Hyundai Corp to rival China's CRCC in bid for $18 bn Ukrainian infra deal

South Korea’s trading company Hyundai Corporation will face China’s Railway Construction Corporate (CRCC) in a bid to secure an $18 billion infrastructure deal in Ukraine. Hyundai Corp. is expected to team up with Hyundai-Rotem Co., the Export-Import Bank of Korea (KEXIM) and Korea Trade Insurance Corporation (KTIC).

According to foreign media outlets, the Ukrainian government will launch a feasibility study for a high-speed rail construction business to connect three major cities: Kyiv, Kharkiv and Donetsk. The government aims to replace deteriorated railroads and transition to high-speed trains in addition to constructing various rail facilities. The cash-strapped Ukrainian government plans to carry out the project by entering into contracts with foreign companies.

Hyundai Corp. is considered a frontrunner since its business execution ability is already acknowledged by the Ukraine government. Last month, top officials of the country's Ministry of Transportation and the Ministry of Construction met with Hyundai Corp.’s country director in Ukraine to request the company's participation.

Hyundai Corp. boasts a solid business network in Ukraine, with a promising track record that includes a 350 billion won order from the Ukrainian government in 2010 for high-speed trains.

A Hyundai Corp. source said that they are reviewing how to carry out a feasibility study. The source added: “There’s still plenty of time until a final decision is made so we’re looking into financing measures.”

The company is considering creating a consortium with Hyundai-Rotem, KEXIM, KTIC as it did in the previous high-speed train project in Ukraine in 2010. If the Korean consortium wins the bid, Hyundai Corp. will likely take the lead in overseeing the project, with Hyundai Rotem responsible for the construction and KEXIM and KTIC handling the financing. Sources said Hyundai Corp. may team up with other Korean companies.

Hyundai Corp.'s biggest competitor will be the CRCC, one of the world’s largest railroad construction companies. As a key location connecting Eastern Europe with Russia, Ukraine has seen a rise in demand for resource development and cargo transportation. Due to this, the Chinese government has focused efforts on Ukraine to expand President Xi Jinping’s one-belt one-road initiative, which aims to create a land and maritime Silk Road.

Meanwhile, the European Union has also been closely watching Ukraine’s high-speed train project given China’s aggressive foray into Eastern Europe.

Hyundai Corp. is one of the key affiliates of Hyundai Corporation Group, spun off from Hyundai Heavy Industries Co. in 2016. Chung Mong-hyuk, the nephew of Hyundai Group founder Chung Ju-young, is the chairman of Hyundai Corporation.

Write to Kyung-min Kang at kkm1026@hankyung.com
Danbee Lee edited this article.