Kyrgyzstan: Showcase Highway Project Stuck in Funding Jam

Three years and $36.2M later, only 48 of the 104 kilometers of road have been built.

The Issyk-Kul highway was supposed to demonstrate that Kyrgyzstan was capable of completing big projects single-handedly, without foreign funding. But three years after its start, construction is now at a standstill, the money has run out and laborers are complaining of unpaid salaries.

The project was designed to expand and improve an existing stretch of road that leads eastward from Balykchy to Korumdu. The route is how visitors reach the lakeside resorts that constitute the core of the country’s tourism industry, which accounts for about 8 percent of economic activity in the country. For most of its current 100-kilometer length, the surface is pot-holed and uneven. Adding to the hazards, many safety-averse drivers are tempted into perilous passing maneuvers on the busy road.

At a projected 6.8 billion som (around $100 million) — an amount equal to $15 for each Kyrgyz citizen — the country was to get a road of which it could be proud. The plan had been to get the highway ready in time for the 2016 Nomad Games, a showcase sporting event intended to impress unseasoned outsiders.

For Tynybek Turgunaliyev, a laborer who has been working on the project for the past two years, the reality has been more bitter. The salary delays began in August. “My daughter is doing her fourth year at the Kyrgyz-Russian Slavic University, I have to help her out,” Turgunaliyev said. “Four months ago I took out a loan for 100,000 som to pay for my daughter’s fees.”

Turgunaliyev said he is one of the lucky ones as his wife has a job at a bazaar and is able to help out. 

The cascade of debt starts with the government.

When it came to doing the work, the authorities organized a public tender and eventually handed the turnkey contract to Longhai Road and Bridge Corporation. The Chinese company beat out two Kyrgyz contenders and a Turkish company.

With the money that Longhai says it is supposed to receive regularly from the Kyrgyz government, it pays salaries and provides laborers with regular meals and accommodation at the worksite.

It hasn’t quite worked out that way.

“We haven’t been paid our salaries for five months,” Turgunaliyev said.

The arrears prompted grumbling that escalated into testy confrontations between employees and company management as 2017 drew to a close. Following negotiations, Longhai’s workers received three months of delayed pay.

The construction site is now idle. Of the planned 104 kilometers, only 48 kilometers have been finished, at a cost so far of $36.2 million.

As even Prime Minister Sapar Isakov readily admits, this is mainly because there is no money left. “We are in talks with Longhai. But this year we are not planning to allocate any money for the project,” Isakov said during a Cabinet meeting in late November.

The authorities had hoped to plug its funding gap with the privatization of a nationalized mobile phone company, Megacom, but that plan was abandoned amid scandal.

There was a whiff of trouble about the Balykchy-Korumdu project from the very outset. It was the brainchild of former Prime Minister Temir Sariyev, who predicted, as work began in November 2015, that the road would serve as a symbolic bridge between different regions of Kyrgyzstan.

But allegations of shady dealing began almost immediately. In December that year, opposition members of parliament summoned a commission to investigate the tender process. One deputy with the Respublika/Ata-Zhurt faction, Adyl Zhunus uulu, spoke for many of his colleagues when he claimed that “tenders are run corruptly so that the foreign companies can win.”

In the course of parliamentary investigations, it emerged that Longhai did not have the permits required to operate in Kyrgyzstan — the same grounds on which other firms were disqualified from getting the highway contract. “Longhai did not have a permit — not a Kyrgyz permit, not an international permit. They had a Chinese permit to do road repair work. But later, they somehow pulled a permit out of somewhere,” said Taabaldy Tillayev, an MP and member of the parliamentary commission that looked into the affair.

Mounting complaints about lack of transparency eventually forced the resignations of Sariyev and his transportation minister, Argynbek Malabayev. The pair then traded accusations of corruption and underhanded lobbying among themselves.

Despite this inauspicious start, the chief engineer of the Transportation Ministry’s Department of Roads, Zhumash Soodonbayev, said he actually had no misgivings about the quality of Longhai’s work. When it came to doing the work, the company was fully committed, bringing in the needed equipment. “Since they began working, they have brought over an asphalt manufacturing installation capable of producing 320 tons per hour, and a stone crusher able to get through about 280 tons per hour,” Soodonbayev said.

Still, Soodonbayev complains that Longhai should still be doing the work without receiving regular payments, notwithstanding the 146 million som ($2.1 million) in debts that have mounted to date.

Longhai representatives have declined to respond to numerous requests for comment, but the potential for ill-will was already clear in early 2017. At the time, Longhai’s general director insisted that any delays were a result of the “unscrupulous behavior” of the Transportation Ministry and that the initial project blueprint devised by the government was riddled with “serious errors.”

The worst-hit by the funding stalemate are the companies renting out equipment and the people indirectly employed in the project.

Ismail Abdyrakhmanov, a driver, has still received no money for work done in the past five months, while laborers at least got something. “I drive the crews to work. I do my work on time. But they ask us outsourced workers to wait for our payments. We use our own vehicles to work. If something breaks, we have to pay for it ourselves, although it says otherwise in our contracts,” Abdyrakhmanov said.

Soodonbayev, the roads department official, is trying to put a brave on things and predicts that the road will be completed “by 2019 at the latest,” before quickly adding that “it all depends on the financing.”

“You know what the people say: ‘If you start a job, you will finish it sooner or later. If you don’t start, then nothing will happen.’ We began construction on that principle,” he said.

Correction: January 23, 2018 — An earlier version of this article misstated the year Kyrgyzstan hosted the Nomad Games. It was in 2016, not 2017. 

Kyrgyzstan: Showcase Highway Project Stuck in Funding Jam

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