Modernizing Water and Energy Systems in Turkmenistan

Turkmenistan’s water and energy systems are heavily influenced by outdated pricing policies that disincentivize efficiency.

The new World Bank report, titled “De-Energizing Water in Europe and Central Asia: Managing the Energy Footprint of Water Services in the Region”, explores the state of water systems across the region. The report highlights how aging infrastructure and inefficient management have turned water delivery into a costly energy burden. In Central Asia, including Turkmenistan, this challenge is intensified by an extreme reliance on energy-intensive, Soviet-era irrigation systems, outdated policies, and heavily subsidized water and energy.

In Central Asia, the water sector is a big energy consumer. Parts of the region have an arid climate and the region relies on outdated over-sized Soviet-era infrastructure, with high water consumption in the agricultural sector.

The Scale of the Challenge

Central Asia stands out globally because of the scale of its water use and energy requirements of that sector:

• Central Asia has very extensive irrigation canal networks, with over 9 million hectares equipped for irrigation. Irrigated area per capita is the highest globally, at 1500 ha/person.
• The agricultural sector in Central Asia is the largest user of water in the wider Europe and Central Asia region.
• Central Asia has the highest irrigation energy use per capita in the world, over 150 kWh/capita, which is more than double the OECD average.
• Water utilities in the region are highly inefficient. In 2000-2020, the average energy intensity was 1.2 kWh/m3 of water produced, but almost 2.0 kWh/m3 of water sold. This gap highlights significant distribution losses.
• Water losses for drinking and household supply in Central Asia were estimated at 30-55% in 2016, which means that utilities were pumping 2 times more water than actually used.
• Water delivery can require up to 20% of national electricity demand in Central Asia, putting a high load on energy grids. 15% of the total primary consumption in the region goes to the water sector, of which around two thirds are used for municipal and industrial sectors, and a third goes to agriculture.

The Situation in Turkmenistan: Subsidies and Tariffs

Turkmenistan’s water and energy systems are heavily influenced by long-standing pricing policies that disincentivize efficiency. The report notes that systemic reforms are needed to move away from these legacy structures:

• Free irrigation water: in Turkmenistan, irrigation water provided by state water management organizations is free of charge.
• Agricultural fees: for services provided by Water User Associations (WUAs), the irrigation service tariff is set at 3% of farm yield.
• Household tariffs: the household water supply tariff is $0.50/m3 after minimum consumption.
• Heavy fossil fuel subsidies: fossil fuel subsidy rate was 65.1% in 2010 and remained high at 65.7% in 2022. These subsidies represented 19.7% of GDP in 2022, the second-highest rate in Central Asia.

Performance Ranking and Areas for Improvements

The report classifies the institutional and financial environment of Central Asia’s water sector as “red” on a traffic-light scale, signaling poor performance characterized by aging infrastructure, subsidized tariffs, and unclear regulatory frameworks.

The report recommends a 3-step approach for regions categorized as “red”:

• Step 1. Laying Foundations: focus on immediate, high-impact repairs, such as upgrading pumping stations, retrofits, and introducing solar energy for pumping for remote irrigation.
• Step 2. Scaling Measures: reduce “non-revenue water” (water losses), build institutional capacity through technical training for utility staff, develop regulatory frameworks, improve financial management.
• Step 3. Market-Oriented Sustainability: engage private capital to build long-term sector capacity and establish equipment supply chains.

A shift toward volumetric pricing (where users pay for the exact amount of water consumed) and incentivizing alternative technologies, such as drip irrigation and high-efficiency pumps, are immediate actions that Central Asian countries can take. Some countries in the region, such as Uzbekistan and Kazakhstan, have already launched incentives to promote drip irrigation technologies. Turkmenistan should also implement these improvements in order to reduce energy waste, lower operational costs, and improve the long-term security of water and energy supply.