CABAR.asia notes that China’s decision to speed up construction of the D gas pipeline Turkmenistan-China running through the territory of Kyrgyzstan and Tajikistan marks a significant step in expanding its participation in the power sector of Central Asia.
Speaking of Kyrgyzstan, China reportedly integrated into the power sector of the republic a long time ago. Almost every large-scale power project in Kyrgyzstan is implemented with the participation of China. According to latest data provided by the Kyrgyz ministry of finance, the total debt of energy companies of Kyrgyzstan to China was 1 billion dollars as of May 1, 2022: including 48 billion 790 million Kyrgyz som (557.47 million dollars) of debt of NESK, and 32.02 billion Kyrgyz som (364.94 million dollars) of “Power Plants”.
Despite huge obligations of the power sector to China, Kyrgyzstan continues to ask money from its neighbor to resolve issues in the power sector. In particular, the heads of Kyrgyzstan and China discussed cooperation in power and other spheres during negotiations in Beijing, when President Sadyr Japarov was in the capital of China on a working visit in early February 2022.
Back then, the Kyrgyz party stated that it hoped to encourage investment from China to the power sector in the following three-four years.
Negotiations have reportedly resulted in the first successes. China will build a wind farm this year in Kyrgyzstan. Construction works will be carried out according to the public private partnership. Investments by the Chinese party are estimated to amount to 100 million dollars.
Moreover, after the meeting of the chair of the cabinet of ministers, Akylbek Japarov, and the secretary of the Communist Party Committee of China, Ma Xingrui, a number of documents were signed in March to build the 500-kilovolt power transmission line and small hydropower plants in the republic using China’s money.
However, there is an opinion that Kyrgyzstan will not get a single kilowatt generated by power transmission lines and small hydropower plants build with China’s participation. To some extent, it turns out to be true because the republic is going to supply electricity to China. Today Kyrgyzstan does not have extra kilowatts and it has to import up to 2.5 billion kWh from its neighbors.
CABAR.asia notes that according to the recent statistical data, gas exports from Kyrgyzstan in January to April 2023 were intended mainly for Europe and Uzbekistan. China is not even on the top three list of importers, it is on the fourth place with 2.4 thousand tons.
Coal supplies from Kyrgyzstan to China amount to 0.3 per cent of total volume. However, the growth was 2.8 times (up to 803 tons) compared to the similar period of 2022, when coal supplies to China amounted to 282.2 tons. Brown coal exports to China are higher, 3.3 per cent of total volume, and amount to 9,247.7 tons, which is almost 23 times higher than in 2022.
The increase in coal supplies to China proves its growing presence in the coal sector. However, Kyrgyzstan exported the most significant amount of coal to Europe (101,198.3 tons).
However, economist Iskender Sharsheyev believes that Central Asia should not fear the growing economic presence of China. According to him, it can boost trade and regional development of countries in the region.
“The growing consumption and trade intensity caused by the active participation of China can potentially create favorable economic conditions both in Kyrgyzstan and in the region,” he said.
However, there are still political risks that are mainly related to the ability of national elites to effectively protect interests of their countries.
“China’s approach to loan repayment causes concern because it ignores sovereign rights of states that are unable to meet their financial obligations. The national elites must hold talks with caution in order not to fall into debt dependency that can lead to economic and political vulnerability. To reduce such risks it is very important to reach economic parity by involving private sector investments to joint projects and by ensuring a more reliable ground for cooperation,” Sharsheyev said.
Analysis of penetration into the energy sector and the global context shows us the long-term strategy of China and its consistent efforts to deepen its involvement in the region. Since China continues to expand its presence, Kyrgyzstan and other Central Asian states need to have a reasonable approach to this interaction by ensuring sustainable agreements and economic partnerships that would protect our interests and yield benefits from China’s integration into the energy sector.
