What a Kyrgyzstan oil refinery reveals about China's Belt and Road Initiative

An oil refinery at night. Photo by Gregg TavaresCC BY 2.0 (Flickr)

The Zhongda oil refinery, one of China’s largest investments in Kyrgyzstan, typifies the jobs versus pollution debate that surrounds Beijing's Belt and Road Initiative (BRI) vision.

The refinery is a paragon of opacity. A decade on from its construction, many Kyrgyzstani citizens know very little about its work, or why it recently halted production.

Zhongda, also known as Junda, was built in the town of Kara-Balta, 60 kilometres west of the capital Bishkek, with Chinese investments of more than 300 million US dollars.

The company that operates the refinery, “Zhongda China Petrol Company” (中大中国石油公司), is owned by the state-owned Shanxi Coal and Chemical Industry Group based in Shanxi, China, via a daughter company called Central Asia Energy Company.

The project was agreed not long before the corrupt, authoritarian regime of Kyrgyzstan's second president Kurmanbek Bakiyev was jettisoned from power in a 2010 revolution.

When it was finally commissioned in 2014, it became the largest oil refinery in Kyrgyzstan, a resource-poor Central Asian country of 6.5 million people.

Unemployment in Kyrgyzstan is chronic, and the refinery was part of a series of Chinese investments made around the time of the revolution that partially offset the trend of hundreds of thousands of Kyrgyzstanis who seasonally migrate to Russia in search for work.

Around two-thirds of the 800 workers at the refinery are locals, while the rest are Chinese.

But many of China's investments, particularly in the extractive sector, have been mired in scandals over perceived environmental damage and poor community relations.

What is most striking about the Zhongda refinery, according to Niva Yau, a researcher at the OSCE Academy in Bishkek, is how close it is to residential buildings in Kara-Balta:

Living next to an oil refinery is bad anywhere in the world. In this case, however, the Chinese company did not assess the impact on placing the factory so close to a village. It was a cost-cutting measure, because a more remote location would have placed the cost of laying down water and energy transmission networks on the shoulders of the company. Strapped for cash, the Kyrgyz government would have not been able to afford this. In China, the government tries to build new refineries farther away from settled communities and they compensate the locals in case of exposure to environmental harm. Building the Zhongda refinery was convenient for the Kyrgyz government. At the end of the day, what happens in Kara-Balta does not affect Bishkek.

A pause in production, but for how long?

Bishkek is Kyrgyzstan's capital, where the political decisions are made. Presidents and lawmakers are often accused of taking the money from investments while leaving local communities to sort out their issues with foreign companies alone.

Several residents of Kara-Balta told Global Voices that their health has suffered since the refinery started its operations.

Sulaiman Satykeev, a member of the local government, claimed that the number of residents suffering from allergies, asthma and other lung issues has grown:

Especially in the morning, the air smelled like gas. We tried to reach the mayor, arguing that the plant is harmful to the environment. People were getting sick due to the polluted air. The refinery’s work, however, went on. We tried our best but nobody was listening to us. Now, thank God, the Zhongda factory is not working and the air has become much cleaner.

The pause in production at the refinery came the same year that the coronavirus struck. The refinery's operators have not given an explanation over the pause, or a schedule for the plant starting work again.

This is the second time the facility has gone offline. After four years in operation, the refinery’s work was suspended in 2018 following a legal dispute over tax evasion and worker rights abuse.

Some see the refinery's problems as being linked to competition for the energy market between China and Russia.

Russian energy giant Gazprom traditionally dominates the fuel market in Kyrgyzstan, while several prominent Kyrgyz politicians have businesses importing fuel from there.

(Lawmaker) Pirmatov tells it like it is. The government is seemingly intent on destroying local production (at Junda) to create benefits for refined fuel imported from Russia. With our officials, who needs enemies? They ruin everything. The Junda refinery, by the way, legally exported our low quality fuel to Afghanistan and paid billions (of Kyrgyz soms) in taxes.

In 2019, Zhongda was one of a number of Chinese-run operations raided by a self-styled nationalist patriot group called Kyrk Chorolor that garnered popularity by taking an aggressive anti-Chinese stance.

Chinese investment skeptics in Central Asia often contend that the industrial component of the BRI will bring into the region dirty production that is no longer needed in China.

This sentiment was highlighted over the border in Kazakhstan, the region's largest economy, during protests against the government's backing for Chinese investment projects two years ago.

Anti-Chinese protests are happening in five major cities of Kazakhstan. The dirtiest factory in Kyrgyzstan is the Chinese refinery Zhongda in Kara-Balta.

Chinese media coverage skims over controversies

The refinery's representatives rarely give interviews to Kyrgyzstan's local press, which is the most independent in the Central Asian region and known for asking difficult questions.

In a 2019 interview with the Sanqin Metropolis Daily, Shi Jianguo, manager of Zhongda China Petrol Company, hailed the plant as “the first large-scale industrial enterprise in Kyrgyzstan.”

Local officials have also avoided mentioning the problems faced by the project in their interviews with the Chinese press.

In a 2017 interview with Xinhua News Agency, Turusbek Nogoev, then-governor of the Chuy region where the refinery is located, used a phrase beloved of Chinese officials to describe the refinery:

Zhongda Petrol's operations and output are a win-win for Kyrgyzstan and China. The refining company has made sizeable tax contributions to Kyrgyzstan’s budget and is a model for foreign investors.

The Central Asia Energy Company said in 2017 that the company paid an average of 3 to 3.5 million US dollars in taxes per month, placing it among the top three taxpayers in Kyrgyzstan.

At present, the state budget is missing out on that money and local workers are missing out on salaries. Many other Kara-Balta residents are just happy to have their air back.

This story is part of a Civic Media Observatory investigation into competing narratives about China’s Belt and Road Initiative, and explores how societies and communities hold differing perceptions of potential benefits and harms of Chinese-led development. To learn more about this project and its methods, click here.

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