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Public-Private Partnerships and Infrastructure Finance in Kyrgyzstan — A Legal Guide for International Investors

August 6, 2026

Kyrgyzstan treats infrastructure as a strategic priority, and public-private partnership is the main route by which the government seeks private capital for transport, energy, water and social projects. Investors and development finance institutions need to understand how the framework operates, and where the legal risks sit, before committing capital.

I have advised on PPP transactions and IFI-financed projects in Kyrgyzstan for over a decade, working alongside the IFC, World Bank, ADB, KfW Development Bank, and EBRD on projects across the energy and infrastructure sectors. This note explains how the framework works in practice.

The Legal Framework for PPP in Kyrgyzstan

The primary legislative basis for PPP in Kyrgyzstan is the Law of the Kyrgyz Republic on Public-Private Partnership No. 98 of 11 August 2021 (the “PPP Law”), together with the implementing regulations adopted by the Cabinet of Ministers of the Kyrgyz Republic. The PPP Law establishes the general framework for PPP project identification, procurement, agreement structure, and dispute resolution. It does not apply to infrastructure connected with subsoil use, to public procurement, or to privatisation. Sector-specific legislation — particularly in the energy sector — supplements the PPP Law with additional requirements relevant to each project type.

The market is now substantial. According to the first PPP review, published in August 2026 by the Eurasian Development Bank and the PPP Centre, the portfolio has grown from 3 projects to more than 90 since 2017, with investment above KGS 450 billion. Transport accounts for 81.6% of private investment.

The authorised state body for PPP is the National Investment Agency under the President of the Kyrgyz Republic, and project coordination sits with its PPP Centre. Investors should engage with the agency and the Centre early. Every signed PPP project must be entered in the state register of PPP projects, and early contact also matters for access to government guarantee mechanisms, which can decide whether a project is bankable.

Kyrgyzstan has ratified the ICSID Convention and is a party to a network of bilateral investment treaties (BITs) covering many investor home countries, including China, Germany, France, Turkey and the United Kingdom. These treaties give qualifying investors access to international arbitration. The ICSID route is in use: International Mining Company Invest v Kyrgyz Republic (ICSID Case No. ARB/22/25), a claim under the 1993 treaty with the United States, was registered on 19 September 2022 under the ICSID Convention Arbitration Rules and ended with an award on 4 June 2026.

PPP Project Structures Available in Kyrgyzstan

The PPP Law does not set a closed list of project structures: the form of the partnership is fixed in the PPP agreement. Structures used include:

Concession agreements — the government grants a private party the right to design, build, finance, and operate infrastructure for a defined concession period, after which the asset reverts to the state.

Build-Operate-Transfer (BOT) — the private party constructs and operates the facility for the concession period and transfers ownership to the state at expiry.

Lease agreements with investment obligations — the state leases existing infrastructure to a private operator who undertakes agreed capital investment as a condition of the lease. It suits existing state-owned infrastructure that needs rehabilitation rather than greenfield development.

The choice of structure has direct implications for the security package available to lenders, the tax treatment of the project company, and the dispute resolution mechanism. The wrong structure is difficult and costly to correct after financial close.

IFI-Financed Projects — What Makes Them Different

A significant proportion of infrastructure investment in Kyrgyzstan involves financing from international financial institutions — the IFC, World Bank Group, Asian Development Bank, KfW Development Bank, and EBRD. These projects carry distinct requirements for private co-financiers.

Environmental and social standards. IFI lenders apply their own environmental and social frameworks as conditions of financing — the IFC Performance Standards, the World Bank Environmental and Social Framework, or the EBRD Environmental and Social Requirements, depending on the institution. These standards apply regardless of what Kyrgyz domestic law requires, and compliance is usually a condition precedent to loan drawdown. A project that meets Kyrgyz requirements but falls short of these standards is unlikely to reach financial close.

Procurement requirements. Where IFI financing is involved, procurement of contractors, consultants, and suppliers must comply with the relevant institution’s procurement rules. This affects EPC contractor selection, consultant appointments, and supply chain arrangements. Non-compliant procurement can trigger loan suspension or cancellation.

Security and step-in rights. IFI loan agreements typically include step-in rights allowing the lender to take control of the project in the event of a default by the project company. These rights interact with Kyrgyz law on pledge enforcement and company insolvency, and that interaction should be analysed at the documentation stage. Under Article 15 of the PPP Law, a pledge of the project company’s assets or shares, a transfer of its shares and a change in its capital all need the written consent of the state partner, so the security package has to be cleared with the state partner.

Reporting and disclosure obligations. IFI-financed projects are subject to ongoing monitoring and disclosure requirements throughout the project life. Private co-investors need to understand these obligations before signing the co-financing agreement.

Bond Stone has advised on the Kyrgyz law layer of multiple IFI-financed transactions, alongside international counsel for the IFI and the project sponsors.

Key Legal Risks in Kyrgyzstan Infrastructure Projects

Land acquisition and resettlement. Infrastructure projects in Kyrgyzstan frequently require acquisition of land currently occupied by communities or used for agricultural purposes. Compulsory acquisition is governed by the Land Code of 18 July 2025 No. 149, which replaced the 1999 Code. Under Articles 67 and 69, land may be taken for public and state needs only where there is no alternative site, by a paid agreement or, if the holder refuses, by court order, and the price must cover market value and losses and be paid before the land is taken. In practice the process is slow and a frequent source of delay. IFI-financed projects are additionally subject to the lender’s involuntary resettlement standards, which typically require a Resettlement Action Plan (RAP) approved by the lender before construction can begin.

Government guarantee enforceability. The PPP agreement must set out the guarantees given by the state partner (PPP Law, Art. 14), and lenders may look for guarantees of revenue, currency convertibility or debt service. Enforcing guarantees against the State, particularly after a change of government, is a material legal risk. The guarantee terms and the dispute mechanism for guarantee claims should be designed together with any available BIT arbitration rights.

Regulatory change risk. Kyrgyzstan’s regulatory environment in the energy and infrastructure sectors has been subject to change, including tariff adjustments that have affected project economics. Article 6 of the PPP Law gives a starting point: laws and regulations on PPP matters adopted after a PPP agreement is signed do not apply to it unless the private partner asks for them to apply. PPP agreements should still include appropriate stabilisation provisions protecting the investor against adverse regulatory changes, and investors should understand the limits of those provisions under Kyrgyz law before relying on them.

Dispute resolution. Domestic court enforcement of investor claims against the Kyrgyz state or state-owned enterprises is uncertain and slow. The Supreme Court’s own review counted 40 first-instance cases involving foreign investors in 2024 and 2025, mostly debt, corporate, insolvency and employment disputes. Under Article 19 of the PPP Law, a dispute goes to negotiation and then to the Kyrgyz courts unless the PPP agreement provides another procedure, including international courts or arbitration, so the clause must be written into the agreement. Foreign investors should generally seek an international arbitration clause under ICSID, ICC or LCIA rules, drafted with recognition and enforcement in Kyrgyzstan in mind.

How disputes have gone in practice

No published court or arbitral decision under the 2021 PPP Law has been found. The closest guidance comes from investment disputes over infrastructure and state-linked assets.

• RusHydro v Kyrgyz Republic (UNCITRAL arbitration seated in Hong Kong, award of July 2022). Two governments agreed the Upper Naryn hydropower cascade in 2012, and the Kyrgyz side terminated the agreement in 2016. The tribunal partly upheld the claim and ordered Kyrgyzstan to compensate the funds RusHydro had put in through loans to the joint venture. According to the Ministry of Justice, the arbitrators relied on the intergovernmental agreement and on public statements by officials from 2016 to 2020 recognising the debt. The award does not appear to be public.
• QazaqGaz v Kyrgyz Republic (UNCITRAL Rules, tribunal in Paris, award of 30 January 2024). A Kazakh investor claimed expropriation over its gas pipeline joint venture after a trust management agreement ended. According to the Ministry of Justice, all claims failed. Claims under the 2003 investment law were time-barred, and the acts of the state gas company could not be attributed to the State, although the State was itself a party to the investment agreement. The investor was ordered to pay 60% of the State’s arbitration costs. For guarantee planning, this shows the risk of relying on a state-owned company and not on the State itself.
• Sistem Muhendislik v Kyrgyz Republic (ICSID Case No. ARB(AF)/06/1, award of 9 September 2009). After the March 2005 revolution, Bishkek courts invalidated the 1999 agreement under which a Turkish investor had acquired a hotel, and the Supreme Court upheld that result. The tribunal held that the rulings deprived the investor of its property “just as surely as if the State had expropriated it by decree” (paragraph 118), and awarded US$8.5 million plus interest under the treaty with Turkey.
• Petrobart v Kyrgyz Republic (SCC Arbitration No. 126/2003, award of 29 March 2005). A supplier held a Kyrgyz judgment against a state gas company. After a letter from the Vice Prime Minister, the Bishkek court stayed execution for three months, and the company’s assets went to new state companies. The tribunal held that these measures denied fair and equitable treatment under Article 10(1) of the Energy Charter Treaty, and that the letter also breached the duty under Article 10(12) to provide effective means of enforcing rights. It awarded US$1,130,859 plus interest.

Bond Stone’s Kyrgyzstan Infrastructure Practice

Bond Stone’s Bishkek office advises on PPP structure and agreements, Kyrgyz law opinions and IFI loan documentation, security packages, land and resettlement, government guarantees, EPC contracts and infrastructure disputes. It works with the firm’s Kazakhstan and Central Asia energy and natural resources practices on cross-border matters.

Related reading: Bond Stone Bishkek Office • Karym Salamatov • Foreign Investment in Central Asia • International Arbitration • Energy & Natural Resources