Barely a week passed after Kyrgyzstan triumphantly declared it had struck a deal with an international company willing to take up one of its ambitious hydropower projects for the agreement to begin looking highly suspect.
The first alarms were rung in the Czech Republic, where Liglass Trading, the obscure company that has committed to building and operating Akbulun HPP and Naryn HPP-1 in the Upper Naryn cascade, is based. Journalists there were apparently startled by news that a company they had never heard of had managed to land a contract for an undertaking that will involve investments running into the hundreds of millions of dollars.
The company's financial report for 2014, for example, shows Liglass Trading recording losses of around $53,000. That hardly seems like the track record of a company expected to handle a project that is by various estimates expected to cost between $400 million and $700 million to complete.
Reporters from one publication, Aktuáln?, decided to check out the address where Liglass Trading is registered, and all they found was a crumbling factory with a leaky roof.
But the deception has gone a little deeper than that. When Kyrgyzstan first announced the Upper Naryn cascade deal, the Liglass Trading website showed, as noted on EurasiaNet.org, that the company had experience in the former Soviet Union — in Armenia and Russia, specifically — on hydropower projects of roughly commensurate scale. Once questions began to be raised, all the website’s content disappeared and was replaced by an “Under Construction” notice. And now, a radically overhauled website has reappeared, only with no reference to previous projects, but with multiple references to the Kyrgyzstan contract.
Kyrgyz civic activist Edil Baisalov investigated the projects Liglass Trading was claiming to have worked on and found that they were in fact completed by other companies in the 1990s, long before the Czech entity was incorporated.
“What is more, Czech media have told us that this company is not linked with a single hydropower project in the Czech Republic either,” Baisalov wrote. Related: Is Big Oil Betting On The Wrong Horse?
Back in March, even the Kyrgyz Foreign Ministry was warning against the tie-up, informing the government that Liglass Trading was financially unsound and did not have the experience it was trumpeting.
That the deal went ahead at all appears to be the result of direct recommendation from the head of the Czech presidential administration to his Kyrgyz counterpart, Sapar Isakov.
Despite all the fuss and suspicion aroused, the Kyrgyz government looks set to proceed undaunted. The state committee for industry and energy has confidently predicted that Liglass Trading will within 30 days gather the $37 million that it has agreed to pay to buy Russia’s RusHydro out of the project.
“They have not yet violated the terms of the contract in any way that would serve as grounds to tear up the deal,” committee spokesman Ryspek Toktonaliyev said.
Toktonaliyev said he has received assurances from Liglass Trading that it has no no less than 383 million euros ($440 million) on its UniCredit bank account.
Jiri Vojtechovsky, the company’s general director for Europe and Asia, said Bishkek had nothing to worry about.
“We Czechs have never in history let down the Kyrgyz people,” he said. Related: Why Oil Prices Aren’t Going Anywhere
Far from being cowed by the wave of skepticism, Liglass Trading is doubling down and insisting, on its revamped website, that it will begin generating power from renewable sources in Kyrgyzstan some time in 2019.
What is more, the changeable specifications have undergone another modification. RusHydro, the Russian company that abruptly pulled out of leading the project over cashflow troubles in 2015, had stated back in the day that the 237-megawatt cascade was designed to produce 942 million kilowatt hours annually. Liglass Trading, meanwhile, states that the “installed capacity of the project will exceed 280 [megawatts] and its [annual] production is estimated at [1.5 billion kilowatt hours].”
What is particularly impressive about those figures, if they are to be believed, is that Liglass Trading is only contracted to develop the Akbulun HPP and Naryn HPP-1 sections of the cascade, in addition to 10 smaller and presumably unrelated hydropower facilities, but not the Naryn HPP-2 and Naryn HPP-3 components also included the RusHydro project.
Kyrgyzstan has either chanced upon a plucky, punching-above-its-weight Czech minnow that is going to revive their stalled hydropower agenda, or it has been sold a world class pup. We should find out soon enough which one they got.
More Top Reads From Oilprice.com:
- The Abrupt Demise Of Dutch Gas
- New Solar Tech Produces 50% More Energy Than Silicon Cells
- Daily OPEC Oil Prices Now Public For The First Time Ever