Preparations for the construction of a railway connecting China, Uzbekistan and Kyrgyzstan are advancing rapidly. Stretching over 450 kilometers in total, the rail line will connect Kashgar in China’s Xinjiang province to Torugart, the Kyrgyz border crossing, and continue through Kyrgyzstan taking a northern detour to the Makmal gold mine. It will then proceed to the city of Jalal-Abad in southern Kyrgyzstan and link up with the existing railway to Andijan in Uzbekistan.
The total cost of the 280-kilometer section running through Kyrgyzstan is estimated at $4.7 billion. Half of the funding is expected to come fr om equity, proportional to the shares held by each party in the tripartite venture, while the other half will likely be financed through debt provided by Chinese state-owned banks.
The railway will have an overall capacity of 15 million tons per year and will serve as a gateway to China’s coastal ports for Central Asian nations. Currently, the Chinese market is primarily accessed by land through Kazakhstan, which is connected by two railway crossings with China, and via Russia’s Trans-Siberian railway.
There were numerous obstacles to implementation, but the most significant was the choice of route. The Chinese and Uzbek parties favored a southern route that would run from Irkeshtam, a border crossing with China in southern Kyrgyzstan, to Osh, a city near the Kyrgyz-Uzbek border. While this proposed route was more economical, it bypassed the northern part of Kyrgyzstan.
The alternative was a northbound route from Torugart. Although this approach was more expensive due to its greater length and the need for additional tunnels and bridges, it presents significant advantages for Kyrgyzstan, namely the possibility of connecting the CKU railway to the more densely populated northern regions and even to the capital Bishkek.
Another technical challenge was the difference in railway gauge: Kyrgyzstan, Uzbekistan and Turkmenistan use the Russian wide-gauge of 1,520 mm, while China uses the 1,435 mm standard gauge that is also common in Europe.
Previously, the idea of using the narrow gauge from China within Kyrgyzstan, with a track change further inside the country rather than at the border, was almost taboo. This created a public narrative wh ere anyone supporting the project was labeled as pro-Chinese. However, the decision to change tracks at Makmal, 150 kilometers from the border, suggests a shift in public perception.
In terms of funding, Kyrgyzstan is required to provide $700 million in equity for the three-way joint venture (of which it will own 24.5 percent). How and when it will finance its stake remains unknown. Yet one thing is clear: With the rest of the $4.7 billion being provided as equity and debt by China and Uzbekistan, the project will represent a major boost in foreign investment for Kyrgyzstan.
The financial risk is limited, as the project is structured as a public-private partnership, with private investment handled by the joint venture, in which 75.5 percent is controlled by foreign state-owned entities from China and Uzbekistan.
