Reforms and Further Development of the Uzbekistan Chemical Industry

Jan 2nd, 2018

On December 28 Uzbekistan government discussed the present-day situation in the chemical industry and prospects of the development of the sector at the meeting chaired by the Uzbek President Shavkat Mirziyoyev.

The industry has undergone a number of transformations since 2017 when the Development Strategy of Uzbekistan was proclaimed. In particular, after Shavkat Mirziyoyev in his April decree urged to improve the management system of Uzkimyosanoat JSC, they have reorganized the board of managers, the administrative apparatus and industrial branches of the joint-stock company.

On August 23, 2017, the Chemical Industry Program for the next 5 years was approved by the government. The Program envisages a number of financial and economic measures among which are the implementation of over 40 investment projects (total cost $3 billion); increase in production and exports; raising the market share of domestic products to 42.5%; the launch of over 40 new products and new job formation.

A new LLC Uzkimoyimpeks was organized to translate into action the following objectives:  to expand the sales geography to the foreign chemical markets,  to regulate the imports and exports of the industry, to gain transparency of the foreign trade, to increase the competitiveness of domestic chemical products at the global markets.

Despite a positive effect of the reforms in the chemical sector, the logjam of issues still remains unsolved. The producers of mineral fertilizers are having financial problems because of misalignments in the mutual settlements system caused by the improper budgeting of the agricultural sector. Chemical enterprises are not able to cover the costs of mineral fertilizers for the farming needs being on a tight budget to pay for sulfuric acid, phosphate raw products and other types of materials, their accounts payable,  electricity and gas. In this respect, in 2018 Uzkimyosanoat will organize the supply of artificial fertilizers to the consumers through exchange trade through the intermediary of the single agent.

However, there is still the need to reduce the cost of mineral fertilizers and increase the profitability of production. In particular, the experts say that the sector can keep the nitrogen fertilizers costs down only if it finds the solution how to reduce the energy costs which are about 67% of the total end-product cost.  Four major fertilizers companies concluded the year with low profits and one company with losses. To solve this problem the government suggests the enterprises taking loans.

The depreciation of plant equipment and construction of new chemical complexes is another problem of the industry which President Mirziyoyev ordered to solve within the shortest time saying that the repair of facilities will considerably increase the production capacities.  To upgrade the ongoing situation in the chemical industry, it was decided to create a centre which will combine under its roof engineering, research, design activities and professional development.