Page 62 - bne_July 2024_20240709

62 I Eurasia bne July 2024
Chinese, Kyrgyz and Uzbek experts discuss the details of the CKU railroad project during a field trip to Kyrgyzstan’s Jalal-Abad Province in April 2023. More than a year later, many details remain unclear. / Kyrgyz Railways
Kyrgyzstan, Uzbekistan & China: When is a done deal really done?
Kyrgyz territory, with Kyrgyzstan granting Beijing a degree of extraterritoriality, waiving visa requirements and taxation rules for Chinese workers and equipment engaged in the project.
According to a local media report, China had to upgrade Kyrgyzstan’s debt rating to medium-risk from high-risk to open the way for financing the deal.
On June 18, the head of Kyrgyz railways, Azamat Sakiev, appeared at a Kyrgyz parliamentary hearing to answer MPs’ questions about the project, which President Sadyr Japarov has described as a vital link connecting landlocked Kyrgyzstan to world markets.
Sakiev’s responses during the two- hour session resolved some questions but raised others. He did address the financing issue, but the numbers didn’t seem to square. He pegged the overall construction cost at $4.7bn, adding that the Chinese government had pledged to give the consortium a $2.35bn low- interest loan, covering about half the project’s final bill. That loan, given the consortium’s financing responsibility framework, would cover just about all of China’s financing share.
Sakiev proceeded to say Kyrgyzstan would need to find $700mn to cover its construction costs, a number that doesn’t align with the country’s 24.5% financing share. A quarter of the remaining estimated construction cost
Eurasianet
The more officials from China, Kyrgyzstan and Uzbekistan try to provide clarity about a multi- billion-dollar railway project, the more it appears to be a case of putting the train before the track.
Construction of the China-Kyrgyzstan- Uzbekistan (CKU) railway had long been planned, but little was done, mainly due to questions about financing. But in early June, the three countries’ leaders unveiled a construction consortium to build the route, asserting that all the pesky details had finally been hammered out. There was one problem, however: none of the three countries immediately published the document that provided specifics on the consortium’s operations.
China’s State Council information service published a commentary by a former Kyrgyz prime minister, Djoomart Otorbaev, touting the project as capable of turning Central Asia into a trade hub. “The new railway [is] a beacon of hope and optimism,” Otorbaev trumpeted.
www.bne.eu
Days after the initial announcement, Kyrgyzstan’s parliament published the agreement, which contains 13 provisions. The document portrayed the railway project as an outgrowth of the “long-term interests of the sides to develop strategic cooperation.” While it shed light on the composition of the
“While the start of the project seems set, the railway route remains uncertain”
construction consortium, it did not directly address the main issues of financing and construction timeline.
To no one’s surprise, the document shows that China enjoys a controlling interest in the project, responsible for 51% of construction costs. Kyrgyzstan and Uzbekistan each have a 24.5% share. Chinese entities are given responsibility for the actual construction of the railway on
comes to about $576mn. An MP during the session said Kyrgyzstan might be responsible for contributing up to $1bn to the project, a number that Sakiev did not challenge. He also revealed that Kyrgyzstan was negotiating with two Chinese banks to obtain a construction loan for an unspecified amount.
To muddle matters, an Uzbek media outlet, Spot.uz, reported on June 19