Japan Extends $229 Million Loan to Boost Energy Efficiency in Uzbekistan
Japan will lend Uzbekistan 36.8 billion yen, roughly $229 million, to cut energy waste in public buildings and industry, targeting two sectors that place heavy pressure on the country’s fuel and electricity systems. The financing was formalized on June 10 in Tashkent, where Japanese Ambassador Kenji Hirata and Uzbekistan’s Deputy Prime Minister and Minister of Economy and Finance Jamshid Kuchkarov signed exchange notes for two projects under Japan’s yen-loan program, according to the Embassy of Japan in Uzbekistan. The larger of the two projects, Energy Efficiency Improvement in Public Buildings, has a maximum value of 21.788 billion yen, about $136 million. A second project, Energy Efficiency Improvement in the Industrial Sector, is valued at up to 14.969 billion yen, about $93.4 million. Both loans carry an annual interest rate of 2.4% on the principal and 0.8% for consulting services. They will be repaid over 25 years, including a seven-year grace period. The financing is being provided on concessional and untied terms, allowing greater flexibility in procurement. The projects are aimed at lowering demand rather than adding new generating capacity. In practical terms, that means modernizing equipment and introducing energy-saving technologies in industrial and commercial operations, as well as in public buildings. The public-buildings component addresses one of the weaker points in Uzbekistan’s energy system. The country’s schools, preschools, hospitals and other state facilities are often expensive to heat and difficult to cool, particularly in buildings constructed during the Soviet period with little regard for energy efficiency. Previous World Bank work on Uzbekistan has identified public buildings from the 1970s and 1980s as poorly insulated and reliant on old boilers and water-heating systems with high energy intensity. The problem is visible in the country’s air as well as its energy bills. In winter, inefficient heating systems increase demand for fuel, while coal- and fuel-oil-based heating contributes to smog in cities such as Tashkent, alongside dust, traffic and industrial emissions. Energy-efficiency upgrades can reduce the fuel demand that worsens urban air pollution during cold weather. Uzbekistan remains heavily dependent on fossil fuels for its energy supply. The Japanese Embassy noted that the country’s energy consumption and greenhouse gas emissions per unit of gross domestic product remain higher than global averages, making improvements in energy efficiency a national priority. The industrial component addresses another pressure point. Uzbekistan is trying to expand manufacturing and exports, but that ambition depends on a power system still dominated by fossil fuels and burdened by aging infrastructure. For Tashkent, cutting the energy used by factories and commercial enterprises is part of the same energy-security challenge as building new power plants or adding renewable capacity. The agreement also gives practical form to one of the priorities in the Tokyo Declaration adopted at the first Central Asia-Japan Summit in December 2025. The declaration identified “Green and Resilience” as one of three major areas for future cooperation between Japan and the five Central Asian states. The loans follow President Shavkat Mirziyoyev’s visit to Japan late last year, when Uzbek and Japanese...
