The Islamic Development Bank (IsDB) together with other multilateral co-financiers participated in providing joint funding of US$ 585 million to BAKAD Investment and Operation Limited Liability Partnership, a project company set up to develop and operate a 66km Ring Road north of City of Almaty in Kazakhstan on a PPP basis. The signing of the financing documentation took place at Nur Sultan, Kazakhstan on 12th February 2020. The Financial Close was reached on 6 August 2020. This is the first PPP project in the country. BAKAD has a 20-year concession awarded by Republic of Kazakhstan to a joint consortium of Turkish and Korean companies for financing, construction, operation, and maintenance of the project. The ring road will have 4 lanes in the first and the last sections with a length of 9km and 6 lanes in all other sections with a total length of 57km. Additionally, it will include 21 bridges, 19 viaducts and other elevated structures.
The is a landmark project which aims to reduce congestion in Almaty and to create a by-pass for commercial vehicles following the “Western China – Western Europe” transnational highway, where traffic is expected to grow with the Chinese initiative of “One-Belt One-Road”. The project is fully aligned with IsDB’s mandate to fund developmental projects. The project will play a critical role in the regional integration of central Asian economies. Furthermore, the project will relieve the traffic in the city of Almaty and reduce travel times along with number of traffic accidents. The concession for this important project has been awarded to the Project Sponsors consisting of Alsim Alarko and Makyol Insaat from Turkey and SK Engineering and Construction (SK) and Korean Expressway Corporation (KEC) from Korea.
IsDB will provide USD 100 million Shariah compliant Installment Sale financing facility to support the project. Noman Siddiqui, Head of PPP Division at IsDB stated that “the negotiations to conclude the financing for this high profile project took enormous efforts from the joint teams of the Senior Lenders, and their Legal and Technical advisors, and IsDB is extremely pleased to have successfully achieved the financial close for this high profile PPP concession. ”. Himmatilla Boriev, Portfolio Manager at IsDB for this transaction stated that “the project is the first of its kind in the CIS and will serve as an excellent benchmark for international investors to exploit PPP models for infrastructure projects in the region in the near future”. Financial Close for the project was achieved despite the limitations caused by the current COVID19 Pandemic, which proved the strong support and determination of the Senior Lenders and Project Sponsors.