CNPC Finance provides $300 million loan for Line D of the Central Asia-China Gas Pipeline Project (Linked to Project ID#54489, #39997, #54528, #70616, #91923, #91926, #91901, #91917, #91898)

On March 4, 2014, Trans-Asia Gas Pipeline Company Limited (中塔天然氣管道有限公司) — a subsidiary of China National Petroleum Corporation (CNPC) — signed an agreement with Tajiktransgaz (a Tajik state-owned company) to jointly establish a special purpose vehicle natural gas pipeline company called Trans-Tajik Gas Pipeline Company Ltd (TTGP). The purpose of the TTGP, which is jointly owned by Trans-Asia Gas Pipeline Company Limited (50% equity stake) and Tajiktransgaz (50% equity stake), is to manage the financing, construction, and operation of Line D of the Central Asia-China Gas Pipeline. Trans-Tajik Gas Pipeline Company Ltd was established with a $300 million equity investment from Trans-Asia Gas Pipeline Company Limited (captured via Project ID#70616) and $300 million equity investment from Tajiktransgaz, which was in turn financed with a $300 million loan from CNPC Finance (HK) Limited, a wholly-owned subsidiary of China National Petroleum Corporation, (captured via Project ID#39955). This loan carries the following borrowing terms: an interest rate of 2.7% per year and a maturity of 26 years. The Government of Tajikistan did not issue a sovereign guarantee in support of the loan. According to the President of Tajiktransgaz, Saidakhmad Shamsiddinzoda, the Government of Tajikistan expected to receive $1.2 billion in transit fees from the pipeline over its first 32 years of operation (approximately $33 million per year), which would facilitate loan repayment. Tajiktransgaz was also expected to receive approximately $2.5 billion over the same time period (approximately $78 million per year). The route of the Line D segment of the Central Asia-China Gas Pipeline will run across five countries, from the border of Turkmenistan through the territories of Uzbekistan, Tajikistan and Kyrgyzstan, and China. It is planned to originate at the Galkynysh gas field in Turkmenistan. In Tajikistan, the gas pipeline will run for 391 km through Tursunzoda, Shahrinav, Hisor, Roudaki, Vahdat, Fayzobod, Nourobod, Rasht and Lakhsh (formerly Jirgatol) to Kyrgyzstan’s border. It will then go through Kyrgyzstan, crossing into China near the village of Irkeshtam on the Kyrgyzstan-China border. Line D is planned to be 966 km long with the capacity to transport 30 billion cubic meters of natural gas (bcm) per year. The Government of Tajikistan allocated more than 9,500 hectares of land for 49 years for the pipeline. The Trans-Tajik Gas Pipeline Company Limited paid the Government of Tajikistan 415,000 somoni ($44,000) for the use of the land. According to the Tajik Ministry of Energy and Water Resources, this project also involves the construction of 42 mountain tunnels with a total length of 63.3 km. The project is also expected to employ 3000 Tajik citizens. China Road and Bridge Corporation (CRBC) is the contractor responsible for project implementation. Line D construction began on September 13, 2014. It was originally expected that Line D would be fully operational by January 2020. However, the project was temporarily halted in March 2017. Work resumed on the Tajik section of the pipeline in January 2018. Then, on January 5, 2020, the first tunnel project and mountain-crossing effort was completed by CRBC. The CNPC Finance (HK) Limited loan for Line D of the Central Asia-China Gas Pipeline Project has raised concerns about hidden public debt in Tajikistan. In August 2021, the Eurasian Development Bank released a report that said 'we believe that the Tajiktransgaz loan agreement with [CNPC Finance (HK) Limited] on the construction of a gas pipeline may […] threaten the country’s fiscal position. First, the project is currently stalled and, second, Tajiktransgaz is a state-owned company, which implies that these obligations may be contingent liabilities for the Tajik government. The total debt obligations [associated with the project] amount to 4% of GDP.' Two months earlier, on June 2, 2021, TTGP held a board meeting. The chairman of the board, Jin Qingguo, referenced possible interest payment relief (i.e. a debt rescheduling) for Tajiktransgaz, one of the shareholders of TTGP.

Additional details

1. The Central Asia-China Gas Pipeline—also known as the Turkmenistan-China Gas Pipeline or the Asia Gas Pipeline—is a 1,873-kilometer long gas pipeline connecting Turkmenistan to China via Uzbekistan and Kazakhstan, which delivers gas equal to approximately 20% of China’s annual natural gas consumption. It consists of 4 lines (A, B, C, and D). Lines A, B, and C run parallel to each other. These three pipelines begin at Gedaim on the Turkmen-Uzbek border, run through central Uzbekistan and southern Kazakhstan, and end at Khorgas in China's Xinjiang Uyghur Autonomous Region. Roughly 188 kilometers of Lines A-C are in Turkmenistan, roughly 529 (or 530) kilometers of Lines A-C are in Kazakhstan, and roughly 1115 (or 1300) kilometers of of Lines A-C run from Kazakhstan to China. Line D, which is still under construction, will be 966 kilometers in length and connect Galkynysh to western China via Kyrgyzstan and Tajikistan. It will originate at the Galkynysh gas field in Turkmenistan. Then, in Tajikistan, Line D will run through Tursunzoda, Shahrinav, Hisor, Roudaki, Vahdat, Fayzobod, Nourobod, Rasht and Lakhsh (formerly Jirgatol) to Kyrgyzstan’s border. It will then go through Kyrgyzstan, crossing into China near the village of Irkeshtam on the Kyrgyzstan-China border. The Central Asia-China Gas Pipeline is supplied from the Galkynysh and Dauletabad gas fields, as well as from the Bagtyyarlyk gas field in Turkmenistan, where it originates. The pipeline is also supplied with gas from the Beineu-Bozoy-Shymkent Gas Pipeline to which it is linked in Shymkent, Kazakhstan. The Beineu-Bozoy-Shymkent Gas Pipeline delivers gas originating in gas fields of Kazakhstan. Line A and Line B connect to the Second West-East Gas Pipeline, while Line C connects to the Third West-East Gas Pipeline. Line D, which is under construction, will connect to the Fifth West-East Gas Pipeline. Line A, B, and C provide 55 billion cubic meters (bcm) of gas to China per annum. Line D is planned to have capacity of 30 bcm/year. 2. The construction of the China-Central Asia Gas Pipeline was financed through a series of Chinese loans and equity investments: $7.5 billion syndicated CDB/BoC loan for Kazakh Section of Lines A and B (captured via Projects ID#54489, #91923); $4.7 billion syndicated CDB/BoC loan for the Kazakh Section of Line C (captured via Projects ID#39997, #91926); $3.5 billion syndicated CDB/BoC loan for the Uzbek Sections of Lines A and B (captured via Projects ID#91901, #91917); $1.4 billion syndicated CDB/BoC loan for the Uzbek Section of Line C (captured via Projects ID#54528 #91898); $300 million CNPC Finance loan for Line D (captured via Project ID#39955); and $300 million equity investment from Trans-Asia Gas Pipeline Company Limited for Line D of the Central Asia-China Gas Pipeline Project (captured via Project ID#70616). 3. Trans-Asia Gas Pipeline Company Limited is a subsidiary of China National Petroleum Corporation (CNPC). 4. This project is also known as the Tajikistan Section of the Turkmenistan-China Gas Pipeline Project. The Chinese project title is 中亚天然气管道D线 or 中亚天然气管道D线工程1号隧道项目. The Russian project title is Трубопровод Центральная Азия - Китай; Газопровод Туркмения - Китай. 5. Tajiktransgaz was created by a government decree on February 21, 2009, and registered on May 28, 2009. 6. CNPC Finance is registered in Hong Kong, but its parent company (CNPC) is registered in the PRC. 7. According to the President of Tajiktransgaz, Saidakhmad Shamsiddinzoda, the total cost of the construction of Line D of the Central Asia-China Gas Pipeline Project is $3.2 billion (thus costing USD 8 million per kilometer). According to that price structure, CNPC is directly financing approximately $2.9 billion (over 90 percent of the cost) of the project through investment and the remainder through a $300 million loan. 8. TTGP is known in Tajik as ТРАНС-ТОҶИК ГАЗ ПИПЛАЙН КОМПАНИ ЛТД.

Number of official sources

21

Number of total sources

48