A. Overview
1. What is the main legislation and international treaties governing the project financing in your jurisdiction?
The main legislation governing project financing in the Kyrgyz Republic includes:
Civil Code of the Kyrgyz Republic dated May 8, 1996 No. 15 (Part I);
Civil Code of the Kyrgyz Republic dated January 5, 1998 No. 1 (Part II);
Land Code of the Kyrgyz Republic dated June 2, 1999 No. 45;
The Law of the Kyrgyz Republic "On business partnerships and companies" dated November 15, 1996 No. 60;
The Law of the Kyrgyz Republic "On joint stock companies" dated March 27, 2003 No. 64;
The Law of the Kyrgyz Republic "On investments in the Kyrgyz Republic" dated March 27, 2003 No. 66;
The Law of the Kyrgyz Republic "On securities market" dated July 24, 2009 No. 251;
The Law of the Kyrgyz Republic "On publicprivate partnership" dated August 11, 2021 No. 98;
The Law of the Kyrgyz Republic "On Pledge" dated March 12, 2005 No. 49;
As for the international treaties, the following are relevant:
The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) dated June 10, 1958;
The Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention) dated March 18, 1965;
In addition, The Kyrgyz Republic has entered into a number of bilateral treaties on mutual support, encouragement and protection of investment with the following countries:
The People's Republic of China (1995);
The Republic of Turkey (1996);
The Republic of Ukraine (1993);
The United States of America (1994);
The Republic of Armenia (1995);
The United Kingdom of Great Britain and Northern Ireland (1998);
The Republic of France (1997);
The Islamic Republic of Iran (2005);
The Republic of Azerbaijan (1997);
The Federal Republic of Germany (2006);
The Republic of Georgia (2016);
The Republic of India (2000);
The Republic of Kazakhstan (1997);
The Republic of Belarus (2001);
The People's Republic of Mongolia (1999);
The Swiss Confederation (2003);
The Republic of Tajikistan (2001);
The Kingdom of Sweden (2003);
The Republic of Moldova (2004);
The Republic of Finland (2004);
The Republic of Korea (2008);
The Republic of Latvia (2008);
The Republic of Lithuania (2009);
Denmark (2001); Malaysia (1995);
The Islamic Republic of Pakistan (1996);
The Republic of Indonesia (1997);
The Republic of Uzbekistan (1997);
The United Arab Emirates (2014);
State of Qatar (2014);
State of Kuwait (2015);
The Republic of Austria (2016).
It is important to note that project financing in the Kyrgyz Republic may also be subject to various regulations issued by the National Bank of the Kyrgyz Republic and other regulatory bodies.
2. How mature is the project finance market in your jurisdiction, and what are the most significant project financings closed during the last 12 months?
The project finance market in the Kyrgyz Republic is relatively small and still developing. However, there have been some notable project financings in the country such as
- Construction of Upper Naryn hydropower plant cascade (still ongoing. The project provides for the construction of four HPPs with total installed capacity of 237.7 MW. The total cost of the project – USD 727 650 000;
- Building infrastructure of information system for fee collection. The project provides for the set-up of infrastructure of the information system for fee collection that includes 42 control points, 2 user service centers, one of which will be combined with the service center for freight traffic on public roads using global navigation technologies (GPS, GLONASS, Galileo etc.) The total cost of the project – USD 58 200 000;
Overall, while the project finance market in the Kyrgyz Republic is still developing, there are opportunities for financing in the country, particularly in the energy sector.
B. Security Interest
3. What are the most commonly used security types in project financings in your jurisdiction?
The types of security that may be used can vary depending on the specific circumstances of the project and the preferences of the parties involved. Some common types of security that may be used in project financings include:
- Mortgage: This is a form of security that involves the transfer of a property interest to the lender, which serves as collateral for the loan. If the borrower defaults on the loan, the lender may foreclose on the property and sell it to recover its investment.
- Pledge: This is a form of security that involves the transfer of possession of a movable asset, such as shares in a company or equipment, to the lender as collateral for the loan. If the borrower defaults on the loan, the lender may sell the pledged asset to recover its investment.
- Guarantee: This is a form of security that involves a third party (such as a parent company or a government entity) providing a guarantee to the lender that the borrower will repay the loan. If the borrower defaults on the loan, the guarantor is obligated to repay the loan on the borrower's behalf.
- Assignment of rights: An assignment of rights is a transfer of contractual rights from one party to another. In project financings in the Kyrgyz Republic, an assignment of rights is commonly used to transfer the right to receive payments from the project to the lender, thereby providing additional security for the lender.
It is important to note that the use of security in project financings can be complex and may involve a combination of different types of security. The specific security types used in a project financing transaction in the Kyrgyz Republic will depend on the nature of the project and the lender's requirements. Lenders typically seek to obtain as much security as possible to protect their investment in the project.
To view the full article click here
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.