balances, with only two disbursements made for the project implementation consultant. In September 2017, however, the MOF asked ADB’s Uzbekistan Resident Mission to hold the loan cancellation while the government reconsidered the project. On 2 November 2017, the MOF verbally reconfirmed its request to cancel the loans with the resident mission. ADB then canceled the loans effective 30 August 2017. 

 

Project Information
Project Name: 
Samarkand Solar Power Project
Report Date: 
July, 2019
Main Sector: 
Country: 
Project Number: 
Report Type: 
Project/Modality: 
Project loan
SDG: 
Goal 9: Industry, Innovation, and Infrastructure
Goal 13: Climate Action
Loan Number: 
3058, 3059
Source of Funding: 
COL/ADF
Date Approved: 
20 November 2013
Report Rating: 
Less than successful

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