kyrgyz republic case studies

Signed projects

Board approval is the final stage in the project approval process. After Board approval, the EBRD and the client sign the deal and it becomes legally binding. Signed project lists reflect year-end data.

Signed projects  (0.1Mb)

Case studies

Small enterprises
Power and energy
Telecommunications
Legal reform

Supporting the Kyrgyz construction sector - 2008

In 2008 the EBRD provided, through the Direct Lending Facility, a €569,000 loan to Granit Yug, a privately-owned quarry in the Djalal Abad region in the south west of the Kyrgyz Republic, for the purchase of processing and polishing equipment to make limestone tiles. Given the region’s high quality stone reserves, Granit Yug is well placed to grow dynamically in the future. The EBRD’s loan will support the sustainable development of the company and have an important impact in the region through skills transfers and setting standards of business conduct as well as health and safety regulations.

A second project supported by the EBRD through the DLF may well benefit from travertine quarried by Granit Yug. The Bank is providing €2 million to Global Construction, a Kyrgyz company which is developing much needed new housing to international standards in the capital, Bishkek. The project should trigger long-term development in the construction sector by increasing demand for construction works and materials and will have linkages to the EBRD’s Microfinance Facility with local banks.

Small enterprises

Local dairy producer grows with EBRD finance

Siut Bulak, a Kyrgyz dairy producer, has turned to the EBRD for financing the improvements in its plant. The EBRD has acquired a 34 per cent stake in Siut Bulak to support the Kyrgyz company’s expansion. The investment is helping to expand the state-of-the-art processing plant in the Tiup region, located in the eastern part of the Kyrgyz Republic. The programme complements an initiative launched at the end of 1995 by the Swiss government to revive the local economy in the region through investments in Kyrgyz companies.

Local farmers will benefit from the increased capacity of the plant which will allow for the procurement of more milk from local farmers. Implementation of the expansion plan will also enable the company to widen its range of high-quality products and will support Siut Bulak’s strategy to continue its growth in Central Asia and to enter the Russian market.

Some 1,250 families from the Tiup region supply the dairy producer with milk, thus obtaining a guaranteed regular income. The plant is currently processing up to 45,000 litres a day during summer. The dairy mainly produces cheese and butter and its products are popular in the Kyrgyz Republic and are also exported.
The EBRD’s support for Siut Bulak demonstrates the Bank’s commitment to the development of the rural economy in the Kyrgyz Republic.
The EBRD finance comes under the Bank’s Early Transition Countries Initiative, which was launched in 2004 to stimulate market activity in the Bank’s lowest-income countries of operations by using a streamlined approach to financing more and smaller projects, mobilising more investment and encouraging economic reform.

Power and energy

Improving alternative energy - Sustainability Report 2007

The Fluid Fund Public Fund, established in 2002, develops biogas technology in the Kyrgyz Republic.

The company is now a qualified Business Advisory Services (BAS) engineering consultant and is experiencing a significant increase in demand, which has helped to finance its research programme. BAS has also helped the company to expand into neighbouring countries.

The company required help with a project to improve one aspect of the biogas creation technology. Ceramic discs used in the production of biogas technology had always been imported from Ukraine, which was very expensive, so the company decided to produce them locally. The BAS consultant identified fire-clay deposits suitable for production of the discs, developed and tested the technology in the production cycle and provided advice on building kilns and on the development of the production line(forming, drying and baking).

The company began to produce the ceramic discs, which resulted in decreased costs for customers and, most importantly, generated additional income for the company through the sale of a new product – gas heaters. After some time, the company began working with a porcelain production plant to prepare the ceramic paste according to a mixture developed by the BAS consultant. This is more economically effective than preparing the paste themselves.

The project helped the company to reduce costs, which it passed on to its customers, and to reduce the need for expensive international transport of goods. It was also able to begin local production of new products, such as radiators.

Telecommunications

Modern communications for the Kyrgyz Republic - Donor Report 2007

Access to networks for information and communications technology (ICT) is crucial to economic growth and social inclusion. However, in many transition countries, telephone services and internet connections are mainly confined to cities or larger population centres and may be sporadic at best.

In the Kyrgyz Republic the EBRD is providing technical assistance to overcome legal, technical and economic obstacles to reliable and affordable universal access, particularly in rural areas.

For interconnection and tariffing, the Bank is helping the authorities to collect all relevant statistical information in order to prepare the necessary enabling laws and regulations. For better rural access, it has been conducting a study throughout the country to gauge the cost, level of demand and affordability of communications services.

The EBRD will advise the Kyrgyz authorities on addressing the cost of universal access through contributions from the service revenues of licensed operators, from government and, perhaps, from donors.

Telecommunications reform in the Kyrgyz Republic - Donor Report 2006

The Kyrgyz government has been reforming its regulatory framework for telecommunications over the past decade.

Legislation reflecting modern principles was adopted in 1998 and a regulator established in 2000. The market for telecommunications was liberalised in 2003 and a number of private operators have begun providing competitive services.

The government has meanwhile been preparing the privatisation of state-owned operator Kyrgyz Telecom (KT).

In 1994 the EBRD helped the government draft legislation and take steps to establish a regulator. More recently, the EBRD’s Legal Transition Programme (with Canadian support) has been assisting the regulator and government develop a universal access framework. This framework will ensure a minimum level of telephone/internet service is available at an affordable price to poorer communities in rural and sparsely populated areas.

Access and interconnection (linking competing providers to maximise the reach and size of the overall network) and costing and tariff setting (ensuring commercial viability and affordability of services) have been identified as priorities. These factors are critical to the development of private sector led competitive services, the privatisation of KT and the successful implementation of the universal access framework.

The EBRD has agreed to help establish international-standard access and interconnection, as well as to help set service costs and tariffs. This work is being supported by the ETC Fund, with implementation scheduled for mid-2006.

Legal reform

Raising the bar in the Kyrgyz legal system - Annual Report 2006

The growth of market economies has brought courts in former Soviet countries a heavy new workload in finance-related cases, which were practically unknown until a decade and a half ago. Now Kyrgyz judges are benefiting from a new EBRD programme that is helping them to strengthen their expertise in administering modern commercial law.

The first course for judges, organised under the EBRD’s Legal Transition Programme, took place in June 2006. It brought 90 judges and lawyers from the National Bank to spend three days training in insolvency law by Lake Issyk-Kul, 200 km east of Bishkek.

“This is the first time that we have undertaken a judicial training programme of such proportions in the Kyrgyz Republic,” said Dilfusa Boronbaeva, the then director of the Kyrgyz Republic’s Judicial Training Centre. “More importantly, this is the first time that commercial law training has been considered in a systematic way. And our judges desperately need training.”

More courses are scheduled throughout 2007, gradually covering all key sectors of commercial law. The EBRD programme will also generate various new tools for Kyrgyz judges, including a law library, and will send some junior judges to Kazakhstan and Russia for internships.

The existence of reliable courts is of key importance for investors such as the EBRD. International and domestic bankers and business people need court decisions to be predictable and based on understandable laws and precedents. This training initiative signals that the international community is determined to address the problem.

The trainers for the insolvency module of the course were two local stars of insolvency practice – Supreme Court Deputy Chairman Aibek Davletov, who has published books on insolvency, and Judge Antonina Rybalkina. Both completed a Training of Trainers course in May 2006, which stressed interactive teaching techniques, including role-plays and working with a facilitator.

The project is funded with €700,000 from the Bank’s Early Transition Countries Fund, €700,000 from Japan and €160,000 from Switzerland. The International Development Law Organisation (IDLO) is acting as project implementer and the EBRD’s partner in the programme.

Phase One of the programme, carried out in 2005, consisted of a survey of judges to identify training needs. Phase Two is expected to ensure a more reliable application of the law by individual judges and to provide a template for similar initiatives in other countries.