Uzbekistan’s JSC National Electric Networks has concluded a 10-year take-or-pay contract with Da Afghanistan Breshna Sherkat on supplying electricity to Afghanistan.
Uzbek media reports say Deputy Minister of Energy of Uzbekistan, Sherzod Khojayev, remarked this at a briefing following the CAREC Energy Ministers’ Dialogue that took place in the Uzbek capital of Tashkent on September 20.
Uzbek official noted that the agreement is not a seasonal one, it is designed for year-round supply of electricity. At the initial stage, electricity deliveries from Uzbekistan to Afghanistan will amount to 4.2 billion kWh with subsequent increase to 6 billion kWh.
A take-or-pay contract is a rule structuring negotiations between companies and their suppliers. With this kind of contract, the company either takes the product from the supplier or pays the supplier a penalty. Take or pay contracts are common in the energy industry and, in particular, for gas sales.
Uzbekistan has supplied electricity to Afghanistan at the rate of 7 cents per one kWh since 2002.
At the same time, Uzbekistan buys electricity from Tajikistan at the rate of 2 cents per one kWh in summer period and at the rate of 2.5 cents in winter period.
Last month, Tajikistan reportedly supplied 346 million kWh of electricity to neighboring Uzbekistan.
Tajikistan also supplies electricity to Afghanistan at the rate of 4.1 cents per one kWh.
In August this year, Tajikistan reportedly supplied 270 million kWh of electricity to northern provinces of Afghanistan.
