SK E&C Strikes Financial Contract with Investors to Finance Almaty Ring Road
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SK E&C Strikes Financial Contract with Investors to Finance Almaty Ring Road
Project is biggest PPP project being undertaken in Central Asia

24(Tue), Mar, 2020

From left, sitting, Vice Chairman of EDB Amangeldy Issenov, EBRD Infrastructure Director Ekaterina Miroshnik, President of Alsim Alarko Ayhan Yavrucu, President of Eurasia Marketing at SK E&C Lee Seung-soo and Director of KEC Yoo Ho-sik pose for a picture after signing a deal for the construction of a beltway in Almaty, Kazakhstan, on Feb.13, in the capital Nur-Sultan. (Photos: SK E&C)

Kazakhstan’s first public-private partnership project involving Almaty Ring Road will be launched with the signing of a financial contract.

SK E&C struck a deal with a group of investors, including the European Bank for Reconstruction and Development (EBRD) and other multilateral development banks (MDBs) to finance the ring road concession project in Nur-Sultan on Feb. 13.

A consortium, comprising SK E&C, Korea Expressway Corp., Turkey’s Alarko and Makyol, signed the deal on the construction and operation of Almaty’s ring road with the Ministry of Industry and Infrastructure Development (MIID) in February 2018.

The total costs for the project will amount to $750 million (900 billion won), and construction will cost $540 million.

The project is the biggest PPP project being undertaken in Central Asia.

SK E&C succeeded in securing $580 million out of its total costs through project financing. Multilateral development banks such as EBRD, the Islamic Development Bank (IsDB), and EDB participated as creditors, and the remaining project money is expected to be filled with contributions by shareholders.

SK E&C said, “This project takes on significance since SK E&C has expanded its business area to Central Asia, going beyond the conventional markets such as Europe and Southeast Asia.”

The financial contract on Kazakhstan’s first PPP project was completed with the help of aggressive support by investors, as well as strenuous efforts having been made, such as the Kazakhstan government’s revision of related laws, the Korean contractor added.

The PPP concession project calls for the construction of a ring road with four to six lanes, running 66 km in total length, with 21 bridges and eight interchanges.

The project takes a build-operate-transfer (BOT) format. Revenues from the operation of the ring road will be paid out as amounts fixed by the Kazakhstan government, regardless of failures to meet traffic volumes.

Construction is expected to take four years and two months, and SK E&C will operate the beltway for the remainder of the 20-year turn-key project’s timeline in partnership with the Korea Expressway Corporation (KEC). The two will hand over the right to operate the ring road to the Kazakhstan government after this period.

SK E&C, and Turkey’s Alarko and Makyol will be responsible for the engineering, procurement and commissioning (EPC) of the project, and the Korean contractor will be in charge of the operation of the ring road with Korea Expressway Corp.

A bird-eye’s view of Almaty’s ring road in Kazakhstan, to be implemented by SK E&C.

SK E&C will gain dividend from its participation as an investor. The Korean contractor has a 33.3 percent stake in the construction consortium. Including the PPP ring road project in Kazakhstan, SK E&C currently conducts four overseas infrastructure development projects.

It operates the Eurasia Tunnel in Turkey, dedicated in December 2016, and is working together with Korea’s Daelim Industrial to complete construction of the Canakkale Bridge, which is expected to be the world’s largest suspension bridge, crossing Turkey’s Dardanelles Strait.

The contractor also expects to launch a project to construct the Silvertown Tunnel under the River Thames in London, following the signing of a contract last November.

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