SK consortium finances a Kazakhstan highway

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SK consortium finances a Kazakhstan highway

A consortium including SK Engineering & Construction closed financing on a $580 million deal to build a 66-kilometer (41-mile) highway in Almaty, Kazakhstan, the company said Thursday.

The funding clears the way for SK and its Turkish partners to embark on the construction of the project, which was originally awarded to them by the Kazakh government in 2018.

The Almaty highway is the country’s first public-private partnership for infrastructure construction and the largest project of its kind in Central Asia. Creditors are the European Bank for Reconstruction and Development, the Islamic Development Bank and the Eurasian Development Bank.

SK first won the deal as a consortium with two Turkish companies in 2018 after suggesting the project to the Kazakh government. The consortium’s members include Turkish construction companies Alarko and Makyol and the Korea Expressway Corporation. SK has a 33.3 percent stake.

Unlike private projects, where multiple companies compete to win in a placed bid, infrastructure development projects are usually initiated by construction companies, which also take charge of securing capital, a company spokesman explained.

The establishment of the project required legal reforms and the raising of funds.

The project, which will require $750 million in total, includes the construction and operation of a 66-kilometer highway of four to six lanes, 21 bridges and eight intersections in the city of Almaty. Capital raised from creditors totals $580 million. The rest will come from the investment by the consortium’s three private companies.

SK and the two Turkish construction companies will take charge of construction, which is scheduled to take 50 months. For the following 15 years and 10 months, SK will team up with the state-owned Korea Expressway Corporation to operate the highway and in turn receive fees from the country’s government.

The project is SK’s first foray into Central Asia for infrastructure development.

BY SONG KYOUNG-SON [song.kyoungson@joongang.co.kr]

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