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In the implementation of projects in the energy and agricultural sectorsEconomic cooperation between Korea and Uzbekistan

By Sharofiddin Nazarov, Doctor of Economics, Director of CER

South Korea is one of the most important economic partners of Uzbekistan. Korean investments to the economy of Uzbekistan today cover such areas as trade, communications, energy, light industry, pharmaceuticals, mining, petrochemicals, electronic products and construction materials.

South Korea’s support for joint research initiatives, implementation of scientific and applied projects in the real sector of the economy in such areas as energy and the agricultural sector is of great importance for Uzbekistan. This importance is mostly connected with urgent necessity of increasing energy efficiency and development of a “green” economy in the country.

It is essential to note that South Korea has extensive experience in ensuring “green” growth . The country rapidly growing as a world leader in establishment, development and export promotion of renewable energy technologies which are widely considered by analysts as strategic sectors of present and future.

In Uzbekistan 34% of GDP goes to industrial sector and the sector needs increasing of its energy capacity. In this regard wide use of renewable energy–one of the priorities in the development of the energy sector of Uzbekistan. Biogas plants, hot water systems based on solar water-heating plants, wind generators and other sources of renewable energy are becoming increasingly widespread in the country. At the same time even though the gross potential of renewable energy in the country is estimated at about 51 billion tons of oil equivalent (t.o.e), but it is only 0.6 million t.o.e. (0.3%) of its technical potential (179 million t.o.e) has been developed by now.

The gross potential to produce wind energy in Uzbekistan is estimated at 2.22 million t.o.e. per year . However, due to the geographical features of the country, the capacity to produce and use the wind energy is spatially uneven. In Uzbekistan such region as Karakalpakstan has the highest annual values of both gross and technical potential to produce wind energy.

Several pilot projects aimed to create and use solar photoelectric stations to provide an autonomous energy source for remote communities succeed and revealed its future prospects in the conditions of Uzbekistan . This experience allowed realizing that such stations can be used to produce and supply energy power for remote telecommunication devices and road markings.

Solar power constitutes approximately 97% of the renewable energy potential in Uzbekistan. Republic of Karakalpakstan and Navoi region are the most promising areas for its production development and implementation for locals.

According to estimates of the Center for Economic Research (CER), by 2030, total capacity of solar stations in Uzbekistan may reach at least 8,000 MW.

In accordance with the Decree of the President of the Republic of Uzbekistan No. PP-3687 “On additional measures to implement investment projects in the field of renewable energy sources” dated April 28, 2018, it is planned to build solar power plants with a total capacity of 200 MW with the help of credits of International Financial Institutions (IFI).

Another Presidential Decree named “On the program of measures to increase energy efficiency and introduce energy-saving technologies in the sectors of economy and social sphere during 2015–2019”, adopted in 2015 created a legal base to increase energy efficiency in the country . In fact, the document defines national policy for the next 5 years with special program to increase energy efficiency, introduce energy-saving technologies and to use renewable energy sources more. The main directions of the program are the following ones:

--taking of the measures to reduce the energy intensity of manufacture production, which will result diminishing of costs;
--further modernization, technical and technological re-equipment of production facilities and creation of the new ones only on the basis of modern energy-efficient and energy-saving technologies;
--acceleration of widespread use of renewable energy sources to replace and reduce consumption of hydrocarbon fuels;
--implementation of modern types of energy-saving equipment, devices and materials, as well as automated fuel and energy consumption accounting systems and their wide exploitation in the economic sectors and the social sphere;
--introduction of new technologies and wide use of renewable and alternative energy in order to increase energy efficiency during reconstruction of existing residential and office buildings and construction of the new ones.

South Korea is well known for advanced technologies in the field of energy storage and production of solar power plants. South Korea actively develops production of ecologically friendly or clean electricity, due the scarcity of own oil and gas reserves, and because coal-fired power plants significantly pollute an air. By now the share of energy generated from renewable sources is equal to 7% and the goal of the government is to increase it up to 20% by 2020.

It is expected that in the next decade South Korea will make a breakthrough in the field of renewable energy generation, which is connected with its plans to install 30.8 GW of solar power plants till 2030. The country’s plans also include the construction of a 3 GW solar park by 2022, which will become the largest in the world.

It is worth to note that in recent years in the Republic of Korea and China the largest number of patent applications in biofuels, solar thermal energy, solar photovoltaic energy and wind energy have been filed.

Among Central Asian countries Kazakhstan had successful cooperation with Korea in adoption of ecologically clean transportation and creation of energy independent houses. The cooperation succeeds because of great contribution of the famous Korean Energy Research Institute which for 41 years has been exploring different types of energy, including renewable ones.

For Uzbekistan the Institute together with the Center of Korea’s “green” technologies has excellent perspectives to realize series of studies about “Development of renewable energy as a tool for ensuring the energy security of the country”. Only through this kind of international cooperation it will be possible to provide high technical, scientific assistance to generate results for their practical implementation in Uzbekistan. Moreover, it will allow Uzbek scientists to get an international experience and to provide concrete solutions for the use of alternative energy technologies. The framework of the joint cooperation can include the following ones: conducting joint research together with Korean experts in the field of “green energy and renewable energy technology in South Korea” and national experts from Uzbekistan (for example, CER); addressing issues of South Korea’s assistance in enhancing scientific capacity of national (local) experts by organizing internships, study tours to explore Korean experience in practical implementation of energy conservation programs and projects in the field of alternative energy; inviting Korean specialists to work together and to conduct an independent examination of research results.

The cooperation can help to solve the following problems in Uzbekistan; sustainable energy supply in the regions through accumulation of renewable energy sources; reduction of mono-dependence from natural gas and thereby ensuring the energy security of the country; creation of a qualitatively new field of energy sector in the country which from one side can become an alternative to traditional energy based on hydrocarbons, and from another side – allow using renewable energy sources and requiring a high-quality new technological solutions, contributing to the development of high-tech industries; replacement of hydrocarbons and decrease greenhouse gas emissions to the atmosphere; improving technical qualification of specialists in the regions.

Practical results and relevant recommendations of the research can be used in the future by managers and relevant specialists of Uzbekenergo JSC, Uzbekgidroenergo JSC, the Ministry of Economy and Industry of the Republic of Uzbekistan and other interested ministries, departments and agencies to prepare a set of measures and relevant roadmaps, as well as define perspective investment projects.

Along with the energy sector, there can be fruitful cooperation between Uzbekistan and South Korean partners in building the capacity of agricultural sector through joint research.
Uzbekistan’s agricultural sector accounts for about 1/3 of GDP and 30% of employment. Agriculture is an important source of income for rural residents of the country.
Despite the qualitative changes in the structure of agricultural production, its diversification and development of farms, there are still a number of problems hindering the sector’s further boost in Uzbekistan:

- cultivated lands for wheat (38.7%) and cotton (36.1%) occupy about 74.8% of the total cultivation area, while implementation of scientifically based crop rotations necessary to achieve high yields remains unresolved;
- there is a worsening of the ameliorative state of irrigated lands, 49% of which are saline in various degrees, about 18% are highly and moderately saline lands, over 23% belong to the category of land with a low quality score (data for 2015);
- insufficient production of feed for the intensive development of livestock due to low share of forage crops (8.6%) in the total cultivation area. As a result, the volume of livestock production is insufficient to fulfill the demand of the population according to rational consumption standards;
- the volume of investments attracted to agricultural sector is insufficient, the share of which in the gross volume of investments is only about 6.4%.

In Uzbekistan, the risks associated with climate change are relevant, actual and fundamental. The predicted change in agro-climatic conditions will affect mostly the rural population (approximately 50% of the population of Uzbekistan lives in rural areas), directly or indirectly engaged into agriculture works. So, the climate change poses a serious threat to agricultural production, water availability and economic growth.

In Uzbekistan, the agricultural sector is not sufficiently adapted to current climatic conditions, especially with regard to the rational use of land and water resources.
Quite obvious that in the long term it will be difficult to increase agricultural production volume and to satisfy growing population’s demand, because of the problems of limited land resources and decrease of soil fertility.

Thus, the following issues should be investigated: efficient use of land resources in climate change conditions, and taking of measures that will help limit the negative effects of climate change; digitalization of the agricultural sector in the framework of such joint projects as “Smart farm” and “Smart technologies in agriculture”, which will increase competitiveness and productivity, ensure food safety and attract investment to the sector;
optimization of placement and improvement of the structure of cultivation of areas with a phased reduction of cotton and grain-planting crops on lands where its yield does not exceed 10 centners per hectare; creation of new intensive orchards and plantations of fruit and vegetable crops on free lands, using high-tech agricultural activities following an example of the Research Institute of Agriculture and South Korea horticulture; improvement of ameliorative condition and increase of soil fertility; increasing export capacity in agricultural sector, first of all, export of fruit and vegetable products to develop not only the nearest neighbors’ markets but also markets of Asian countries such as Korea and Japan.

In conclusion, conducting of joint research will contribute to strengthening economic relations between Uzbekistan and Korea. It will increase an attention of investors from both countries, primarily producers of energy and agricultural sectors, who are closely involved in the implementation of effective technologies, innovative projects and know-how.

Sharofiddin Nazarov  edt@koreapost.com

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