Kyrgyzstan is looking for an investor to build a cascade of hydroelectric power plants

  April 14, 2025   Posted in Kyrgyzstan

Kyrgyzstan is ready to unfreeze the construction project of the Verkhne-Naryn cascade of hydroelectric power plants, which includes four stations. The Minister of Energy of the Republic, Taalaibek Ibrayev, reported on the ongoing negotiations with Russian and foreign companies. The company is also ready to cooperate with RusHydro, the previous investor of the project, the agreement with which was previously terminated by Bishkek.

At the congress “Hydropower: Central Asia and the Caspian Sea” held in Bishkek, Kyrgyz Energy Minister Taalaibek Ibraev expressed hope that the Upper Naryn Cascade project would be resumed in late April or early May. He also informed about the ongoing negotiations, including with Russian companies, and plans to announce a tender among investors for the construction of hydroelectric power plants in the near future. 

However, the minister did not specify either potential investors or the new cost of the project.

In turn, Sergey Machekhin, Deputy General Director for Project Engineering and International Cooperation at RusHydro, said that the company was ready to continue work on the Verkhne-Naryn cascade of hydroelectric power plants, despite previous disagreements. “We had disagreements on financial issues, but they are not an obstacle to cooperation. The company is ready to continue work on the Verkhne-Naryn cascade of hydroelectric power plants in any format acceptable to the parties,” said Machekhin. According to him, the first negotiations have already taken place between the parties. However, their results have not yet been disclosed.

In September 2012, Russia and Kyrgyzstan agreed to build the Kambaratinskaya HPP-1 and the Verkhne-Naryn Cascade (VNK) HPP. The agreement was signed by the energy ministers of the two countries, Alexander Novak and Avtandil Kalmambetov, in the presence of the heads of state, Vladimir Putin and Almazbek Atambayev. The Kyrgyz president, emphasizing Russia’s key role in the implementation of the project, thanked Putin for his “support and wisdom.” The project cost for 2012 was estimated at $727 million. VNK was to consist of four hydroelectric power plants on the Naryn River, Akbulunskaya HPP, Narynskaya HPP-1, Narynskaya HPP-2 and Narynskaya HPP-3. The total capacity of the cascade stations was planned at 237.7 MW, with an average annual electricity generation of 942.4 million kWh.

However, the hydroelectric power station was never built. In 2016, Bishkek terminated the agreement on the construction of the Verkhne-Naryn cascade and the Kambaratinskaya HPP-1. The reasons for this were the lack of financing solutions and a significant increase in the cost of Russian loans. Despite the fact that, according to the contract, Bishkek, in case of termination of the agreement, must pay RusHydro the invested $ 37 million, Atambayev decided to terminate the agreement. He hoped that another investor would come and pay off the debt. The investor was quickly found – the Czech company Liglass Trading. However, it turned out to be untenable, the Kyrgyz parliament also denounced the agreement with it, and the debt remained with the republic. The long-running dispute between Kyrgyzstan and RusHydro has reached The Hague Court. The problem was resolved only in February 2022. Moscow and Bishkek agreed to transfer $37 million. the internal sovereign debt of the republic.

Kyrgyz political scientist Mars Sariev noted then in an interview with NG (see NG dated 18.10.18) that “at that time, the construction of the VNK hydroelectric power plant was considered as a geopolitical instrument of pressure on Uzbekistan, which was afraid of water shortages. On the other hand, it was important for Russia to consolidate its presence in the region in order to prevent the participation of China, which also showed interest in the project.” However, after the normalization of relations between Russia and Uzbekistan, the construction of the VNK HPP was suspended. The official reason was the financial support of the project.

Today, the geopolitical situation has changed. Russia strives to strengthen friendly relations and cooperation with the countries of Central Asia. This probably explains the renewed interest in the project. Perhaps Russia sees it as an instrument of economic influence and a way to strengthen its presence in the region in the face of growing competition from China and other players. In addition, the construction of hydroelectric power plants can become an important factor in the development of Kyrgyzstan’s energy sector, which also meets Russia’s interests.

The second attempt to find an investor in the Upper Naryn Cascade was made by Kyrgyzstan in March 2023. The Ministry of Energy of Kyrgyzstan and the British Minddock Limited signed a memorandum of understanding on the construction of VNK HPP, but it was terminated in July of the same year due to non-fulfillment of obligations.

The Verkhne-Naryn Cascade HPP project is of strategic importance for Kyrgyzstan, which has faced a shortage of electricity in recent years and has been forced to import it, including from Turkmenistan. The import agreements with Ashgabat are valid until 2026. Energy Minister Ibrayev announced negotiations on electricity supplies next year with Russia, Kazakhstan and Uzbekistan.

The launch of VNK HPP will allow Kyrgyzstan to overcome its internal energy deficit and implement ambitious plans to export electricity to Afghanistan and Pakistan. Ibrayev announced his intention to supply these countries with about 500 million kWh in the period from May to September. For these purposes, a CASA-1000 power transmission line is being built, which will ensure the export of electricity from Kyrgyzstan and Tajikistan to Afghanistan and Pakistan.

It should be recalled that recently in Khujand, the Presidents of Kyrgyzstan Sadyr Japarov and Tajikistan Emomali Rahmon launched the Datka-Sogd transmission line within the framework of the CASA–1000 project, which connected the energy systems of the two republics. Thanks to the peace achieved between Kyrgyzstan and Tajikistan, the countries will be able to export up to 5 billion kWh of electricity to Pakistan annually, which will bring them income of over $250 million. In addition, China is showing interest in buying electricity from Kyrgyzstan.

This is confirmed by the investment agreement signed in 2023 between Kyrgyzstan and Chinese companies on the construction of the Kazarman cascade of hydroelectric power plants on the Naryn River. The 1,160 MW project is estimated at $3 billion. According to the Kyrgyz government, the hydropower potential of the Naryn River is estimated at 6.2 GW, which makes it possible to build up to 30 hydroelectric power plants.