At over 12km in length and clearing the traffic in the Yellow Sea below by more than 70 metres, the ambitious Incheon second airport toll bridge has all the hallmarks of a prestige project - writes Simon Ellis.

However the bridge project – which is due to connect the South Korean capital Seoul with the Incheon International Airport on Incheon Island – was conceived at a time of severe economic distress for the country.

It took a long time to get off the ground but it bodes well for the local economy. The AMEC-led Incheon Bridge is now viewed as a potent symbol of South Korea’s economic recovery.

Background

The project was developed initially by Canadian company Agra as an unsolicited bid under the government of Korea’s public participation in infrastructure (PPI) programme.

When UK-based company AMEC acquired Agra, a review was undertaken and the decision made to continue with the bid.

In 2001, the Korean ministry of planning and dudget approved the project as one of five privately-funded transport projects to help kickstart the economy.

AMEC was duly appointed preferred bidder and set with the task of raising financing in a country still facing an economic crisis.

The project

The 12km bridge with a main span of 800m, will be one of the world’s longest spanning cable stayed bridges and is one of the world’s longest sea bridges. 

It will link the new state-of-the-art international airport situated on Yongjong Island with the Songdo New Town economic development zone located south-west of Seoul in Incheon Metropolitan City.

The bridge will support three lanes of traffic in each direction and includes a mixed manual/electronic-tolling plaza on the island side of the bridge.

The bridge is expected to improve access to the Incheon International Airport for traffic coming from Southern Seoul Metropolitan Area, and will contribute to the development of the Incheon Free Economic Zone.

Under its concession agreement with Incheon City, Korea Development Co (KODA) will build and operate the Incheon Grand Bridge until 2039 with government revenue support until 2024.

Financing

To fund its 30-year concession with the Korean government, AMEC formed a finance-driven SPV including Kookman Bank, IBK, AMEC, Incheon Metropolitan City and later Macquarie (through its wholly-owned subsidiary Incheon Bridge Investment Company).

The equity investment was set at US$159m. AMEC contributed 23 per cent (US$38m); Macquarie 44 per cent (US$66m); Kookmin Bank 15 per cent (US$23m), IBK 15 per cent (US$23m) and Incheon Metropolitan City 6 per cent (US$9m)

The senior debt – totaling US$557 was provided by Macquarie, IBK, Kookman and syndicated by a number of Korean investors.

The mezzanine facility is US$139m and is drawn from Macquarie and a number of Korean investors.

Although the project marks Macquarie’s largest infrastructure investment in Asia, its involvement is unlikely to be long term.

Macquarie has said it will explore a range of options for this investment including the possible transfer to institutional investors in a refinancing expected within the next six months.

Project at a glance