Completed Mixed AidData Chinese Aid

China Eximbank provides $185 million preferential buyer’s credit for Aral-Kazarman Section (195 km-291 km) of the Alternative North-South Road Project (Linked to Record ID#40491 and #46350)

$185.25M USD

Funder	Export-Import Bank of China (China Eximbank)
Recipient Organization	Ministry of Finance of the Kyrgyz Republic
Country	Kyrgyz Republic
Start Date	Jun 15, 2015
End Date	Nov 05, 2031
Duration	5,987 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`53585`

Grant Description

China Eximbank provides $185 million preferential buyer’s credit for Aral-Kazarman Section (195 km-291 km) of the Alternative North-South Road Project On June 15, 2015, China Eximbank and the Government of the Kyrgyz Republic's Ministry of Finance signed a $185,254,119 preferential buyer credit (PBC) loan agreement [CHINA EXIMBANK PBC NO. (2015) 4 TOTAL NO. (346)] for the Aral-Kazarman Section (195 km-291 km) of the Alternative North-South Road Project.

📋 Loan / Grant Terms

📅 Maturity20 years

⏳ Grace Period11 years

💹 Interest Rate2%

The proceeds of the loan were to be used by the borrower to partially finance a May 4, 2014 commercial contract [EXMB/KG/NS-05] worth $298,796,966.13 between the Ministry of Transport and Communications of the Kyrgyz Republic and China Road and Bridge Corporation (CRBC).

According to internal data that the Kyrgyz Ministry of Finance shared with AidData in July 2022, this loan achieved a disbursement rate of 83.8% ($155,374,422.40 out of $185,254,119) as of December 31, 2021 and its amount outstanding was $155,374,422.40 as of December 31, 2021.

The purpose of the project was to construct a section of the Alternative North-South Road that runs from Aral to Kazarman (195 km to 291 km).

The aim of this international North-South transport corridor is to reduce trade costs and connect Russia, Central Asia, Iran, and India. CRBC was the EPC contractor responsible for project implementation. Construction began on August 10, 2015. However, as of December 2020, the project had still only achieved a 70% completion rate.

The project was ultimately completed on November 10, 2021. It was originally scheduled for completion on April 10, 2020. This project has also been plagued by controversy.

According to a 2018 investigation, former Minister of Transport and Communications Kalykbek Sultanov and the Minister of Transport and Communications at the time (Zhamshitbek Kalilov) may have colluded with the contractor responsible for project implementation (CRBC) to embezzle funds that were allocated for the Alternative North-South Road by China Eximbank.

The investigation found the project input costs were inflated by several orders of magnitude — from paying $1.1 per kilogram of cement (while the cost on the local market was $0.07) to paying $2,000 a month to provide office space to an engineer on the construction site.

📋 Staff Comments

This project is also known as Phase 2 of the Alternative North-South Road Project (or “Строительство альтернативной автомобильной дороги Север-Юг, фаза 2”).
The Alternative North-South Road Project (Russian: строительства альтернативной дороги Север—Юг; Chinese: “北-南公路”) is being implemented in three parts and financed with 3 different China Eximbank loans: Phase 1 of the project [Kazarman-Jalal Abad Section (km291-km433) and Balykchy-Aral Section (km183+500-195+486)] is being financed with a $399,989,041 PBC from China Eximbank (Project ID# 40491). Phase 2 of the project [the Aral-Kazarman Section (195 km-291 km)] is being financed with a RMB 697,562,608.76 government concessional loan (GCL) from China Eximbank (Project ID#46350) and a 185,254,119 PBC from China Eximbank (Project ID#53585). Phase 3 of the project [the Balykchy-Kyzyl-Zhyldyz Section (0-183km) was funded by the Asian Development Bank.
The project identification number in the Government of the Kyrgyz Republic’s Aid Management Platform (AMP) is 87188512762.
The China Eximbank (PBC) loan agreement can be accessed in its entirety via https://www.documentcloud.org/documents/20488737-kgz_2015_425.
A detailed loan repayment reschedule (that the Kyrgyz Ministry of Finance shared with AidData in July 2022) can be accessed via https://www.dropbox.com/s/xg0cmomv0qk7cbj/Repayments.xlsx?dl=0. The schedule reflects actual repayments through December 31, 2021 and planned/scheduled repayments after December 31, 2021. Note also that (a) China Eximbank granted the Government of Kyrgyz Republic a a deferral of payments for the period from August 2021 to December 2021, and (b) the deferred principal and interest amounts are included in the main body of the debt and the repayment amounts of the deferrals (with additional accrued interest for granting a deferment) are already included in the repayment schedule.

📚 Sources & References

27 years of independence: Biggest projects implemented in Kyrgyzstan
Alternative North-South Road Aral - Kazarman (Construction)
Alternative North-South Road Project Section Aral-Kazarman (km195-km291)
CAREC Corridor Implementation Progress
Planned Actions, and Support Needs
China's Foreign Assistance PPT Presentation
China’s Silk Road Economic Belt Initiative: Network and Influence Formation in Central Asia
Chinese company helps build Kyrgyzstan's biggest infrastructure project
Financing the Construction of an Alternative North-South Road in Kyrgyzstan, http://static.akipress.org/127/.storage/business/images/Nazika/0d0de3348ed67b9e5d654d234f3a92b0.png
Kyrgyzstan and the Belt and Road Initiative
Kyrgyzstan
China mull cooperation
Kyrgyzstan’s north-south road to corruption
News agency sums up Kyrgyzstan’s greatest tangible achievements since independence
PREFERENTIAL BUYER S CREDIT LOAN AGREEMENT
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Preferential Buyers Credit Loan Agreement on Alternative North-South Road Project
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The Kyrgyz Parliamentary Transport Committee reviewed and approved the draft of the second-phase loan agreement for the “North-South” Highway, АЛЬТЕРНАТИВНАЯ ДОРОГА СЕВЕР — ЮГ. ФИНАНСИРОВАНИЕ ВТОРОЙ ФАЗЫ СТРОИТЕЛЬСТВА, Интервью ИА AkiPress у ЧПП КНР в КР г-жи Ду Дэвэнь о строительстве автодороги «Север-Юг», Министерство транспорта и дорог Кыргызской Республики, Нам любые дороги дороги. Как в Киргизии зарабатывают на асфальте, будке для инженера и китайцах, Р Е Ш Е Н И Е Комитета Жогорку Кенеша Кыргызской Республики по транспорту, коммуникациям, архитектуре и строительству от 26 февраля 2019 года О состоянии автомобильных дорог республики, подведомственных Министерству транспорта и дорог Кыргызской Республики и ходе реализации ратифицированных Законов по реконструкции и строительству автомобильных дорог, Түндүк-Түштүк альтернативдик жолу 70 пайызга бүткөрүлдү, Түндүк-Түштүк жолунун бир бөлүгү ачылды
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重大项目 Major Projects Loan applications and disbursements are still being received and processed as the projects continue to evolve. Ongoing monitoring and evaluation are in place to ensure project continuity.