Hyundai, IHI Among Firms Weighing $5 Billion Turkey Project

  • Bidders emerge before auction set to take place on Jan. 26
  • Government seeking to ease congestion across strait to Europe

Hyundai Engineering & Construction Co., Itochu Corp. and Chinese builders are among companies that may bid for a $5 billion contract to build a network of roads and a suspension bridge across Turkey’s Dardanelles waterway, according to people familiar with the matter.

At least five bidding groups may compete in the Jan. 26 auction, the people said, asking not to be identified because participant details are confidential. Turkey’s transport ministry invited proposals from contractors in October for the construction of an alternative route to Europe to bypass congested traffic across Istanbul’s Bosporus strait.

Itochu will team up with Japan’s IHI Corp., Turkey’s Nurol Holding AS and Makyol Insaat AS in the bidding, two of the people said. Hyundai, Italy’s Astaldi SpA, IC Ictas Insaat AS and Kalyon Insaat Sanayi ve Ticaret AS is another group considering a bid, three people said. Sichuan Road and Bridge Co. of China is also planning to bid with local partners, two people said.

Turkey’s Cengiz Insaat Sanayi ve Ticaret AS may bid with China’s Road and Bridge International Co. Ltd., or CRBC, and Kolin Insaat Turizm Sanayi ve Ticaret AS, two people said. SK Engineering & Construction Co. and Daelim Industrial Co. have joined with Limak Insaat Sanayi ve Ticaret AS and Yapi Merkezi Insaat Sanayi ve Ticaret AS, two people said.

Bid Extension

Bidding groups have to commit 100 million liras ($27 million) to participate in the auction, according to the terms. The auction date could be postponed to meet demands from some of the companies, one of the people said. The companies will build, operate and eventually transfer the infrastructure to the government at the end of the contract.

The project envisages a 352 kilometer (220 miles) toll-road strip starting from Kinali in the Thrace region to the west of Istanbul and end at the town of Savastepe, south of the city of Balikesir in western Turkey. It would pass through the Dardanelles strait via a bridge to be built at the town of Canakkale, according to Roads Directorate of Turkey, or KGM, website.

“The Canakkale bridge and connecting roads will be among large projects that will require project finance this year,” said Ebru Dildar Edin, executive vice president in charge of project finance at Turkiye Garanti Bankasi AS, in an interview on Jan. 5 in Istanbul. “We think Turkish banks will largely be financing these.”

Suspension Bridge

The government has stepped up work in the past decade to build toll roads in western Turkey and auctioned off a road network to the north of Istanbul to two groups of local builders last year in a $2.5 billion project. Astaldi is leading a group of builders in a $7.5 billion toll road project from Istanbul to Izmir via a completed suspension bridge.
A spokesman for Astaldi, who asked not to be identified in line with company policy, said the Rome-based company hasn’t decided on whether to participate in the auction. A Hyundai spokesman said it is working with partners to prepare for a bid in the project, without elaborating.

A spokesman for Itochu said the company is considering bidding in the project and working on details. An executive at Sichuan Road and Bridge confirmed the company’s interest in the project, declining to give further information. Spokesmen at SK Engineering, Daelim, IHI, CRBC, Limak, IC Ictas, Cengiz, Nurol, Kolin, Kalyon, Yapi Merkezi declined to comment.

— With assistance by Tesun Oh, Yan Zhang, and Kyunghee Park

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