BAKU, Azerbaijan, July 22. Fitch has affirmed Uzbekistan's Regional Electrical Power Networks at BB/Positive, with rating entirely dependent on state guarantees, as a standalone credit stands at CCC.
This is reflected in an official report published by the rating agency.
"Regional Networks' rating is equalised with that of its sole parent, Uzbekistan (BB/Positive), reflecting that almost all of the company's debt is provided by the state or secured by government guarantees. We expect this to remain the case," the report says.
At the end of 2025, Regional Networks held UZS 0.6 trillion in cash against UZS 2.3 trillion in short-term debt - a coverage ratio of just 0.26x. Equity turned negative after the company transferred high-voltage substations and network lines to the national transmission operator in 2025 without cash compensation, reducing fixed assets by 11% year-on-year. The company's average EBITDA margin was approximately 4% over 2021-2025, with high year-to-year volatility. Fitch forecasts profitability to remain low and erratic under the current regulatory regime. Planned capex over 2025-2028 amounts to $470 million. In June 2026, the government raised household electricity tariffs by 8-13%, depending on consumption volume, and corporate tariffs by 10%, though the corresponding increase in the wholesale purchase tariff has not yet been approved.
Franklin Templeton, acting as trustee and manager of the state's share in Regional Networks, has proposed an action plan covering cost-reflective tariffs, a long-term tariff framework, loss reduction and collections improvement, governance strengthening, and reduced reliance on ad-hoc state support.
Trend's analysis shows that the eight-notch gap between Regional Networks' CCC standalone profile and its BB issuer default rating is among the widest for any rated utility in the region, and it is bridged entirely by a single structural factor: the state's willingness to guarantee the company's debt. Fitch is explicit about the fragility of this construction - if guaranteed debt falls below 75% of total debt, the rating would automatically be notched down two levels from the sovereign, regardless of any operational improvement.
The Franklin Templeton action plan represents the most credible route to improving the standalone profile. The investment manager's involvement as trustee is unusual for a state-owned utility in Central Asia and signals a level of institutional oversight. The June 2026 tariff increases of 8-13% for households and 10% for corporates are a step in the right direction, but the absence of a corresponding approved increase in the electricity purchase tariff means the cash flow benefit of the retail tariff hike is not yet visible at the company level.
Meanwhile, international financial institutions could act as possible actors in improving the standalone profile. For example, the EBRD has been a key financier of Uzbekistan's electricity infrastructure alongside state sources. Sule Kilic, EBRD Director and Head of Energy Eurasia, told Trend that the Bank has financed high-voltage transmission lines spanning several hundred kilometres, as well as major substations, connecting new wind and solar capacity in remote areas to the national grid.
"We have financed high-voltage transmission lines spanning several hundred kilometres, as well as major substations, connecting new wind and solar capacity in remote areas to the central grid. We are also developing a strong pipeline of new grid projects to support further expansion," Kilic said, adding that the EBRD also provides technical assistance to strengthen the corporate governance of Uzbekistan's National Electric Grid, improve project delivery, and enhance its capacity to manage increasingly complex power systems.
