Optima Energy Consulting teamed up with Expertise France to support the Government of Uzbekistan in modelling the economic and social impact of its fossil fuel subsidy reform.
Pricing electricity below cost of supply distorts consumption incentives, encourages inefficient use, and imposes a significant and recurring burden on public finances. Phasing out energy subsidies is therefore a structural reform priority: it strengthens fiscal sustainability, restores accurate price signals across the economy, and frees public resources for more targeted and productive expenditure.
Our engagement focuses on three linked workstreams. First, we quantify the scale of implicit and explicit subsidies in the electricity sector. Second, we model how the removal of gas price subsidies passes through to end-user electricity tariffs under alternative reform pathways. Third, drawing on Uzbekistan’s national social registry, we map energy poverty to identify which households are most exposed under each scenario—providing the evidence base for well-designed compensatory measures that protect vulnerable groups through the transition.
This approach ensures that reform is not only fiscally and economically sound, but socially equitable and politically sustainable. The technical assistance is delivered under the Green Economy Technical Assistance Program (GETAP), funded by the European Union and the French Development Agency (AFD).
