Kyrgyzstan: Chinese Investor Struggling Without Russian Help
A Chinese company that has had a string of bad luck in Kyrgyzstan is not getting much support from the country's investment-hungry government—or from Russia.
China’s state-controlled Junda China Petrol Company runs a troubled but potentially strategic oil refinery in northern Kyrgyzstan. The problem now is that Junda doesn’t have enough crude to fuel its $430 million plant. And the regional oil producers, Kazakhstan and Russia, are unwilling to help.
Last week Kyrgyzstan’s Vice Prime Minister Valery Dil called Junda's decision to build a refinery without planning for crude supplies “ridiculous,” in quotes picked up by 24.kg.
"To build a huge refinery and not know where to get the oil, that’s ridiculous,” Dil said.
Those are not exactly welcoming words for a large foreign benefactor already struggling to find reasons to keep investing in perennially troubled Kyrgyzstan. In its short history, Junda itself has faced environmental protests and labor disputes, which one lawmaker claims are backed by opposition politicians bent on using the facility as a weapon in a political confrontation with the government.
Dil also confirmed that Russia and Kazakhstan have refused to supply crude tax-free, though his colleague, Economy Minister Temir Sariev, recently had been hopeful that Kyrgyzstan’s membership in the Russia-led Eurasian Economic Union would help solve this problem.
Currently the refinery in Kara-Balta is meeting only a fraction of its 850,000 tons annual capacity. Medetbek Kerimkulov, the chairman of Kyrgyzstan’s Association of Oil Traders, an industry lobby, recently claimed that Kazakh companies had supplied 100,000 tons of crude to the refinery in 2014. But that translates into roughly 50,000 tons of refined oil products (i.e. petrol), barely a drop toward Kyrgyzstan’s annual consumption, which the Association says is around 1 million tons.
Moscow is likely loathe to become a supplier of raw materials to Chinese upstarts in its own backyard. Since Soviet times Central Asia has always been a captive market for Moscow’s finished products, and fuel, like labor migrants, is an easy source of leverage over Bishkek.