By Anton Usov
The European Bank for Reconstruction and Development (EBRD) has played a major role in organising financing for the construction of a 66-kilometre ring road (the BAKAD project) around the city of Almaty and brought the deal to a financial close, making it the largest public-private partnership (PPP) project in both Kazakhstan and Central Asia.
It is also the first PPP project in the region structured with the involvement of international advisors and through an open, international competitive process.
The financing package of US$ 585 million consists of an A-loan of US$ 225 million for the EBRD’s own account, B-loan of US$125 million syndicated to Bank of China (US$100 million) and PGGM (US$25 million), as well as parallel loan facilities of US$135 million by the Eurasian Development Bank and of US$100 million by the Islamic Development Bank.
The largest infrastructure project in Kazakhstan outside the oil and gas sector will help remove a major transport bottleneck in Almaty and increase the transit throughput capacity, while reducing local air pollution.
A Turkish-Korean consortium, formed by Alsim Alarko Sanayi Tesisleri ve Ticaret A. Ş., Makyol Inşaat Sanayi Turizm ve Ticaret A.Ş, Korea Expressway Corporation and SK Engineering & Construction Co. Ltd., was awarded a 20-year concession to construct, operate and maintain the BAKAD road. It will be responsible for the construction of 20 bridges, 8 interchanges and 22 overpasses.
EBRD Head of Infrastructure Eurasia Ekaterina Miroshnik said: “The BAKAD project puts Kazakhstan on the global map for private investors and developers interested in infrastructure development opportunities. It also provides a solution for the environmental and transport problems Almaty has faced for a long time. I would like to express my gratitude to the government of Kazakhstan, our co-financiers and the implementing consortium for their determination to make this important project happen.”
The consortium representative, Hakan Aytekin said: “Kazakhstan with its abundant resources has a strong economy based on oil and gas business. The BAKAD project, however, is opening a gateway for a new investment scheme, which is public-private partnerships. The Big Almaty Ring Road Project is the first infrastructure concession project to be executed at state level both in Kazakhstan and in Central Asia”.
“The successful financial close of the BAKAD project demonstrates the strong interest of international financiers and helps bring foreign direct investors to Kazakhstan. The implementation of this landmark project will reduce traffic congestion in Almaty and cut excess mileage and the number of traffic accidents, which will result in the decrease of air pollution, noise, and emission of greenhouse gases.”
The BAKAD project will also create employment opportunities for the local population.
Support for existing clients is part of the EBRD’s response to the coronavirus pandemic. The EBRD expects the entirety of its investments of up to €21 billion in 2020-21 to be dedicated to the response to and the recovery from the coronavirus pandemic.
In Kazakhstan, the EBRD has invested €8.63 billion through 273 projects in the economy to date.