A bird-eye view of a project to build road tunnels crossing River Thames in London, won by SK E&C.

A map of the route of the Silver Town Tunnel Project. (Photos: SK E&C)

SK E&C has won an order to build a road tunnels under the River Thames in London, outbidding global contractors. It was the first time this year the Korean contractor has landed the public-private partnership project in Western Europe. SK E&C was selected as a preferred bidder of the 1.5 trillion won project issued by the Transport for London (TfL), the Korean contractor said.

The project calls for building two underground tunnels, each with two lanes, penetrating underwater parts of the River Thames from Silver Town and Greenwich. The projected tunnel is 1.4 km long and 12.4 meters in diameter.

A consortium, dubbed “RiverLink,” participated in the project bidding. The consortium consists of SK E&C, Macquarie Capital of Australia, Cintra of Spain, Aberdeen Standard Investments of the UK, and BAM PPP PGGM of the Netherland. SK E&C has a 10 percent stake in investments in RiverLink.

SK E&C also formed a consortium with Ferrovial Agroman of Spain and BAM Nuttall of the UK to undertake the engineering, procurement and construction (EPC) of the project. The Korean contractor owns a 20 percent stake in the EPC segment.

An enforcement agreement and financial contract will be struck in the second half of this year, and RiverLink will operate the projected tunnels for 25 years starting 2025 when the project is dedicated after it is launched. The project will take a format of availability payment in which the TfL will pay determined revenues on a monthly basis for 25 years.

The project involves the construction of twin, underwater tunnels in a limited environment such as congested traffic, so global TBM (tunnel boarding machine) design/construction companies had formed consortia and participated in a fierce bidding competition. SK E&C has been recognized for its track record of successfully implementing large-diameter tunnel and underground space projects, not only in Korea but also in Turkey, Singapore, and Qatar as well as excellent technologies, which have contributed to helping the Korean contractor win the project.

SK E&C’s winning of the project was also owed to the Korean Export Credit Agency, Korean commercial banks, insurance companies and other financial institution that provided active financial support, leading to the stabilizing of the financial structure of the consortium comprising the Korean contractor.

It is noteworthy that SK E&C has become the first Korean contract to have landed a public-private partnership project in Western Europe, including the United Kingdom. The UK has established PPP projects in Europe for the first time in the world and developed them.

There, diverse infrastructure projects have been implemented with stable institutional foundation and differentiation financing tactics, becoming one of the regions attracting a keen attention from global contractors and investment companies.

SK E&C President Ahn Jae-hyun said, “I’m pleased to have entered the advanced European market with higher entry barriers for the first time by winning the project.”

SK E&C will endeavor to explore additional business opportunities by making the most of the contractor’s strengths in road, tunnel and underground space construction technologies and project financing capabilities through strategic alliances with global contractors and financial investors, he added.