Obligations of Kyrgyzstan in construction of railway through region determined

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Kyrgyzstan, China, and Uzbekistan are starting the implementation of the railway construction project after signing the final text of the project agreement on June 6 this year in Beijing.

According to this document, the route of the new transport corridor is as follows: Kashgar – Torugart – Makmal – Jalal-Abad – Andijan.

The financing, commercial issues, and construction of the project will be handled by three parties:

• China Railway International under the state corporation "China Railway";
• the state enterprise "Kyrgyz Temir Jolu" under the Ministry of Transport of Kyrgyzstan;
• JSC "Uzbekiston Temir Yullari"
.

As part of the project's implementation on the territory of Kyrgyzstan, a Joint Project Company will be established with a charter capital divided among the Chinese, Kyrgyz, and Uzbek sides as follows:
• The authorized organization of the Chinese side or its holding subsidiary will hold 51%;
• The authorized organizations of the Kyrgyz and Uzbek sides will hold 24.5% each.

The organizations of each country will contribute capital in accordance with the specified shares to form the charter capital of the company. The exact size of the charter capital has not yet been determined according to the organization's documents.

The parties to the agreement have also agreed to establish the project capital of each side based on their capital share, including investments from national enterprises.

Obligations of Kyrgyzstan in the project

According to the agreement, Kyrgyzstan undertakes to sign an investment agreement with the Joint Project Company to grant the company special rights to implement the project on its territory under the BOT model and receive corresponding benefits.

The signing of the agreement is conditional on the investment in the construction of the railway. Kyrgyzstan must provide the company with the necessary permits and licenses to execute the project.

The country also undertakes to create favorable conditions for construction on land plots, including the use of local construction materials, ensuring electricity and water supply, as well as granting residence permits.

Kyrgyzstan also exempts Chinese and Uzbek personnel from the requirement to obtain work permits for railway construction.

An important condition is the exemption from customs and tax payments on the import and export of necessary materials, equipment, and machinery for the project.

Additionally, Kyrgyzstan must ensure favorable conditions for bank accounts and currency exchange.

Accordingly, Kyrgyzstan undertakes to facilitate the development and revision of relevant regulations governing investment, construction, operation, and management of railway infrastructure.

The authorized Chinese organization will be responsible for design, procurement, construction, and other main works on the territory of Kyrgyzstan.

At the same time, Kyrgyzstan and Uzbekistan can participate in partial subcontracting works, possessing the necessary qualifications, capabilities, and effective cost control of enterprises.

Resolving key issues, including the feasibility study and financing of the project, requires the joint efforts of all parties.

CentralasianLIGHT.org

June 15, 2024