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Financing Challenges Loom Over China-Kyrgyzstan-Uzbekistan Railway Project

CHINA: Kyrgyz President Sadyr Japarov’s recent visits to the United States and Germany showcased his efforts to attract investors to the China-Kyrgyzstan-Uzbekistan (CKU) railway project, a vital component of China’s expansive Belt and Road Initiative. However, while Kyrgyzstan’s enthusiasm for the project is evident, the key question of financing remains unanswered, with participating countries struggling to determine funding models and sources for this monumental undertaking.

In September, Gennady Bessonov, the secretary-general of the International Coordinating Council for Trans-Eurasian Transport, highlighted the ongoing financing disagreements among Beijing, Bishkek, and Tashkent. These disputes may potentially prolong the project. Bessonov also noted that Kyrgyzstan and Uzbekistan face financial constraints that limit their ability to independently finance the venture. Moreover, the delay in the project could benefit Kazakhstan, as this railway route initially served as an alternative means of transporting Chinese goods to Russia, avoiding Astana and minimizing customs clearance fees.

Despite these challenges, Kyrgyz Deputy Prime Minister Bakyt Torobaev remained optimistic, stating that negotiations regarding project financing are ongoing. Kyrgyz Transport and Communications Minister Tilek Tekebaev dismissed reports of a project suspension, asserting that discussions with China and Uzbekistan are active, and work will resume once the financing model is finalized.

The CKU railway project is a monumental endeavor covering approximately 454 kilometers, traversing the challenging terrain of western China and Kyrgyzstan, characterized by altitudes ranging from 2,000 to 3,500 meters. The project involves constructing over 50 tunnels and 90 bridges through Kyrgyzstan’s highest mountains. Kyrgyz officials previously detailed the Kyrgyzstan segment’s route, spanning around 280 kilometers, and a comprehensive feasibility study conducted by Chinese engineers estimated its cost at $4.7 billion. However, the question of financing remains a significant obstacle.

Rayimkul Mendekeev, Director of the Scientific and Technical Center at Kyrgyz State Technical University, outlined two potential avenues for financing: public-private partnerships and loans. However, securing a loan presents challenges for Kyrgyzstan, given its existing $2 billion debt with China. Bishkek has expressed concerns about the significant threat this debt poses to its sovereignty. Kyrgyz economic expert Iskender Sharsheev noted the formidable challenge of attracting foreign investment for the CKU railway, particularly as the primary route for railway imports from China to Europe currently goes through Kazakhstan, Russia, and Belarus.

Despite feasibility studies dating back to the early 2000s, tangible construction progress on the CKU railway remains elusive. The recent 10th-anniversary summit of the Belt and Road Initiative saw world leaders discuss the project’s future, though notable absences included Kyrgyz President Japarov and Prime Minister Akylbek Japarov. Following the summit, Chinese Prime Minister Li Qiang visited Bishkek for the Shanghai Cooperation Organization summit, where agreements related to the CKU project were reportedly signed, although details of the agreement have not been made public.



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