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Korea Exim News

Korea Eximbank to Provide PF Loan to London’s Silvertown Tunnel Project

Date 2019.11.26 View 16946

The Export-Import Bank of Korea (www.koreaexim.go.kr, Chairman Bang Moon-kyu, "Korea Eximbank") announced November 26 that it will provide GBP 190 million (equivalent to USD 250 million) in Project Financing to the Silvertown Tunnel Project in London where SK Engineering & Construction (SK E&C) participates.

 

This project is a large-scale Public Private Partnership (PPP)* project which will construct a one-way two-lane tunnel with a total length of 1.4 kilometers and a diameter of 12.4 meters and access roads under the Thames River to connect Greenwich and Silvertown in east London, and be operated for 25 years after completion of construction.

 

Tendered by Transport for London (TfL), this project amounts to GBP 1 billion in total project cost and is expected to alleviate air pollution by reducing traffic congestion and induce economic revitalization of the relatively underdeveloped area in London.

 

The consortium for the project is comprised of SK E&C and other major players in global infrastructure PPP projects, such as Macquarie Capital from Australia, Cintra from Spain, BAM PPP from the Netherlands and Aberdeen Standard Investments from the U.K. 

 

SK E&C will implement EPC jointly with Spain’s Ferrovial Agroman and Britain’s Bam Nuttall, with a 20% stake in construction.

 

 

Citing uncertainties in financing followed by Brexit, the consortium called for a significant participation of Korean ECAs including Korea Eximbank in the project.

 

 

In response, Korea Eximbank expressed its strong intention to provide long term, large scale financing for the project in a bid to support the Korean company, SK E&C, by issuing a Letter of Commitment to the consortium.

 

Having considered SK E&C’s abundant track records and experiences in global infrastructure PPP projects, including the Eurasian Tunnel Project and the Canakkle Bridge Project in Turkey, Korea Eximbank decided to provide financial support for this project.

 

As a result, the consortium participated by SK E&C had been selected as a preferred bidder for the project in May, and the company at last succeeded in entering into the infrastructure market of an advanced country with high entry barriers.

 

 

A Korea Eximbank official said “This project is the first PPP project that a Korean company pioneered into the infrastructure market in a developed country, which can be attributed to a close collaboration between the company and financial institutions with extensive experience in global infrastructure projects.”

 

 

He added “It is meaningful in that the Korean company participates in the higher value-added project where long-term profits are expected to be generated as an EPC contractor and equity investor. This serves as a stimulus for other Korean companies to reinforce their capacities in dealing with investment development projects.”