Uzbekistan’s President Dismisses Energy Minister After 4,000 Outages in Two Months, Orders AI-Led Shake-Up

The Shake-Up: Minister Dismissed Over Widespread Blackouts

President Shavkat Mirziyoyev has dismissed Energy Minister Jurabek Mirzamakhmudov and replaced him with Sherzod Khodjaev, formerly head of the Energy Market Development and Regulation Agency. The president announced the change during a video-conference on 27 July, where he delivered a blistering assessment of management failures in the fuel-and-energy sector. Simultaneously, the head of state-owned distribution company “Regional Electric Networks” was also removed, while the chiefs of National Electric Networks, Thermal Power Stations, Uztransgaz and Hududgaztaminot were placed on probation until the end of the year, with explicit warnings of dismissal if results do not improve.

The trigger was severe operational underperformance. Mirziyoyev disclosed that in June and July alone, approximately 4,000 accidents occurred on substations, leaving households and businesses without power for 8–10 hours at a time. Network losses reached 17.2%, and 4.8 billion kWh of electricity were lost in the first half of 2026—losses the president attributed squarely to weak management, not lack of funding.

Yet the backdrop is one of heavy investment. Over the past decade, Uzbekistan has drawn $23 billion in foreign investment into the energy sector and commissioned 9.5 GW of new generation capacity. A further 30 trillion sums (about $2.5 billion) were spent modernising electric and gas networks, substations, transformers and distribution equipment—six times the amount allocated in the previous 25 years. “The problem in energy is not in funds, because we find and allocate as much as needed. The problem is in managing the system,” Mirziyoyev stated. The new minister is expected to introduce a fundamentally new working style, with local governors also warned that they will be held strictly accountable for energy supply in their regions.

Why $23 Billion in Foreign Investment Couldn’t Fix Uzbekistan’s Grid

The Investment vs. Reliability Paradox

The removal of the energy minister lays bare a contradiction that will be familiar to many emerging-market reformers: massive capex has not translated into reliable service. The $2.5 billion network modernisation was meant to cut losses and prevent outages, yet 17.2% of electricity is still lost in the system and consumers face frequent blackouts. This suggests that capital was allocated without corresponding improvements in operational discipline, asset management or maintenance regimes. Investors who have committed $23 billion to generation projects will now be asking whether the downstream infrastructure can reliably offtake and deliver the power they are paid to produce.

The Surkhandarya Fiasco as a Cautionary Tale

One glaring example cited by the president was the planned combined-cycle gas power plant in the Surkhandarya region. The site chosen will require an additional $300 million simply to secure a gas supply, and the contract terms with the project initiator were not thoroughly studied, creating a risk of further overruns. This has now been openly identified as a planning failure, and the new leadership has been instructed to renegotiate the agreement. For foreign developers and lenders, the episode underscores that project selection and due diligence in Uzbekistan’s energy sector have been weaker than the headline investment figures suggest, and that new contracts may face stricter scrutiny.

A Digitalisation Push with Teeth

Mirziyoyev ordered the creation of a digitalisation and artificial intelligence centre within the energy ministry. Its mandate is to conduct a stress audit of the entire chain—from generation and transmission to distribution and delivery to end users, including coal, liquefied gas and fuel-oil supply. Several development scenarios will be modelled, and a system of daily digital algorithm-based employee management will be introduced. This goes far beyond typical IT upgrades; it signals a top-down push to replace legacy human-driven processes with data-driven oversight, potentially exposing further inefficiencies and resistance from vested interests within state-owned enterprises.

The New Team’s Mandate and the High-Stakes Probation

Sherzod Khodjaev arrives at the ministry with an explicit mandate to change working practices. He will be flanked by a new head of Regional Electric Networks, Sardor Isakulov, and a new chief of the Energy Inspectorate, Akhad Isokjonov. Their immediate tasks include reducing network losses, lowering the frequency and duration of outages, and renegotiating the Surkhandarya project. Meanwhile, the four enterprise heads on probation until year-end face a stark ultimatum: deliver measurable improvements or be fired. The combination of a probation period, an AI-driven audit, and direct presidential accountability extending to regional governors creates an unusually high-pressure environment for the entire energy bureaucracy.

What the Leadership Change Means for Investors and the Energy Sector

• For foreign investors and lenders: Expect heightened due diligence on project economics and contract terms. The Surkhandarya case makes clear that poorly structured agreements will be reopened. Any new project proposal is likely to face a stress test under the new digital audit framework.
• For equipment and technology providers: The creation of an AI centre and the focus on loss reduction open opportunities for smart-grid, metering, and asset-management solutions. The stated target of tackling 17.2% network losses creates a concrete addressable market.
• For the leadership of National Electric Networks, Thermal Power Stations, Uztransgaz and Hududgaztaminot: The year-end probation means immediate operational KPIs are critical. The first measurable test will be whether the 4,000-outage monthly run rate falls and whether network losses improve in the second half of 2026.
• For regional authorities: Mirziyoyev’s explicit warning that local governors “no longer have the right to sit quietly” means they will be drawn into energy planning and crisis response. Cross-institutional coordination will become harder to avoid.
• For consumers and businesses in Uzbekistan: Short-term disruption from management changes is possible, but the medium-term trajectory is towards more reliable supply. The creation of a digitalised daily monitoring system, if implemented effectively, should reduce the frequency of unplanned outages.