Kyrgyzstan Business & Economy - The Times Of Central Asia

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Hydropower

Chinese Company to Build Hydropower and Solar Plants in Kyrgyzstan

Construction of a small hydropower plant and a solar power station has begun in Kyrgyzstan’s Jalal-Abad region as part of efforts to expand domestic electricity generation and reduce reliance on energy imports. The groundbreaking ceremony took place on April 28 and was attended by the presidential envoy to the region, Tilek Tekebayev; the project’s scientific supervisor and former Prime Minister Akylbek Japarov; as well as representatives of the Chinese corporation SINOMACH. The project involves the construction of two facilities: a small hydropower plant with a capacity of 5 megawatts and an annual output of around 20 million kWh, and a solar power plant with a capacity of 1 megawatt, generating approximately 1.6 million kWh per year. The total investment, to be implemented under a public-private partnership model, is estimated at $259.8 million. Once operational, the facilities are expected to help reduce electricity shortages in the region and decrease dependence on imports. The project is also expected to create more than 100 jobs and provide irrigation for over 1,000 hectares of arid land. Kyrgyzstan is accelerating the development of small hydropower projects amid rising electricity demand and limited generation capacity. Currently, 48 small hydropower plants are operating in the country, with a combined capacity of around 180 megawatts. Another 50 facilities are under construction, which authorities say will strengthen the country’s energy independence.

Gold

Kyrgyz Jewelers to Receive Discounted Gold as Government Expands Industry Support

Kyrgyzstan’s Cabinet of Ministers has approved a package of support measures for the jewelry industry, implementing a directive from President Sadyr Japarov aimed at improving producers’ access to raw materials. Earlier, Japarov instructed the government to ensure that jewelers could obtain raw materials from the State Fund of Precious Metals and Precious Stones on more favorable terms. Under the new resolution, Kyrgyz jewelry manufacturers will be able to purchase domestically produced gold from the state at a 2% discount to the London Bullion Market Association (LBMA) fixing price. The State Fund will supply precious metals to jewelers in raw form, without the right of resale. To purchase gold, companies must either sign a direct contract with the fund or acquire the metal through a commodity exchange. Jewelers will also be granted deferred payment terms of up to 180 days. Transactions will be conducted at market prices in the national currency, the som. Access to gold scrap and refined bullion will be limited to companies operating under a special tax regime, with confirmed production capacity and compliance with requirements for accounting and the targeted use of raw materials. In addition, the government has approved a preferential lending mechanism for the jewelry sector. Authorities will subsidize interest rates on loans issued by state-owned banks, with approximately $11.5 million allocated to the program. The maximum loan amount will be $1 million, with a term of up to 60 months. The interest rate is set at 6% per annum, with a possible payment deferral of up to 180 days. Funds may be used for production modernization, equipment purchases, and the upgrading of manufacturing facilities. Eligible borrowers include legal entities and individual entrepreneurs registered with the State Tax Service. “The implementation of these initiatives will create a sustainable foundation for the development of the jewelry industry and increase its contribution to the national economy,” the Ministry of Economy and Commerce said in a statement, adding that the measures are expected to reduce costs, expand production, and create jobs. Stalbek Akmatov, head of the Kyrgyz Jewelers Association, told The Times of Central Asia that the industry had been advocating for such measures for many years. According to him, local producers were previously forced to purchase domestic gold at prices about 5% above London market levels, making imports from Russia and Turkey more common, despite higher logistics costs. “Now the situation will change, and the industry has real prospects for development,” Akmatov said.

EU Sanctions

EU Sanctions Put Kyrgyzstan’s Transit Trade Under Scrutiny

The European Union has stepped up sanctions pressure on Kyrgyzstan by restricting supplies of sensitive technologies and imposing measures on the country’s financial institutions. The decision, adopted as part of the EU’s 20th sanctions package against Russia, reflects growing concerns in Brussels that the Central Asian republic may be used as a transit hub to circumvent restrictions. The move marks a shift in the EU’s approach, from diplomatic warnings to tighter controls on trade and financial channels in third countries. A key argument for Brussels has been trade data. According to European Commission materials, imports of sensitive goods from the EU to Kyrgyzstan surged by nearly 800% in 2025 compared to pre-war levels. Meanwhile, exports of similar goods from Kyrgyzstan to Russia rose by approximately 1,200%. European officials say this dynamic indicates a systemic pattern of re-exports. As a result, the EU has added Kyrgyzstan to its list of countries posing a “systematic and persistent” risk of sanctions circumvention, a designation previously applied only selectively. The restrictions primarily target dual-use goods. These include metalworking machinery and numerically controlled equipment, as well as a wide range of telecommunications devices, from routers and modems to data, voice, and image transmission equipment. According to the EU, these categories present the highest risk of being used by Russia’s defense-industrial complex. European exporters will face tougher checks to show that sensitive goods are not likely to be re-exported to Russia. This creates an additional administrative barrier and raises risks for businesses. For many companies, the effect is a ‘presumption of guilt’ regime around trade with Kyrgyzstan. The sanctions package also affects the country’s financial system. Keremet Bank and Capital Bank have been included in the restrictions, which are set to take effect in May 2026. Particular attention has been paid to the cryptocurrency sector. The EU has sanctioned TengriCoin, a Bishkek-registered entity linked to the Meer platform, which European regulators say facilitated trading in a stablecoin affiliated with Russia’s Promsvyazbank. This move signals the EU’s expanding sanctions policy into digital financial instruments increasingly used to bypass traditional restrictions. Additional measures affect the transport sector. Several Kyrgyz logistics companies have been restricted from accessing European infrastructure, including ports and transport networks. This is likely to increase shipping costs and complicate foreign trade operations, putting additional pressure on export-oriented businesses. Analysts also warn of a potential shortage of European industrial equipment on the Kyrgyz market. The risk of secondary sanctions may lead EU suppliers to withdraw even from legitimate transactions. The tightening of sanctions comes amid intensified foreign policy engagement by Kyrgyzstan. On the day the package was approved, President Sadyr Japarov reaffirmed a strategic partnership with Vladimir Putin during a visit to Moscow. At the same time, Bishkek is strengthening cooperation within the Shanghai Cooperation Organization (SCO), preparing to host a summit and receive high-level delegations, including Chinese Defense Minister Dong Jun. Kyrgyz authorities have previously criticized EU sanctions policy. Japarov has described it as unjustified and as pressure that hampers economic development. Despite a series...

Credit Ratings

Kyrgyz Authorities Seek Review of Sovereign Credit Rating

Kyrgyzstan’s Minister of Economy and Commerce, Bakyt Sydykov, held talks with analysts in Washington on the sidelines of the Spring Meetings of the International Monetary Fund and the World Bank Group, where the country’s macroeconomic stability was discussed. According to Sydykov, Bishkek is seeking an upgrade to its sovereign credit rating as part of the implementation of the National Development Program through 2030. He noted that engagement with Moody’s is aimed at strengthening international investor confidence and forms part of an ongoing institutional dialogue. Sydykov said the country is meeting its obligations within the framework of cooperation with the agency and expects further constructive information exchange. He also recalled that last year Moody’s revised Kyrgyzstan’s outlook to “positive” while maintaining the rating at B3, which authorities interpreted as confirmation of ongoing reforms. The minister added that the country’s economy has grown at an annual rate of 9.5-11% over the past four years, driven by investment, domestic demand, and activity in construction, services, and industry. Following the meeting with Moody’s, Sydykov also held talks with representatives of U.S. businesses, presenting investment opportunities in logistics, transport infrastructure, and energy, including hydropower. According to the National Statistical Committee of Kyrgyzstan, investment in fixed capital increased by 25% year-on-year in the first quarter, reaching 77.3 billion KGS ($883.4 million). Domestic investment rose by 20%, while foreign investment increased by 50%. For comparative sovereign risk ratings on Central Asia see TCA's Central Asia Balance Sheet.

Hydropower

Kyrgyzstan Expands Small Hydropower to Tackle Rising Energy Deficit

Kyrgyzstan is accelerating its development of small hydropower plants as it seeks to close a widening electricity gap driven by surging demand and limited domestic generation capacity. On April 20, two new small hydroelectric power plants (HPPs) were commissioned in the country's northern Chui region. The Sokuluk-3 HPP has a capacity of 9.5 MW, while the Tuyuk HPP has a capacity of 5.9 MW. Combined, they are expected to generate between 60 million and 70 million kWh of electricity annually. Speaking at the launch ceremony, President Sadyr Japarov underscored the strategic importance of small-scale hydropower. “Such projects increase the resilience of the energy system and facilitate the gradual reduction of the energy deficit. Today, 48 small hydroelectric power plants with a total capacity of 180 MW are operating in Kyrgyzstan. They play a significant role in strengthening energy independence and reducing dependence on imports,” he said. The government is scaling up efforts in the sector, with 50 small HPPs currently under construction across the country. Of these, 13 are scheduled to be commissioned in 2026. Electricity demand in Kyrgyzstan continues to rise rapidly. In 2025, total consumption reached 19.3 billion kWh, up by 900 million kWh compared to the previous year. Domestic generation accounted for 15.4 billion kWh, while the remaining 3.9 billion kWh was covered through imports from Turkmenistan, Uzbekistan, Kazakhstan, and Russia. According to Minister of Water Resources, Agriculture, and Processing Industry, Bakyt Torobayev, electricity consumption has grown by more than 25% over the past five years, rising from 15.4 billion kWh in 2020. “If current electricity consumption rates continue, it could reach 25 billion kWh by 2030,” Torobayev said. The surge in demand has been driven by rapid housing construction and the launch of new industrial facilities. With Kyrgyzstan’s population now exceeding 7.4 million, the number of electricity consumers is expanding steadily. Over the past three years alone, 4,192 industrial facilities and 96,975 households have been connected to the national grid, according to the Energy Ministry. Despite the expansion of generation capacity, supply continues to lag behind demand, prompting authorities to prioritize small hydropower as a flexible and scalable solution to improve energy security and reduce reliance on imports.

Solar Power

Kyrgyzstan to Construct Solar Power Plant with IFC Support

Kyrgyzstan is launching a pilot project to construct a solar power plant through a public-private partnership (PPP). The project is supported by the International Finance Corporation (IFC), which has prepared technical, legal, financial, and environmental assessments. The project’s implementation was discussed during a meeting in Washington, DC between Kyrgyz Energy Minister Taalaibek Ibrayev and John Gandolfo, Vice President and Chief Financial Officer at the IFC. A key feature of the project is the selection of an investor through an open tender based on the lowest electricity tariff bid. Kyrgyzstan has agreed to a tariff proposed by China Power of 4.1 cents per kWh. The power plant will be built in the Naryn region. Construction is scheduled to begin in 2026, with electricity generation expected to start in 2027. Ibrayev noted that the project introduces new standards to Kyrgyzstan’s energy sector and will serve as an example of attracting investment through transparent and competitive mechanisms. Gandolfo expressed the World Bank’s support for Kyrgyzstan’s energy sector reforms. The meeting also addressed the second phase of the project, which envisages the construction of additional solar power plants in the Talas and Batken regions. As part of efforts to reduce chronic power shortages, Kyrgyzstan has accelerated the development of renewable energy. In December 2025, the country inaugurated its first solar power plant in the Chui region, approximately 100 kilometers east of Bishkek. The 100-megawatt facility was constructed with $56 million in Chinese investment and is expected to generate around 210 million kWh of clean electricity annually.