112 million dollars from an unknown company for a hotel on Issyk-Kul

Since October 2023, an Azerbaijani company has been building a five-star hotel with a park belonging to it on the shores of the Lake Issyk-Kul in Kyrgyzstan. The cost of work on the territory of more than 17 hectares, near the village of Kara Oi, is estimated at 8-10 billion Kyrgyz soms (10 billion soms - more than 112 million dollars). The construction is supervised by the Administration of the President of Kyrgyzstan, as the decision to start work was made at the level of two presidents. The agreement was signed on October 12, 2023 in Bishkek. And the consent of the country's parliament was received on December 21 of the same year.

None of the open sources in Baku and Bishkek mention the name of the Azerbaijani company that is building and then, most likely, will operate the hotel.  An unknown Azerbaijani company has received an unprecedented exemption from local taxes. According to the Managing Director of the President of the Kyrgyz Republic Kanybek Tumanbayev, during the construction period, the Azerbaijani side is exempt from VAT, import VAT and property tax. In addition, after commissioning for 10 years, exemption from a number of other taxes is provided.

The proposal to build a hotel on Issyk-Kul was received by Azerbaijan from Bishkek in August 2022. After 14 months, construction began. During this time, the Government of Kyrgyzstan has identified and allocated an area of 17.24 hectares in the village of Kara-Oi for the construction of a hotel, a beach area (1 ha) and a park (4 ha).  The Cabinet of Ministers of Kyrgyzstan has pledged to build infrastructure, build a road to the boarding house.   Azerbaijan's responsibilities include completing the hotel within three years and hiring 70% of its employees from Kyrgyz citizens.

The Azerbaijani company has been granted the right to lease this territory for 49 years. As it turned out at a meeting of the parliamentary committee, after 49 years, Azerbaijan has the priority right to lease the facility again. If it does not extend the lease, Kyrgyzstan will have to buy the hotel.

Deputy Ulugbek Ormonov insisted that after 49 years the hotel should be transferred to Kyrgyzstan along with the land under it, which will always remain the property of the country, and demanded that the Cabinet of Ministers amend the agreement.

"Negotiations with the Azerbaijani side were very difficult," the deputy director of the investment agency replied, adding that it was unlikely that it would be possible to amend the agreement. "Won't it turn out that in the end Azerbaijan will name an exorbitant price at which Kyrgyzstan simply will not be able to buy the hotel?" asked MP Gulsharkan Kultayeva.  Recall that according to the Deputy Managing Director of the President of the Kyrgyz Republic Talantbek Junushev, the five-star hotel is estimated at 8-10 billion soms.

"It is worth noting that Zhalyn Jeenaliev (Deputy director of the National Investment Agency - Ed.) and the representative of the Cabinet of Ministers in the Jogorku Kenesh (LCD, Parliament - Ed.) at the meeting literally forced deputies to approve this agreement in its existing form without changes," the press reported in Bishkek.

During the discussion in the Housing Complex, the decision to grant special rights to Azerbaijanis was difficult.  The deputies were outraged by the conditions that Kyrgyzstan provides to the Azerbaijani side. 

"Azerbaijan is our partner, it helped us well when there were problems at the border. We need to strengthen cooperation with Azerbaijan. It is necessary not only to be able to take, but also to be able to give," their colleague Nurzhigit Kadyrbekov persuaded the deputies during a meeting of the Housing and Communal Services Committee on International Affairs.  The Housing and Communal Services Committee on Transport, Communications, Architecture and Construction decided on the project, first postponing the meeting, and then returning to consideration of the issue a week later.

As a result of discussions in the residential complex, on January 12, 2024, the Law of the Kyrgyz Republic "On ratification of the agreement between the Cabinet of Ministers of the Kyrgyz Republic and the Government of the Republic of Azerbaijan on investments for the construction of a five-star hotel on the shore of Lake Issyk-Kul, signed on October 12, 2023 in Bishkek" was adopted.

The specifics of the unique Azerbaijani-Kyrgyzstani agreement are revealed in the text of the Agreement between the Cabinet of Ministers of the Kyrgyz Republic and the Government of the Republic of Azerbaijan on investments for the construction of a five-star hotel on the shore of Lake Issyk-Kul (Bishkek, October 12, 2023). The document says that "The Government of the Republic of Azerbaijan undertakes to invest in the Kyrgyz Republic in order to implement an Investment project, funds in the amount necessary to complete the construction projects provided for under this Investment Project.

The Cabinet of Ministers of the Kyrgyz Republic undertakes to grant the above-mentioned land plot free of charge to the Government of the Republic of Azerbaijan on temporary use rights with a preferential right over other persons to conclude a new contract on the use of the land plot.  The right of the Azerbaijani side to use the land plot includes conducting works on the construction of facilities, the acquisition by the Azerbaijani side of ownership of the facilities after completion of their construction and commissioning, as well as the implementation of commercial activities.

Questions arise: will the government of Azerbaijan, which has transferred the right to build to an Azerbaijani company, be able to earn more money over 49 years than it will spend? And this is at least 112 million US dollars.  Answering this question, it should be borne in mind that four and five-star hotels pay off in 15-20 years. But the shore of the Lake Issyk Kul is not the French Riviera, which attracts the richest tourists in the world.  

What if, after 49 years, the Kyrgyz side refuses to leave an object with an unidentified name in the ownership of an Azerbaijani company?

The procedure for choosing an Azerbaijani construction company, or rather the absence of a procedure, is puzzling. No tender was reported in Kyrgyzstan. The preparation of the feasibility study was entrusted to an Italian company, the name of which was not disclosed.

On May 2, Turan agency sent a written request, after a telephone conversation, to the press service of the Ministry of Economy with a request to provide the name of the company and other information about construction in Kyrgyzstan. No response has been received until today.

Here it is appropriate to recall the story of a specific Azerbaijani road construction company AzVirt, which took second place in the tender held in Kyrgyzstan, but received a contract for work ($82 million), beating the winner - the Chinese ("China Railway No.5 Engineering Group Co.").  But the Asian Development Bank, which financed the project, and the Ministry of Transport of the Kyrgyz Republic restored legality, returning the right to build a road to the Chinese.  It was in 2016.