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| 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, Wednesday, in the capital Nur-Sultan. / Courtesy of SK E&C |
SK Engineering & Construction (SK E&C) said Thursday it has closed a deal to begin the construction of a beltway in Almaty, Kazakhstan, in the country's very first public-private business partnership.
Multilateral development banks including the European Bank for Reconstruction and Development, the Islamic Development Bank and the Eurasia Development Bank are involved as project lenders.
The project is to build a six-lane, 66-kilometer-long highway with 21 bridges and eight interchanges. 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 operations to the Kazakhstan government after this period.
The beltway will be run on an "availability payment" system to reduce the risk of fluctuations in profits that may arise from inaccurate predictions of traffic volume.
SK E&C will receive dividend income as an investor, owning 33.3 percent of the project.
In Feb. 2018, SK E&C formed a consortium with KEC, and Turkey's Alarko and Makyol to bid for the project that is projected to cost $750 million. The consortium is using project financing to provide $580 million of the total $750 million, with the rest being covered by private investment.
Including the Almaty beltway SK E&C is currently involved in four infrastructure development projects. It is already operating an undersea tunnel in Turkey connecting Europe and Asia that the company finished building in Dec. 2016, while another project ― the world's longest suspension bridge in Canakkale, Turkey ― is set to open in 2022. The fourth project is the Silvertown Tunnel under the River Thames in London, as part of the Riverlinx consortium that was awarded the contract in November last year.
This last project was meaningful for SK E&C as it expanded its business foothold from the Central Asian market to Europe.
"As this is Kazakhstan's very first public-private partnership project, multilateral development banks have actively participated in investing in it," said SK E&C President and CEO Ahn Jae-hyun. "We will do our best to produce a successful model in Central Asia after Turkey and England.
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