Introduction

This Factsheet outlines the current progress in advancing Sustainable Public Procurement (SusPP) in Uzbekistan based on a desk review. The review applies an analytical framework of six Pillars (or "building blocks") of SusPP systems.

The Framework is designed to make clear that countries do not need to follow a linear step-by-step path to build effective GPP systems. Rather it is important to examine local contexts and prioritize the Pillars with the most potential in the country. No matter where a country starts, a balanced approach to implementation calls for progress on all Pillars to some degree.

This Factsheet is organized as follows:

• "Country Overview" section with executive summary, indicative maturity rating, key achievements, potential pathways forward and timeline of key events related to advancing sustainable public procurement.
• "State of Play & Forward Looking Analysis" section that summarizes the research findings from the desk review for each Pillar theme.
• "Key Stakeholders Driving the Agenda" explores opportunities for ADB teams to open discussions with country counterparts and add value to the work of partners.

The Factsheet is intended to be a living document that will be revised and improved as new information is uncovered and advances are made. It is designed to support the ADB training programs on SusPP.

In Uzbekistan, public procurement represents between 11% and 20% of the country’s GDP. Sustainable public procurement is endorsed in the country's Green Growth Strategy and Implementation plan for the Sustainable Development Goals (SDG) as a key green financing tool. The Public Procurement Law (PPL) specifically encourages the inclusion of sustainability criteria as a factor in bid evaluation.

The country is in the midst of a transition to a market economy launched in 2016. Thus, a sizeable share of the economy is still in the hands of the public sector. However, the country's latest development vision outlined in its Development Strategy 2022-2026 prioritizes stimulation of the private sector and entrepreneurship to account for a greater proportion of national GDP. The PPL allows preferences for domestic suppliers.

The country faces one of the most serious infrastructure investment gaps in the region due to deferred maintenance. Such underperforming infrastructure is a major burden on the economy, and an opportunity for more sustainable infrastructure development.

Meanwhile, action on climate change is essential. Uzbekistan is one of the most vulnerable countries to climate change: 80% of its territory is considered grassland and desert areas. Water use in Uzbekistan is particularly inefficient, while the country’s energy use per unit of GDP is about three times higher than the average for the Europe and Central Asia region and two times that of neighboring Kazakhstan. Windblown sand and dust from degraded land exposes the population to unhealthy levels of air quality (World Bank, 2023).

>> Snapshot of Sustainable Procurement Maturity Level

Maturity Level:

Early-Intermediate Stage

Key Achievements

• Public procurement law (2021 update) encourages the inclusion of green criteria in bid evaluation and allows modern procurement approaches (joint procurements, online stores, functional criteria)
  
• SusPP recognizes as a key green financing tool to achieve the country's ambitions on green growth and SDG implementation
• Policy commitment and action plan on SusPP under development, expected in 2023
• Market shows readiness to provide energy-efficient technologies and products for buildings and greener fuels
• National ecolabel established with environmental criteria for 10 product categories (not yet formally adopted)
• Clear national priorities to promote water and energy efficiency in industrial and agricultural sectors
  

Potential pathways forward

• Support to formally endorse and implement of SusPP policy commitment and action plan
  
• Creation of an inter-ministerial body and working groups to advance SusPP
• Awareness raising and capacity building across procuring entities, private sector and wider public
• Support for focused market assessment studies to understand readiness to response to green criteria in key sectors
• Support to develop more implementing tools and environmental standards, such as green building codes, life-cycle costing tools
• Support of pilot SusPP in key ministries (energy, construction, housing, agriculture)
  

>> Timeline of Implementation of Sustainable Procurement Activities

2023

2018

2019

2021

2022

Green Economy Transition Strategy 2019-2030 endorses SusPP

Major energy law reform with the Law on renewable energy and Decree on energy efficiency

Update to Environmental Protection Concept recognizes SusPP

Green Business forums organized on energy efficient technologies and green construction

Law on Public Procurement consolidates regulatory framework

Decree on measures to implement the SDGs sets SusPP implementation as a national SDG target

SusPP Policy commitment and action plan under development

Updated Law on Public Procurement encourages SusPP

Updated NDC commits to 35% reduction in GHG emissions

National ecolabel launched & environmental criteria for 10 product categories developed (awaiting approval)

Presidential Decree endorses Green Economy Strategy, including SusPP & preferences for domestic suppliers

Development Strategy 2022-2026 prioritizes private sector development & entrepreneurship

Pillar 1: Government Vision & Awareness of SusPP

Governments that establish a clear policy vision on SusPP can accelerate the shift from procurement as an adminstrative to strategic function, making clear how SusPP can deliver on important national social and environmental goals.

Vision for SusPP

Uzbekistan's Green Economy Transition Strategy 2019-2030 endorses SusPP, placing the "inclusion of green criteria into public investment and spending" as one of six main tasks to support the country's green economy transition. The 2022 Presidential Decree No. PP-436 sets out the Green Economy Program, which includes the "introduction of green public procurement to justify procurement decisions based on sustainable development criteria" (Article 2.7.3(f)). Previous commitments to "expand the use of environmental standards in public procurement practices" can be found in the Decree No. 841 of October 20, 2018 “On measures to implement the National Sustainable Development Goals" and the 2019 Environmental Protection Concept.

Uzbekistan’s Development Strategy 2022-2026 defines the country's overarching development vision. The Strategy priorities the stimulation of the private sector, entrepreneurship support and privatization of state-owned enterprises, targetting socially vulnerable segments of the population.

Presidential Decree No. PP-436 of December 2, 2022 confirmed the country's commitment to green and socially-inclusive development. It notes the need to retrain vulnerable populations at risk of unemployment due to climate change and reduce the quality of life gap between rural and urban areas.

The Public Procurement Department of the Ministry of Finance planned work in 2022-2023 funded by the French Development Agency to conduct a baseline status assessment of SusPP, draft a SusPP policy statement and design an SusPP action plan. With completion expected in May 2023, the Ministry of Finance will have a roadmap for SusPP deployment and put in place early tools to pilot the SusPP approach in key sectors.

Other related national goals and strategies

Procuring entities can design procurements to contribute to the achievement of national goals and priorities. The Green Growth outlines national green growth goals that SuPP can contribute to achieving:

• 35% reduction of GHG emissions per unit of GDP by 2030
  
• minimum 20% increase in energy efficiency in industry
  
• 30% reduction in energy intensity per unit of GDP, including through the expansion of renewable energy
  
• significant increase in water use efficiency in all economic sectors
  
• 30% expansion of green space in cities by planting 200 million seedlings a year up to 1 billion seedling planted by 2030
  
• expanding forest cover to more than 90 million cubic meters
  
• minimum 65% recycling rate of household waste
  

These goals are further elaborated in several national strategies and policies.

• Climate change: The Government of Uzbekistan submitted its updated Nationally Determined Contribution (NDC) in 2021. In 2022, the country joined the Global Methane Pledge to reduce methane emissions by at least 30% by 2030 compared to 2020.
  

• Energy Efficiency & Renewables: This topic is regulated by the 1997 Law on Rational Use of Energy, 2019 Law on renewable energy use, 2019 Decree on energy efficiency and 2020 Decree on reducing dependence on fuel and energy. Notably, government departments are expected to implement energy saving programs, and may be subject to energy audits.
  
• Water Efficiency: Water withdrawal limits are planned along with improved wastewater treatment and circular water supply in industrial and agriculture sectors.
• Environmental protection: The 2019 Environmental Protection Concept encourages energy efficiency in buildings, cleaner fuels in transport and vehicle emission standards up to Euro-6.
  
• Circular Economy: The circular economy is a new concept in Uzbekistan, first introdued in the 2022 Presidential Decree on a "Green" Economy. The Decree calls for the introduction of circular economy practices in industrial enteprises and the agri-food chain.
  

Pillar 2: Legal & Regulatory Framework

Procurement law reform can be key to clear obstacles to implementation by establishing "value for money", not "lowest price", as a core procurement objective, and authorizing procurement approaches suited to SusPP.

Public Procurement Law

The Government of Uzbekistan has made substantial and consistent efforts since 2017 to modernize its public procurement system to align with international standards. The 2018 Law on Public Procurement (PPL) was the first major reform, replacing a patchwork of over 30 regulatory acts. A 2021 update to the PPL further improved alignment with international standards.

The PPL requires procuring entities to ensure the optimal balance between the benefits from the acuisition of goods, quality and cost, including life-cycle operating costs. Several articles support SusPP including:

• Encourages procuring entities to take into account national priorities set out in socio-economic policies, including the creation of innovative industries and preservation of the environment (Article 16).
  
• Allows for preferences to domestic suppliers, as long as at least three domestic bidders participate in a public procurement (Article 16).
• Allows the application of non-price evaluation criteria and evaluations based on the most economically advantageous offer. Non price criteria can include service life, operating costs and environmental criteria, which may comprise factors on energy efficiency, rational use of natural resources, use of environmentally friendly or secondary raw materials, renewable energy (Articles 18, 32).
  

• Permits use of functional or operational criteria (beyond technical criteria) such that suppliers can propose green innovations (Article 34)

The PPL allows the organization of joint procurements (Article 38) and procurement through electronic store (Article 49). These procurement approaches can be used to aggregate demand for sustainable goods and services, as well as streamline the selection of green and inclusive suppliers.

Minimum environmental standards

Public procurement must be designed to meet minimum environmental standards. In Uzbekistan, the Government has banned the production and import of motor fuels below the Euro-4 standard as of 1 January 2023. Further environmental standards are planned to set sustainable water withdrawal limits, establish minimum energy efficiency requirements, limit vehicle emissions and pollution.

Law on Ecolabelling

The Government adopted a resolution “On implementation of a system for voluntary eco-labeling of products in the Republic of Uzbekistan” in August 2019 to formalize the creation of a national eco-labelling scheme. Voluntary ecolabelling of products must be carried out by accredited authorities and consider impact on the environment, public health and biological resources during production, use, consumption, transportation, storage and disposal of products. The Regulation introduces an official ecological safety mark for Uzbekistan, called EkoUz. The usage of the word “eco” (“эко”) is prohibited if a product or service is not certified with an ecolabel.

Pillar 3: Institutions & Capacity

Public Procurement - Institutions

The Cabinet of Ministers is responsible for developing policy and oversee activities in the field of public procurement. The Public Procurement Department of the Ministry of Finance is the authorized body responsible for carry out state regulation and policy on public procurement, which includes the implementation of SusPP.

Green Economy - Institutions

The implementation of SusPP in Uzbekistan is coordinated under the country's Green Economy Program. The Ministry of Economic Development and Poverty Reduction is the lead agency responsible for the transition to the green economy. It coordinates the work of an Interdepartmental Council, Donor Coordinating Group, Technical Secretariat and various interdepartmental working groups.

Other government agencies with responsibilities related to SusPP:

• The Ministry of Energy is responsible for the development of green energy, especially the introduction of renewable energy sources and hydrogen energy, as well as improving energy efficiency and reducing the energy intensity of manufactured products.
  

• The Ministry of Innovation Development is responsible for developing research and innovation programs to explore the possible use of gren technologies in key sectors of the economy and support promising innovations and startups.
• The Ministry of Water Resources and Mininster of Housing and Communal Services is responsible for improving efficient water use.
• The Minister of Agriculture is responsible for improving sustainable agricultural practices, especially on water conservation and efficiency.
• The State Committee for Ecology and Environmental Protection is responsible for providing environmental support and monitoring the state of the environment.

Capacity & Training

The Ministry of Economic Development and Poverty Reduction, with World Bank support, hosted a series of 11 roundtables on the topics of green growth and climate change from August 2021 to February 2022. Green public procurement was discussed as a key green finance policy tool.

National consultations and validation workshops to support the development of a SusPP policy and action plan were planned in 2022-2023 under a project financed by the French Development Agency.

Pillar 4: Market Practices & Sustainable Supply Chain

Market dialogue throughout the procurement process helps procuring entities to choose realistic sustainability criteria and ensure suppliers succeed in delivering on sustainability commitments over the contract duration.

The Government of Uzbekistan has aims to support the greening of industries and products, with a particular focus on supporting domestic companies, SMEs, women-owned enterprises and vulnerable groups. At present,

Market forums

UNDP has hosted business forums to feature green market solutions available in Uzbekistan. In November-December 2019, two business forums were organized on the topic: "Energy-efficient materials and technologies in Uzbekistan: the state of the market and its development prospects for promoting green construction in the country." The forum also featured a specialized exhibition of energy efficient materials and technologies from local and foreign manufacturers.

Green buildings

The market appears ready to respond to green building requirements. Under a UNDP project with GEF financing, 30,000 energy efficient apartments were built that provided energy cost savings for low-income households in 2021, with 60,000 more apartments planned. The project also supported the construction of the first Nearly Zero-Energy building constructed in the Yoshlik mahalla in the city of Nurafshan. As of January 2023, there is one known LEED certified building in Uzbekistan, a residential building “Parkent Plaza”. Three other buildings have been registered for certification, two office buildings and one hotel and conference centre all located in Tashkent.

Green fuels

Shifting to greener fuels is a key national priorities and it appears that domestic companies are responding to this demand. The Ferghana oil refinery has been modernized and reconstructed to produce a line of Euro 4 and Euro 5 diesel products, as a lower-emission vehicle fuel option available since November 2020.

Pillar 5: Procurement Operations

Various tools and procurement approaches can be employed to help procurers more easily identify environmentally friendly goods and services and attract a competitive market response.

Adoption of SusPP practices by procuring entities in Uzbekistan appears to be limited at present. Few tools are currently available to support SusPP practice. However, the development of green criteria, standards and training are priorities in the Government's Green Economy Program - including the creation of an energy certifiation system for buildings and revision of existing norms and standards for thermal-insulating building materials.

Ecolabels

In 2019, specialists from the NGO Ecological Union began work on a national ecolabel with assistance from Russian specialists from the “Vitality Leaf” certification system. As of 2021, environmental criteria adapted to the Uzbek context have been developed for 10 product categories and are awaiting formal adoption as national standards.

Product Standards

Uzbekistan will introduce a system of "green certificates" to identify products manufactured using environmentally-friendly energy and technologies. To further promote greener products, regulations on GHG emissions and implementation of the "polluter pays" principle are also planned.

Pillar 6: Monitoring & Impact Measurement

Monitoring systems are essential to gather the information needed to keep SusPP implementation on course and communicate on the benefits achieved for the country.

Monitoring of public procurement activities is the responsibility of the Ministry of Finance. The 2021 PPL, Article 27, calls for the creation of a Special Information Portal to allow electronic viewing of public procurement information. The Ministry of Finance with EBRD support, launched an e-procurement system in April 2020 as part of the country’s procurement modernization efforts. The Ministry of Finance has committed to design a SDGs financing monitoring system, and advance implementation of green taxonomy (World Bank dialogues 2021).

The Green Economy Transition Strategy assigns responsibility for monitoring implementation to the Ministry of Economy and Industry. No indicator on SusPP are included in the "Green Economy" monitoring framework. However, an indicator on SusPP is included in the country's Statistical Indicators of Achievement of National SDGs, specifically Indicator 12.7.1 "Availability of strategies and action plans for sustainable public procurement." No data is available to date on this indicator on the country's SDG tracking website.

The Open Data Portal for Uzbekistan monitors an indicator on public procurement. However, sustainability criteria are not yet tracked.

Projects Supported by ADB

The Asian Development Bank (ADB), through its country partnership strategy (CPS) 2019–2023, will support Uzbekistan to support private sector development and reduce economic and social disparities. ADB will support the country's climate goals through its operations aimed at improving energy efficiency, developing renewable energy, supporting fuel switch in transport, and reducing methane loss in the natural gas segment.

Opportunities to integrate SusPP include:

• Integrate sustainability criteria to contract with domestic suppliers and SMEs in ADB financed projects, complementing ADB's projects to enhance the enabling environment for SMEs.
  

• Implement ADB recommendations on climate-resilient road infrastructure in future projects in the country and region.
  

The Ministry of Economic Development and Poverty Reduction is responsible for creating a Donor Coordinating Group to foster the mutual coordination of support programs on climate change and green growth.

Other Initiatives supported by National/International Agencies

The French Agency for Development (AFD) (2022-2026, 150 million EUR) is supporting the development of a new strategical framework to transition to a greener economy. The first loan aims to support structural measures such as the adoption of the new strategical framework, the implementation of fiscal measures to encourage clean transport or integration of environmental criteria in public procurement. This AFD project funding will soon be complemented by European funds delegated to AFD.

UNDP, under the UN Joint Programme funded by the Joint SDG Fund, is supporting the Government to better link public finance to the SDGs.

Under its CPS 2022-2026, the World Bank supported the 2021 reform of the PPL, including the integration of SusPP and plans to support capacity building on sustainable procurement. The Bank also is currently supporting the development of a Long-Term Decarbonization Strategy.

Switch Asia supports the advancement of the environmental policy framework in Uzbekistan. The program also works with SMEs to improve resource efficiency, especially in the textile and cotton industries.

Resources

ADB news released on "Green Financing and Private Sector Can Support Uzbekistan's Transition to a Green Economy" (6 April 2022).

IEA website on "Uzbekistan energy profile: Sustainable development."

UNDP 2022. Green Growth Strategic Framework - Uzbekistan.

UNECE 2020. Uzbekistan Environmental Performance Reviews - Third Review.

UNECE 2022. Innovation for Sustainable Development - Review of Uzbekistan.

World Bank 2022. Uzbekistan: Choosing an Innovative and Green Future.

“World Bank; Ministry of Economic Development and Poverty Reduction of the Republic of Uzbekistan. 2022. Towards a Greener Economy in Uzbekistan.

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