Kyrgyzstan Guarantees $25M Loan for New Hydropower Plant

State Financial Holding OJSC of Kyrgyzstan has acted as the guarantor for a $25 million loan provided to Alliance Hydro LLC by the Russian–Kyrgyz Development Fund. The funds are designated for the construction of the 24-megawatt Jeruy small hydropower plant in the country’s Talas region. The deal was formalized through a tripartite guarantee agreement signed on February 3, 2026, which was based on a directive issued by the Cabinet of Ministers of the Kyrgyz Republic on November 5, 2025.

The transaction represents a significant financial commitment, as its value is equal to at least 10 percent of the total assets of State Financial Holding OJSC. This arrangement means that if Alliance Hydro defaults on its loan obligations, the state-owned holding company will face substantial financial losses, with taxpayers becoming indirect guarantors of the private company’s debt.

The Russian–Kyrgyz Development Fund remains a key source of financing for infrastructure projects in Kyrgyzstan, particularly in the energy sector. The construction of small hydropower plants is a government priority aimed at increasing the share of renewable sources in the national energy balance. However, dam construction inherently carries environmental impacts, including the alteration of natural river flows, which can disrupt migration routes for fish and other aquatic organisms. Changes to a river’s hydrological regime also affect riparian ecosystems, and in Kyrgyzstan’s mountainous regions, where biodiversity is especially vulnerable, such disruptions could have long-term negative consequences.