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ADB, Kyrgyz Republic Sign Three Grant Agreements

BISHKEK, THE KYRGYZ REPUBLIC (24 November 2008) – The Asian Development Bank (ADB) and the Government of Kyrgyz Republic today signed three grant agreements totaling $65.4 million.

The contract agreements for the Reconstruction of Bishkek-Torugart Road and the Supplementary Grant on Water Infrastructure Project were signed by ADB's Country Director of Kyrgyz Resident Mission Lan Wu and Kyrgyz Republic’s Finance Minister Tajikan Kalimbetova, who is also an ADB Governor. The contract for the Improvement of Climate Investment Program was signed by Mr. Wu and Kyrgyz Republic’s Economic Development and Trade Minister Akylbek Japarov.

The $20 million road grant aims to upgrade a 39-kilometer section of the Bishkek-Torugart Road, that links the Kyrgyz Republic with the People’s Republic of China (PRC) and other Central Asian countries.

The funds will also be used to improve outdated, unwieldy border-crossing facilities at the Torugart border that slow journey time and create a major drag on cross-country trade. Counterpart financing of $10.3 million is being provided by the Kyrgyz Government.

“ADB will upgrade the worst part of the road, last 39 kilometers of Bishkek-Torugart road. It will give access to market, develop tourism and trade; and foster regional economic cooperation”, -said Lan Wu on signing ceremony.

The road forms part of one of the main transport corridors of the Central Asia Regional Economic Cooperation (CAREC) group of countries. It is the shortest road link from Kashi, a vibrant cultural and trade center in the PRC, to consumer markets in the northern Kyrgyz Republic, Kazakhstan and the Russian Federation, and is part of the famous Silk Road that linked ancient China to the Western World.

The $30 million supplementary grant aims to provide clean drinking water and access to better sanitation services to 1.5 million people in Kyrgyz’s four provinces.

Sharp increases in the prices of steel, cement, pipes, and petroleum products during the project implementation period have raised the average per capita cost of constructing water supply infrastructure. Climate change and drought have also limited the use of spring and groundwater near the project areas, so the water pipe networks had to be connected to distant water sources, further raising the scale and cost of the project.

Since the loan was approved, 118 out of 240 subprojects have been completed. The additional funding will enable the government to complete the remaining subprojects.

“These funds will also ensure the completion of the project. In this grant ADB tried to exclude the possibilities to wasting finance of the project”, -said Lan Wu to the journalists.

Combining the ADB loan approved in 2000 and the new ADB grant, along with $16.5 million in contributions from the Kyrgyz government and beneficiaries, the total investment to this sector will stand at $82.5 million.

The Investment Climate Improvement Program includes three subprograms. The first subprogram grant is estimated at $15.4 million. Indicative grant amounts for subprogram 2 and subprogram 3 which are scheduled for 2010 and 2011 are $20 million each. An additional $600,000 technical assistance will provide implementation support.

The program includes measures to improve the enforcement of financial contracts which will help lower credit risk and improve investor access to finance. The program will also create a clear legal and regulatory framework for public-private partnerships in infrastructure.

Infrastructure bottlenecks, particularly in power and transport, add considerably to the cost of doing business. It is clear that the infrastructure investment requirements cannot be met with government’s resources alone.

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