This is a uk trade and investment document     HELPING YOUR BUSINESS GROW INTERNATIONALLY                                 ...
Produced by:	Bob Docherty,International Business Adviser,Railway Sector, UKTI,No 1 Victoria StreetLondon, SW1H 0ET© Crown ...
CONTENTS1	     Purpose and Methodology				                            22	     Executive Summary				                       ...
1                             PURPOSE AND METHODOLOGY                              This report has been created to provide...
EXECUTIVE SUMMARYRailways are enjoying a period of significant and sustained investment in Turkey, withmajor investment in...
2                              Turkey is developing rapidly and has become a manufacturing force in Europe. This will furt...
2It is vital for UK companies to take care and pay close attention when approaching the market.Sensitivity to the progress...
3                              3.2 Milestones                               Year       Milestone                          ...
3Section 5 of this report covers mainline railways in detail.3.4 Urban TransportationTurkey is creating or extending urban...
4                             4 MINISTRY OF TRANSPORT                              AND COMMUNICATION                      ...
4RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011   9
4                              4.1 DLH General Directorate of Ports Railways and Airports                              www...
4RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011   11
4                              4.4 Enhancing Logistics and Distribution Capability                              The Minist...
4Both mainline and urban railways remain in public ownership for now, despite a programmeof privatisation that is underway...
5                             TCDD - THE STATE-OWNED                              MAINLINE RAILWAY COMPANY                ...
55.1 TCDD ActivitiesTCDD’s current activities are extensive and diverse, going beyond rail operations andmaintenance to in...
5                              5.2.1 Route Km and Detail                               Route km (2011)                Volu...
55.2.3 Rolling Stock Type                                           Active units High-Speed Train Sets                    ...
5                              5.2.6 Proposed Organisation                              The new organisation, expected to ...
5Lake Van Operations5.3 Budget Allocation and Priority ProjectsRailway in general and TCDD in particular, are enjoying an ...
5                              5.3.2 Key Projects                              Railways are expanding in Turkey. The follo...
55.5 TCDD Port OperationsTCDD has responsibility for four ports, with three (Mersin, Samsun and Bandirma) alreadyhaving be...
5                              5.5.1 Freight Transportation Potential                              TCDD is confident that ...
5Existing International FreightThe charts below show the freight between Turkey and Europe, and Turkey and Asia. Thepropor...
5                              A press announcement during April 2010 reflected the desire of TCDD to extend Turkey’s reac...
66.2 UITPwww.uitp.org/regions/europe/turkey.cfmUITP, the International Association for Public Transport, has opened a liai...
6                              6.4 Adana                              http://www.adana.bel.tr                             ...
66.5.3 Ankara Suburban Railways – TCDDTCDD operate a network of around 37 km, covering 28 stations across Ankara; Category...
6                              6.9 Eskişehir                              www.estram.com.tr/eng/iletisim.php              ...
66.11.1 Metropolitan Transport AuthorityIETT - İstanbul Elektrik Tramvay ve Tünel İşletmeleri Genel Müdürlüğühttp://www.ie...
6                              Systems in Use                              The following systems are in use in Istanbul, m...
6Planned Extensions:System Evolution / Future DevelopmentPlans to develop the metro are shown in the map below. The city i...
6                              Manufacturing / RD Capability                              The extent of the capability at ...
66.12 Izmirwww.izmirmetro.com.trIzmir is served by around 80 km of suburban rail, with 31 stations and operated by TCDD. T...
7                             THE TURKISH                              CONTRACTING SECTOR                              Tur...
7Turkish Contractors Associationwww.tmb.org.trThere is a Turkish Contractors Association, which recently completed an inwa...
8                              Key Points                              „„  ayder is an industry body.                     ...
88.3 AcademiaThere a number of universities and distinguished academics with links to the rail sector inTurkey, some of wh...
9                              9.2 Republic of Turkey Prime Ministry Investment Support and                              P...
10 EURASIA RAIL EXHIBITIONwww.eurasiarail.comThe first ever exhibition focussing exclusively on rail was held in Ankara in...
11                              11 Doing Business in Turkey                              The UK has stated publically that...
11InvestmentUK investors in Turkey include: Tesco; Vodafone; British Foods; BP; Shell; Lloyds List; HSBC;International Pow...
I                             APPENDIX I                              Case Study – The Marmaray Crossing                  ...
IProject MapBenefitsThe project will help to relieve some of the pressure on Istanbul’s bridges and reduce carcongestion i...
I                              *Due to the withdrawal of the contracted party, CR1 has been re-tendered and is now referre...
IFuture ConnectionsNew rail systems are planned to facilitate movement across the city on both European and Asiansides, wi...
II                            APPENDIX II                              Case Study – High-Speed Rail Project               ...
APPENDIX IIITCDD SubsidiariesTCDD, the state-owned mainline rail company is not only fully vertically-integrated, it also ...
III                              III.1 Tülom sas – Locomotives                              www.tulomsas.com.tr           ...
UKTI - Railway sector in Turkey, 2011 (ENG)
UKTI - Railway sector in Turkey, 2011 (ENG)
UKTI - Railway sector in Turkey, 2011 (ENG)
UKTI - Railway sector in Turkey, 2011 (ENG)
UKTI - Railway sector in Turkey, 2011 (ENG)
UKTI - Railway sector in Turkey, 2011 (ENG)
UKTI - Railway sector in Turkey, 2011 (ENG)
UKTI - Railway sector in Turkey, 2011 (ENG)
UKTI - Railway sector in Turkey, 2011 (ENG)
UKTI - Railway sector in Turkey, 2011 (ENG)
UKTI - Railway sector in Turkey, 2011 (ENG)
UKTI - Railway sector in Turkey, 2011 (ENG)
UKTI - Railway sector in Turkey, 2011 (ENG)
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  1. 1. This is a uk trade and investment document HELPING YOUR BUSINESS GROW INTERNATIONALLY RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011
  2. 2. Produced by: Bob Docherty,International Business Adviser,Railway Sector, UKTI,No 1 Victoria StreetLondon, SW1H 0ET© Crown Copyright 2011You may re-use this information (not including logos, images and case studies) free of charge inany format or medium, under the terms of the Open Government Licence. To view this licence visitwww.nationalarchives.gov.uk/doc/open-government-licence/ or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gsi.gov.ukWhere we have identified any third party copyright information you will need to obtain permission fromthe copyright holders concerned.Any enquiries regarding this document should be sent to us at: enquiries@ukti.gsi.gov.uk or telephone: +44 (0)20 7215 8000 (Monday – Friday 09.00-17.00)This document is also available from our website at www.ukti.gov.uk
  3. 3. CONTENTS1 Purpose and Methodology 22 Executive Summary 3-53 Brief History and Milestones 5-74 Ministry of Transport and Communications 8-13 Rail Structure and Organisation5 TCDD – the State-owned Mainline Rail Company 14-246 Urban Railways 24-337 The Turkish Contracting Sector 34-358 Rail Associations and Academia in Turkey 35-379 Privatisation and Inward Investment into Turkey 37-3810 Eurasia Rail Exhibition 3911 Doing Business in Turkey 40-41 Appendices I Case Study – The Marmary Crossing 42-45II Case Study – High-Speed Rail Project 46III TCDD Subsidiaries 47-51IV UK and Turkish Business Sectors in Detail 51-52V Overview of Turkey 52-57 ISPAT – the Turkish Inward Investment Agency VI Organisations Visited 58-59
  4. 4. 1 PURPOSE AND METHODOLOGY This report has been created to provide UK companies with an introduction to the rail sector in Turkey. It explores the expansion of both urban and high-speed rail, and recognises the desire to improve freight distribution, both across the country and cross-border as a land-bridge. Prior to the fact-finding mission, preparation included desk studies and research. This was followed by a series of meetings in the market to examine the sector at first hand, interviewing officials and reviewing and assessing opportunities. This report has been prepared by Bob Docherty at UK Trade Investment (UKTI), with the assistance of Mr Tim Gray from the Railway Industry Association and UKTI colleagues in Turkey. 1.1 Acknowledgements and Delegation Name Company Position Bob Docherty UKTI International Business Adviser Tim Gray RIA* International Business Development Director 1.2 UKTI Turkey Support Recognition must be given to the UKTI colleagues in Turkey, for their assistance in building the programme and developing contacts in the rail sector. Name Location Asiye Yaman UKTI Ankara Özge Dursun UKTI Istanbul 1.3 Organisations Visited The full list of companies and organisations visited in the course of the research are listed in the Appendix to this report. 1.4 UKTI Railway Sector Contacts Mr Derek Griffiths Mr Bob Docherty Head of Rail Sector Railways Sector, UKTI International Business Adviser Tel: +44 20 7215 4773 Rail Sector, UKTI Email: derek.griffiths@ukti.gsi.gov.uk Tel: +44 7879 661 598 bobdocherty@btinternet.com Mr Mike Carroll Head of Mass Transport, UKTI UKTI Tel: +44 20 7215 4569 No 1 Victoria Street London SW1H OET www.ukti.gov.uk2 RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011
  5. 5. EXECUTIVE SUMMARYRailways are enjoying a period of significant and sustained investment in Turkey, withmajor investment in high-speed lines, rail-led solutions to freight and distribution, and urbantransportation in major cities across the country. A commitment to invest US$45 bn has beenmade (US$23.5 bn before 2023), in a programme of expansion up until 2035. The detail of thisexpansion programme is:„„ 2,622 km of high-speed track by 2013 2„„ A further 6,792 km of high-speed track by 2023„„ 4,707 km of new conventional track by 2023„„ A n additional 2,960 km of high-speed track and 956 km of conventional track in the period from 2023 to 2035The national economy has been growing and strengthening. Turkey is currently the 16th largesteconomy in the world and the sixth largest economy relative to the EU, according to GDP figures(at Purchasing Parity Power) in 2009. Growth is forecast at 6.7 per cent in the period 2011 to2018; GDP is around US$618 bn, with inflation at around 6.5 per cent.Turkey is being increasingly recognised as a country that is modernizing rapidly, growing acompetitive economy that is moving up the skills chain, and with increasing capability. Marketsectors that are expanding include electronics, white goods, automotive sectors, and defenceand aerospace. Privatization has been underway since 2002. Indeed, there is a suggestion in themarket that private capital will have a role to play in railways, certainly in the provision of ahigh-speed station in Ankara on a public private partnership (PPP) basis for which the tenderhas been published, on a build operate transfer (BOT) basis for high-speed lines, and possiblyalso in freight.Regarding the rail infrastructure, the new high-speed lines will be double-track and electrified, andwith line speeds of 250 kph. Rolling stock will be partially constructed or assembled within Turkey.A number of major cities have urban rail systems, Light Rapid Transit systems (LRT), tram ormetro of some kind. Extensions or new lines are much in demand and being planned. In Istanbulalone, there are plans to provide 118 km of new lines by 2018 and a further 276 km by 2023.Rail is seen as the preferred solution for freight, with new freight hubs planned around thecountry that will use the high-speed lines and the Marmary Crossing to carry freight overnight.The environmental issues associated with freight are well recognised in Turkey. Road congestionis an issue, especially at border crossings, with as much as 95 per cent of freight currently on theroads. There is an interest in growing railway freight in the market for domestic and internationalroutes. Turkey is keen to capitalise on its strategic geographical location. RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011 3
  6. 6. 2 Turkey is developing rapidly and has become a manufacturing force in Europe. This will further drive the demand for rail freight between Asia and Europe. (Turkey has borders with eight countries). The future may, therefore, see an end to the monopoly of Turkish State Railways’ (TCDD) railway operations, with cross-border freight and passenger ‘open access’ operators being allowed access to track. To facilitate change and to comply with EU directorates, TCDD is undergoing reform, separating infrastructure, passenger and freight operations in a far-reaching programme of modernisation. TCDD is currently a vertically-integrated railway, also owning in-house manufacturing facilities for rolling stock and track materials, as well as maintenance units. Ports and a rail ferry have been part of the portfolio but the former are now being privatised, and the latter upgraded to include a ferry terminal with Russian gauge to accommodate cross-border traffic. Historically, TCDD has owned a great deal of the maintenance and supply chain market. Many of these facilities have been acquired in partnership, with technology transferred in-house, for example, for track components, locomotives, wagons and passenger cars and their components. UK companies may see this as an opportunity. In a meeting with Academia regarding the rail sector, UKTI formed the impression that a step change is happening in the Turkish market and that this should be accompanied by a step change in technology, particularly with the demand for high-speed rail, and the drive to grow the freight market. There is an opportunity for companies to introduce services and technology into the market. The market is ready to work with international partners and there is desire to diversify these links. In the wider (political) picture, Turkey is a member of NATO and wishes to join the European Union (EU). Currently, both France and Germany appear to be resistant to Turkish accession (to the EU), but despite this, both have traditionally strong positions in the Turkish rail market, with more recent involvement from the Chinese, Japanese and Koreans. 2.1 Opportunities for UK Companies With the growing rail market and high levels of investment, there are likely to be opportunities for UK companies in Turkey. The Government is investing in the rail sector. There is investment in high-speed and urban rail which may make these areas a particular focus for UK companies, but freight and distribution are expanding too, and the drive for cross-border traffic may attract companies with skills in inter-operability and logistics. UK skills in PPP and (real estate) development may also contribute, as the market is changing and privatisation is progressing, creating a growing desire to maximise use of assets, and return on investments. Professional Services are likely to find opportunities in most of the previous areas. All new lines will be electrified, so capacity for electrification may be an opportunity dependent on project phasing. In supply chain rail areas, there has been extensive collaboration with overseas companies, so the sector has a great deal of experience in technology transfer. The desire for local content, if not production, remains strong. Performance will be admired, particularly for products or services that can facilitate reductions in costs and energy consumption. European standards are widely- recognised. Technology areas of interest include signalling and control, and rolling stock systems.4 RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011
  7. 7. 2It is vital for UK companies to take care and pay close attention when approaching the market.Sensitivity to the progress already made by local participants in advancing the rail sector isconsidered essential, as is local partnership or a local market presence. A long-term approach isalso required.Turkey is also recognised as having a very strong construction sector, capable of working in thirdmarkets, and there may well be opportunities for UK companies here in support of the majorTurkish players.Generally, major project work is advertised and is open to international competition. Internationalfunders and Development Banks may also be a source of opportunity for feasibility work fornew-build projects and upgrades.The UKTI team locally has good contacts and a strong market presence, and remains animportant resource to support UK industry in entering and developing the market.BRIEF HISTORY ANDMILESTONES3.1 Mainline 8RailwayThe first rail system in Turkey was constructed in 1856 by a UK company, connecting the portof Izmir with the Aydin. Railways were developed elsewhere around the country by other private 3companies, before being nationalised in 1927.The evolution of the railway system in Turkey is shown in table in 3.2 (Milestones) shows.The first urban rail service in Turkey dates back to 1875, when the “Tünel” opened. The Tünel isan underground funicular line of only 573 m that connects the Bosphorus. It rises 60 metres upto the busy Taksim square area, with trains operating every 3.5 minutes and the journey lastingabout 1.5 minutes.From Steam Trains to High Speed Service 1856 2010 RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011 5
  8. 8. 3 3.2 Milestones Year Milestone Comment 1856 The first railway from Izmir to Aydin Developed by a UK company 1924 4,000 km of track in operation Nationalisation began 1927 Ports added to rail portfolio 5,500 route km of track in operation 1950 Route km reaches 9,204 km 1953 Railway becomes a State Enterprise and 9,441 route km in operation TCDD is formed 1984 TCDD becomes a State Economic 10,263 route km in operation Institution 2003 Rail transport is opened to include private sector participation 2004 Six ports are offered for privatization 10,991 km of track in operation 2008 First high-speed line is constructed 2009 High-speed operations begin 2010 2.85 million passengers carried on high- speed lines Projected Milestones 2023 Network of 26,251 route km Adding 14,336 route km, of which 10,000 will be high-speed lines 2035 Further 1200 km of high speed lines Turkey has grown its rail network to around 11,000 route km (as at March 2011), and has a programme of expansion currently underway and with more planned. The intention is to extend the network by about 14,000 km by 2023, including 10,000 km of high-speed lines by 2023 and further track by 2035. There is a strong suggestion that some of the future expansion may draw in private capital in the form of BOT (Build Operate Transfer) developments. Concession times of 30 to 35 years were mentioned, and this approach could also be adopted for high-speed lines.6 RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011
  9. 9. 3Section 5 of this report covers mainline railways in detail.3.4 Urban TransportationTurkey is creating or extending urban transport in most, if not all, of its major cities to meet growingdemand, using a mix of modes, including road and rail. (It may properly be described as guidedsystems, as all forms of rail including monorail are under consideration). Buses and mini-bus servicesare usually private sector, whilst the metropolitan authorities are responsible for rail.Section 6 of this report examines urban transport in detail. RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011 7
  10. 10. 4 4 MINISTRY OF TRANSPORT AND COMMUNICATION Rail Structure and Organisation www.ubak.gov.tr/ This Ministry is responsible for all transport, air, roads, railways and ports in the structure shown below. Key elements of note in the rail sector are TCDD, the state rail organisation, and DLH, a turnkey contractor. TCDD is a vertically-integrated system, which also has extensive manufacturing and maintenance facilities. DLH can be considered a turnkey contractor that has evolved to include design, construction and project management capability, able to take on major projects such as the Marmary Crossing, a multi-billion dollar, complex project. Priorities and Projects The Ministry has defined three main targets for the rail sector which are to: 1. provide an attractive, substantial and affordable high-speed rail service 2. enhance existing track to allow increased speed of operation 3. streamline TCDD through restructuring and privatisation Organisation The current structure of the Ministry is shown Opposite.8 RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011
  11. 11. 4RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011 9
  12. 12. 4 4.1 DLH General Directorate of Ports Railways and Airports www.dlh.gov.tr DLH was established in 1934, initially as a public works body. A series of re-organisations followed, with activity extending to include ports, airports civil defence and railways, it became a General Directorate for the Ministry of Transportation and Communications in 1986. DLH is the state-owned entity whose role is to deliver major infrastructure projects, from planning and design through to project management and construction. It is involved in some of the biggest projects in Turkey. DLH is the responsible directorate for the implementation of projects and reports to the Ministry of Transportation. 4.2 Safety and Regulation Currently, the railway is self-regulating in terms of safety. However, the proposed structure to be adopted soon will include “DEKAK” which will be a separate railway accident investigation board, reporting directly to the Ministry of Transport and Communication, rather than TCDD. The proposed structure, which will probably be adopted following the next general elections in Turkey (at time of writing, June 2011), is shown in Section 5. 4.2.1 Statistics and Safety Data TCDD publishes an annual statistical report, including data relating to accidents, numbers of casualties and much more (see link below). A snapshot of the number of accidents, followed by passenger-km and freight tonnes-km is shown below for interest. www.tcdd.gov.tr/Upload/Files/ContentFiles/2010/istatistik/2004_2008.pdf 4.3 Projects A number of rail projects are in planning, but have not yet been released for construction. (Refer to the TCDD website for current information). The aim is to extend the network to over 26,550 km of track by adding more than 14,000 route km, by 2023, the centenary of the Republic. Included in this is 10,000 km of high-speed track. New track will be double-track electrified and it will use modern signalling.10 RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011
  13. 13. 4RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011 11
  14. 14. 4 4.4 Enhancing Logistics and Distribution Capability The Ministry is aware of the need to improve the logistics capability of Turkey to maintain competiveness and support economic growth. There is a desire to exploit Turkey’s strategic location as a bridge between Europe and Asia. Rail freight currently has a very modest share of all freight carried, at around five per cent. The country is keen to increase this as the sheer volume of trucks on the road is causing significant delays at Turkey’s border crossings on a daily basis, with queues that regularly reach 15 km long. Rail is seen as the desired solution for freight that wins on a number of fronts. It offers significant capacity, with a low carbon footprint. The potential to run freight services at night over the high- speed network and through the Marmary tunnel crossing are also desirable ways of adding capacity. To support the growth in rail freight and assist in attracting international traffic to the rail sector, Turkey’s logistical capability is in need of improvement. As such, a range of 16 hubs and logistics centres are being developed, four of which are already complete. The map below shows the detail. These, too, may offer opportunities for UK Industry. 4.5 Privatisation and Private Capital in Railways www.oib.gov.tr12 RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011
  15. 15. 4Both mainline and urban railways remain in public ownership for now, despite a programmeof privatisation that is underway in Turkey. This privatisation process is managed by OIB, theTurkish Government agency, and is covered in this report in Section 9. Currently, the impact ofprivatisation in the rail sector is limited to the privatisation of some ports under TCDD control.In future, there is a possibility of opening up the market to private capital and private operators inseveral ways:1. he new high-speed station planned for Ankara will be delivered on a PPP basis. After several T delays, a tender was issued, before being later withdrawn. At the time of writing, the timetable for the process has still not been finalised. If the PPP model is successful, the same approach may be used for further stations on new high-speed routes, so careful planning of this tender will bring benefits in future.2. he plan to enhance international freight may provide opportunities for UK companies in T operations.3. uild Operate Transfer (BOT) appears to be the favoured option for attracting private capital B into rail. Selected lines may be tendered on a BOT basis, with a proposed concession period of up to 30 or even 35 years. No process or policy has yet been adopted for such private sector engagement, but at the time of preparation of this report, BOT looks likely to be the preferred solution for the future.. RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011 13
  16. 16. 5 TCDD - THE STATE-OWNED MAINLINE RAILWAY COMPANY www.tcdd.gov.tr TCDD is the Turkish state-owned, vertically-integrated railway company. Headquartered in Ankara, it has seven regional directorates around the country and, in addition to the rail and maintenance operations, TCDD also has an extensive manufacturing capability in both rolling stock and track components. It is a part of the Ministry of Transport and Communications. In order to comply with European Legislation, a reorganisation of TCDD is imminent, most likely following the elections that are planned for June 2011. (chart as pubished including acronyms)14 RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011
  17. 17. 55.1 TCDD ActivitiesTCDD’s current activities are extensive and diverse, going beyond rail operations andmaintenance to include:„„ train operations„„ rail infrastructure„„ ownership and management of all stations„„ track construction„„ track maintenance„„ rolling stock maintenance„„ manufacturing units for rolling stock -- locomotives -- passenger cars -- freight wagons„„ factories -- ADF ve Ray -- Kaynak -- Afyon ve Siva Beton Travers -- Çamaf„„ four ports – (a further three have already been privatised)„„ shared ownership of manufacturing units -- Eurotem -- Izban -- VademsaDetail on most of these facilities can be found on the TCDD website. TCDD has or has had in thepast joint ventures or collaboration with Austrian, French, German and Korean partners.5.2 Physical DataA detailed report on physical conditions, including bridges, track curvature, tunnels, wagonresource, plant and equipment, as well as statistics covering TCDD operations can be found at:http://www.tcdd.gov.tr/Upload/Files/ContentFiles/2010/istatistik/2004_2008.pdf RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011 15
  18. 18. 5 5.2.1 Route Km and Detail Route km (2011) Volume / units Conventional 11,048 km Electrified 2,305 km Signalled 2,665 km Dual Track 403 km Triple Track 28 km Quadruple Track 9 km High-Speed Lines 867 km Total 11,915 km 5.2.2 Existing and Planned Route Map16 RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011
  19. 19. 55.2.3 Rolling Stock Type Active units High-Speed Train Sets 12 Diesel Locos 470 Electric Locos 52 DMUs 46 EMUs 91 Passenger Car 46 Freight Wagon (TCDD) 16,189 Freight Wagon (3rd party) 2,4865.2.4 Employment Category Personnel Interpretation Civil Servants Including Contracted Staff 16,089 White Collar Permanent and Temporary Staff 15,590 Blue Collar Total 31,6795.2.5 Market ShareAt the peak of its powers in the 1950’s, TCDD had significant market share, which has fallenconsiderably in modern times, following decades of relative under-investment compared to theroad sector. RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011 17
  20. 20. 5 5.2.6 Proposed Organisation The new organisation, expected to come into force later this year, will look as follows: This new structure will comply with European legislation regarding rail operations. 5.2.7 Lake Van – Rail Ferry Operations Ports Van Gölü Feribot Isletmeciligi Establishment is the part of TCDD that operates the train ferry service at Lake Van. Plans include investment in modern ferries to support freight distribution across and through Turkey.18 RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011
  21. 21. 5Lake Van Operations5.3 Budget Allocation and Priority ProjectsRailway in general and TCDD in particular, are enjoying an upturn in investment, followingdecades of under investment, certainly in comparison to roads. The investment is aimed atrecovering market share by providing much-improved services. In the passenger sector, growth isplanned in the high-speed and urban sector, whilst in freight Turkey is keen to support economicgrowth by improving rail and multi-modal freight services, logistics and distribution capability.This will extend to include the creation of an international, trans continental land-bridge forfreight, linking Europe to the Middle East and Asia to Europe.5.3.1 TCDD Annual Budget Evolution RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011 19
  22. 22. 5 5.3.2 Key Projects Railways are expanding in Turkey. The following projects are underway, with the extensions of the high-speed network constituting a key area: „„ expansion of high-speed rail „„ Marmaray project „„ rehabilitation of existing railway lines „„ modernisation of rolling stock and infrastructure „„ improved logistics and distribution, including multi-modal options „„ improvement of block train management „„ establishment of rail RD facilities. 5.4 High-Speed Operations The high-speed (HS) lines between Ankara and Eskeşhir commenced revenue operations on 13 March 2009. Around 2.85 million passengers used the service from its launch until end of December 2010. Since July 2010, the lines have operated 22 trips per day, carrying around 6,000 passengers every weekday and 8,000 at weekends. The tender for a new high-speed station required for Ankara has been issued on a PPP basis and this may well be a model for future high-speed stations, encouraging private capital into the sector. The tender process experienced some delays and had been re-issued without a specific time frame for closure at the time of preparing this report. This process may be a useful case study to determine how the market adopts the PPP process for future use. Siemens has stated that it would consider producing a “Velaro” type train in Turkey, adapted for local use, and capable of running at 400 kph. During the Eurasia Rail exhibition, there were reports that the technology transfer could open with 20 per cent local content, rising to 50 per cent or more in future. There may be other suitors seeking an investment in Turkey in this area.20 RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011
  23. 23. 55.5 TCDD Port OperationsTCDD has responsibility for four ports, with three (Mersin, Samsun and Bandirma) alreadyhaving been privatised. The privatisation process will continue, so the number of ports underTCDD control will diminish.The volumes passing through the TCDD ports are shown below for information. RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011 21
  24. 24. 5 5.5.1 Freight Transportation Potential TCDD is confident that the traditional and historic trade route between Asia and Europe can be revived and expanded using rail to exploit Turkey’s strategic location. It has analysed the market and believes there is a potential US$75 bn trade flow pa. The organisation wishes to offer a route to market for companies wishing to obtain a share of this. Existing Rail Border Crossings Location Borders / Connects to Kapikule Bulgaria and onward to Europe Uzunköprü Greece and beyond Kapıköy Iran and central Asian Markets Islahiye Syria and Iraq Nusaybin Syria and Iraq The intention is to improve the network and entice operators to use rail to deliver into the heart of markets in Europe. A great deal of work is needed to deliver such a service, including access and interoperability agreements with neighbouring countries. Access to CIS / Russian gauge (1,520 mm) is catered for by means of a Black Sea rail ferry, and gauge conversion facilities, where bogies can be changed. Investment to modernise and improve train ferry services is proposed.22 RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011
  25. 25. 5Existing International FreightThe charts below show the freight between Turkey and Europe, and Turkey and Asia. Theproportion of international freight is modest, whilst imports into Turkey from the Middle Easthave largest share of cross-border freight. These charts suggest the extent of activity required togrow international freight.International Freight Traffic Classification* RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011 23
  26. 26. 5 A press announcement during April 2010 reflected the desire of TCDD to extend Turkey’s reach as an international freight destination: “Turkey’s Independent Industrialists and Businessmen’s Association (MUSIAD) signed a co-operation agreement with the Lithuanian railways at the beginning of April 2010. MUSIAD conducts initiatives for the realisation of the Viking Project to connect Turkey and Middle Eastern countries with the Baltic countries. The agreement was signed by the Foreign Relations Commission of MUSIAD and the General Manager of the Lithuania Railroad. The Viking Project also involves the commercial connection between Lithuania-Belarus-Ukraine (Odessa) and Turkey (Samsun, Istanbul)-Syria-Iraq-Iran.”6 URBAN RAILWAYS Demand for urban transport is growing in Turkey, with its increasingly-congested cities. Rail- based solutions are recognised as delivering solutions in an environmentally-friendly manner, and there is a belief that investment in rail (in its many forms, including light and heavy rail commuter systems), will continue, certainly in the major cities that have sufficient traffic density to meet the economic criteria for rail. 6.1 Urban Transportation – Metropolitan Authority Urban transportation is generally the responsibility of the metropolitan authorities, which own and manage rail operations. However, bus services are generally privately-owned and run, including the ubiquitous mini bus services which are found in most cities.24 RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011
  27. 27. 66.2 UITPwww.uitp.org/regions/europe/turkey.cfmUITP, the International Association for Public Transport, has opened a liaison office in Turkeyto better serve its members there and maintain current awareness of industry trends in importantareas, such as finance.Contacts are listed on the UITP website:Enis Hemedoglu, UITP Turkey Office Manager, enis.hemedoglu@uitp.orgSibel Bahtiyar, UITP Turkey Office Assistant, sibel.bahtiyar@uitp.orgUITP Turkey Liaison OfficeTel: +90 212 569 5786Fax: +90 212 568 9956Ferhatpasa Metro Facilities EsenlerTR 34200 IstanbulTURKEY6.3 Metro Systems in DetailWhen researching this report, there was insufficient time to visit all of the metropolitanauthorities with planned or existing rail systems, though we did have very positive exchanges inboth Ankara and Istanbul. Detailed information is included in this report. Additional informationwas kindly provided by Ms Sibel Gursoy at Ulasim, the Istanbul metropolitan authority, and alist of cities with transportation authorities is included below, which may be useful for companiesaddressing the market. City System Adana Heavy Rail Ankara Heavy Rail Metro Light Rail Antalya Tramway Bursa Light Rail Eskişehir 2 x Lines Light Rail Istanbul Heavy Rail Light Rail Tramway Funicular Izmir Heavy Rail Konya Tramway Kayseri Tramway Samsun Light Rail RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011 25
  28. 28. 6 6.4 Adana http://www.adana.bel.tr Situated in southern Turkey, Adana has a light metro line. Construction began in 1992, with the first, mostly surface section finally opened in March 2009. The second phase, around 6 km (Akincilar Station-Cukurova University), is currently under construction and due to be ope rational during 2011. This will raise the daily passenger carrying capacity to 660,000. The website has more detail, including the strategic plan for 2010 – 2014 (in Turkish). www.adana.bel.tr/adanabeltr/data/pagetopic/63/stratejikplan-20102014.pdf 6.5 Ankara www.ankara.bel.tr/TasarimOgeleri/defaultEn.aspx The Turkish capital has some 3.5 million inhabitants in the metropolitan area, who are served by a mixture of rail systems: the commuter rail system delivered by TCDD, Ankaray a light railway system and the “Metro. Ankara is developing new projects and has a detailed masterplan called Urban Transportation Plan of Ankara for 2015. The first “Metro”, the M1 (Kizilay-Batikent) metro line (14.6 km) started operation in December 1997 with 108 cars. Ankaray, became operational in 1996 serving Dikimevi-Asti (8.5 km). Currently under construction, M2 Kizilay-Cayyolu will add 16.5 km to the metro system. M3 Batikent-Sincan to Torekent will be 15.3 km and M4 Tandogan-Kecioren will be 10.5 km. 6.5.1 Ankaray www.ankaray.com Built in 1996, this system runs mostly underground on an east to west axis and provides an interchange with bus services and the heavy metro in the city centre. An extension of around 12 km is planned. Full detail can be found on the website: http://www.ankaray.com.tr/component/content/article/6-genel-tanitim.html 6.5.2 Ankara Metro www.ankarametrosu.com.tr Ankara metro system covers 14.6 route km. It is a double-track, heavy rail system serving 12 stations, supported by a depot. It travels from southeast to northwest through the city centre. Ankara metro system operates with a 90 second headway, with maximum operating speeds of 80 kph. It has 108 cars (in 36 train sets), capable of carrying 70,000 passengers. This heavy rail system had significant UK input during construction. A link to an interactive map, with system detail and plans can be found here: www.ankarametrosu.com.tr/guzergahmap26 RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011
  29. 29. 66.5.3 Ankara Suburban Railways – TCDDTCDD operate a network of around 37 km, covering 28 stations across Ankara; Category Detail Name TCDD www.tcdd.gov.tr Description Suburban Heavy Rail Route km and Stations 37 km with 28 Stations 25 kV Hz Passengers 380 Million Passenger - km Rolling Stock 96 Cars Emu Rotem / Mitsui 26 Train Sets6.6 Antalywww.antray.com (website under construction)The Antray Light Rapid Transit (LRT) in Antaly opened in December 2009, with 11.1 km and 16stations (between Kepez and Meydan).6.7 Bursawww.burulas.com.trBursa, with a population of around 1.3 million, is situated in north-western Turkey, about 150km south of Istanbul and 400 km west of Ankara. Burulas is the Public Transport Authority andOperator. Bursa became famous as the first capital of the Ottoman Empire and the departure pointfor the Silk Road trading route.Bursaray is the light metro system for the city and will be extended, in time, to 50 route km intotal. The initial 17 km Y-shaped line opened in 2002, built by a Siemens-led consortium. Itcarries some 190,000 passengers daily. Burulas is the municipal company in charge of operationand maintenance of the system. Both branch lines are being extended6.7.1 Bursa Light Rail Receives International FundingIn March 2011, The European Bank for Reconstruction Development approved a 15-yearloan worth €50m towards construction of the second phase of the light rail network in Bursa.The loan is part of a financing package that also includes €100m from the European InvestmentBank. The funding will allow the operator to purchase 30 Flexity Swift cars from Bombardier toboost capacity on the expanding network.6.8 Denizliwww.denizli.gov.trThe municipality of Denizli is currently planning a railway system project to relieve congestionin the city. A rail transportation master plan has been produced, including some revisions to theroute and further feasibility work. Approval to proceed is anticipated soon. RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011 27
  30. 30. 6 6.9 Eskişehir www.estram.com.tr/eng/iletisim.php There is an operational Light Rapid Transit (LRT) system in the industrial city of Eskişehir, which the regional authority plans to extend. An urban development plan has been written to create a modern transportation infrastructure that will harmonize the city’s development needs with quality of life and environmental concerns. The LRT was built within 20 months by a Bombardier–Yapı Merkezi consortium in December 2004. It won the 2004 UITP Light Rail Award. Estram is the operator of the system, with a concession for 10 years. The current network covers 13.5 km, with two lines across the city, has a daily patronage of around 87,000 passengers. Feasibility studies have been completed to extend the system. 6.10 Gaziantep www.gazi-antep.com/index.php?option=com_contenttask=viewid=15Itemid= There is 9 km of Light Rapid Transit (LRT) in Gaziantep, with 13 stations under construction and plans for further extension by 2025. 6.11 Istanbul In Istanbul, public transport extends to include: bus and minibus; rail; a funicular railway; a modern tram and a heritage tram. New capacity is currently being added, with one high profile project being the Marmary Crossing. New and extended rail lines will be added to extend the systems when the (Marmary Crossing) tunnels are completed. Even with these new systems, demand will continue to grow in this bustling metropolis of at least 12 million people. Passenger Demand and Share in Istanbul Rail carries about 9.5 per cent of passenger traffic in Istanbul, though road is the dominant mode. Demand has risen substantially in the past five years, and the forecast is for continued growth.28 RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011
  31. 31. 66.11.1 Metropolitan Transport AuthorityIETT - İstanbul Elektrik Tramvay ve Tünel İşletmeleri Genel Müdürlüğühttp://www.iett.gov.trIETT is the General Directorate for the Electric Tramway and Tunnel for Istanbul. Whilst its keyresponsibility is for the bus services in Istanbul, it also operates the funicular Tünel systems and atram, which runs over 1.6 km and carries around 1,500 passengers per day.Transport and Affiliated OrganisationsThe following table shows the transport structure within Istanbul: RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011 29
  32. 32. 6 Systems in Use The following systems are in use in Istanbul, many of which will be extended: Name System Vehicles Stations Route km Passengers ‘000 M1 Aksaray - Airport 84 18 20 200 T1 Şişhane - AOS 124 10 14.5 170 M2 Zeytinburnu - Kabataş 61 23 14 260 T2 Güngören - Bağcılar 16 9 5.2 50 T3 Kadıköy - Moda 4 10 2.6 2 T4 Habibler - Topkapı 62 22 15.4 100 F1 Taksim - Kabataş 4 2 0.59 28 Funicular Cable Eyüp -Maçka 8 4 0.71 5 6.11.2 Istanbul Metro - Ulasim www.istanbul-ulasim.com.tr Ulasim is the operator of the Istanbul metro. It is a fully vertically-integrated rail system and covers all disciplines, from planning design and consultancy through to operations and maintenance. Indeed, Ulasim is also manufacturing passenger cars in-house. Operations Ulasim was founded in 1988 to maintain and develop suburban rail systems under the metropolitan authority of Istanbul. Its activities include: „„ operations -- metro -- light rail -- tram -- cable car „„ maintenance construction „„ measurement and training „„ engineering and consulting „„ research and development Ulasim is building an in-house passenger tram car and has developed its own control systems, demonstrating the reach and capability of the organisation.30 RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011
  33. 33. 6Planned Extensions:System Evolution / Future DevelopmentPlans to develop the metro are shown in the map below. The city is seeking to complete theseahead of the centenary celebration of the republic in 2023: Lines Length (km) Existing Lines Municipality-owned lines 72.8 Suburban lines (TCDD-owned lines) 72 Short–term Projects (under construction) - Urban rail lines (to be finished in 2012) 54.5 - Marmaray Tunnel (to be finished in 2012) 89.5 Mid–term Projects - (To be finished in 2018) 118.6 Long-term Projects - (To be finished in 2023) 276.6 TOTAL 612The System at a Glance„„ Founded: 1988„„ Seven lines„„ 73 km length„„ 98 stations„„ 815.000 passengers per day„„ 363 trains RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011 31
  34. 34. 6 Manufacturing / RD Capability The extent of the capability at Ulasim can be measured by the Domestic Tram Project, which was designed and produced by İstanbul Ulaşım in–house. The first prototype was produced in 1999, and to date, the vehicles produced have carried more than five million passengers. An updated version was produced in 2009. New Rolling Stock Demand Types of Cars Number of Cars Through to 2018 Metro 1,105 Light Rail 186 Tram 30 Monorail 26 Suburban 440 Between 2018 and 2023 Metro 943 Monorail 46 Suburban 148 TOTAL 2,924 6.11.3 Marmaray Crossing The Marmaray Crossing project a long-planned underwater Bosphorus rail crossing, begun in 1994. The project includes a 13.3 km Istanbul Strait crossing and the upgrade of 63 km of suburban lines to create a 76.3 km high-capacity line between Gebze and Halkali. The crossing is being constructed using a 1.8 km earthquake-proof immersed tube, assembled in 18 sections. This tube will be accessed by bored tunnels from Yenikapi on the European side and Sogutlucesme on the Asian side of Istanbul. The project has been delayed by the discovery of important heritage sites and around US$60 million of additional cost has been incurred investigating these and recovering a huge the important relics and antiquities discovered on the site. A case study is included in Appendix I at the end of this report Plans for the Marmaray Crossing include interchange stations with Istanbul metro and light rail, whilst the upgrade of the suburban lines requires a third track to be laid along most of the route to increase the line capacity up to 75,000 passengers per hour in each direction. Signalling is being upgraded to provide a service with two minutes’ headway. The 41 stations along the line will be refurbished and the platforms lengthened to 180 m. The rail tunnel will be used by both suburban and long-distance services, as well as freight. A decision on whether the line will be operated by TCDD or Ulasim is yet to be taken.32 RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011
  35. 35. 66.12 Izmirwww.izmirmetro.com.trIzmir is served by around 80 km of suburban rail, with 31 stations and operated by TCDD. Thereis also a metro, Izmir Metro AS, with 11.5 km of lines currently operational and further phasesunder construction:„„ Phase 2 5.4 km„„ Phase 3 7.5 km„„ Phase 4 3 km„„ Phase 5 11 kmThe metropolitan authority has a transportation master plan from 2010 that includes a further 50route km of metro. The website contains detail information, a brochure and presentation with fulltechnical detail and system description.6.13 Kayseriwww.kayseri.bel.trThe 17.5 km tramway Kayseray, became operational in August 2009, serving 28 stations with afurther three phases now at the planning stage.The General Manager of Kayseray is listed on the website above.6.14 Konyawww.konya.bel.trOperated by the municipality, the first tramline in this ancient city of the Central AnatolianRegion opened in 1992, following lengthy delays in both planning and construction. A secondline was added in 1995, with a third extension of 3.3 km completed in 2007. The system carriesmore than 30 million passengers each year.6.15 Samsunwww.samsun.bel.tr/proje-detay.asp?SayfaId=15Detailed information can be found on the website, covering the 17.2 km of the Light RapidTransit (LRT) system which serves 21 stations. RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011 33
  36. 36. 7 THE TURKISH CONTRACTING SECTOR Turkey has a very strong reputation and capability in the international construction and contracting sectors. Consequently, it may present opportunities to UK companies for co-operation and supply chain, both in Turkey and third markets. The chart below shows the evolution of the values accrued by Turkish contractors in overseas markets and the geographic spread.34 RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011
  37. 37. 7Turkish Contractors Associationwww.tmb.org.trThere is a Turkish Contractors Association, which recently completed an inward mission to theUK arranged by UKTI. The website is a good source of information.Secretary General Mr Haluk BϋykϋbasDeputy Secretary General Ms Çiğdem Çinar7.1 YapirayInsight into the rail market in Turkey was provided for this report by Yapiray, the Turkish railcontractor. Yapiray has considerable experience both in Turkey and in international markets. It canlist projects such as the high-speed rail line in Turkey and the Dubai Metro amongst its references. 8RAIL ASSOCIATIONS ANDACADEMIA IN TURKEYTurkey has several rail organisations.8.1 RAYDER (Association of Rail Transport Systems)http://www.rayder.org.trRayder is the organisation founded for the development of the railway sector in Turkey. Its boardis drawn from academia and industry.The organisation’s aims include improving skills and knowledge locally, as well as monitoring thelatest developments from around the world, with the intention of adopting these for use within Turkey.The development of the railways has been adopted as the most significant transport policy of thenew Turkish Government. Its intention is to grow the share of rail freight to 15 per cent by 2023.Plans are being laid to invest US$50 billion in high- speed lines, the Marmaray Crossing project,and metro and tramway projects across Turkey’s metropolitan cities. As such, Rayder sees itselfas having an increasing important role. RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011 35
  38. 38. 8 Key Points „„ ayder is an industry body. R „„ I t is preparing a railway industrial catalogue to promote the indigenous railway sector and industry. „„ R ayder has been participating in INNOTRANS, Berlin, drawing in other Turkish companies and raising the international profile of the sector. „„ T he organisation works in collaboration with international organisations, such as UITP (International Association of Public Transport) and UNIFE (The Association of the European Rail Industry). „„ R ayder is seeking to create a General Directorate of Urban Rail Systems within the Ministry of Transportation and support research and development for the production of metro and tramway vehicles locally. „„ W ork to establish a research and development centre for rail systems, and a test line in Eskişehir, is underway. „„ T he creation of a Department of Rail Systems in Turkey’s universities is also underway. „„ R ayder supports rail system departments in some recently-opened Industrial Vocational High Schools across Turkey. „„ I t aims to encourage further investment and participation in the sector from local and international players from the private sector, and is working to develop a new law that will extend the use of the private sector in rail. Rayder recognises the need to develop railway infrastructure, the supply chain sector and rolling stock. The upturn in the market has already attracted the attention of a number of local and European companies in this field. Rayder Contact Information Email: rayder@rayder.org.tr www.rayder.org.tr 8.2 Railway Transport Association (DTD) www.dtd.org.tr/ DTD is the Railway Operators Association, established in June 2006. Its members carry over 3.5 million tonne of freight pa and are seeking to grow rail’s share of freight in Turkey. DTD lobbies for improved railway transportation, railway infrastructure and the restructuring of the industry and law to align Turkey with European legislation. Therefore, the organisation is building international links to ensure that rail can take advantage of the growing freight market and potential for international traffic on rail.36 RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011
  39. 39. 88.3 AcademiaThere a number of universities and distinguished academics with links to the rail sector inTurkey, some of whom also hold positions in the rail associations and lend their expertise tobodies such as Tüvasas, the rolling stock constructor. Among the universities with links to the railsector are:„„ Işik University„„ Istanbul University (Faculty of Engineering)„„ Istanbul Technical University.While researching this report, we had the opportunity to take soundings from several of theseinstitutions who kindly offered their insights into the rail market.The impression we formed was that a step change is happening in the market and, consequently,this needs to be accompanied by a step change in technology, particularly with the demandfor high-speed rail, and the drive to grow the freight market. There is an opportunity for UKcompanies to introduce services and technology into the Turkish market. 9PRIVATISATION AND INWARDINVESTMENT INTO TURKEYwww.oib.gov.trThe Ministry responsible for privatisation, OIB, and the Ministry for Inward Investment intoTurkey report to the office of the Turkish Prime Minister. It is widely anticipated that privatecapital will have a place in Turkish railways in the future. The most likely scenario is that Turkeywill adopt public-private partnership (PPP) opportunities on a Build Operate Transfer (BOT)basis. PPP operations are probable, particularly on high-speed lines. PPP is already establishedand in use in Turkey, but not yet in the rail sector.The diverse nature of rail operator TCDD, with its ports and production units for rolling stockand components, means that these two Ministries are worth including in this report.9.1 Republic of Turkey Privatisation Administration 2011Further privatisation is underway in Turkey and may impact the railways in future, though noplans beyond privatisation of ports were discussed during this visit. Further privatisation of portscurrently owned and operated by TCDD is possible.The role for private capital is likely to be on BOT (Build Operate Transfer) projects, with 30-yearconcessions. These will probably include high-speed lines. RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011 37
  40. 40. 9 9.2 Republic of Turkey Prime Ministry Investment Support and Promotion Agency of Turkey (ISPAT) http://www.invest.gov.tr Ispat provides a one–stop shop for inward investment into Turkey. It has a presence around the world, including offices in the UK. It also serves as a reference point for international investors and as a point of contact for all institutions engaged in promoting and attracting investments at national, regional and local levels. Ispat operates like a private company. It works with its clients on a confidential basis and has the backing of all Turkish Governmental bodies. Its services, which are provided free-of-charge include: „„ market information and analyses „„ industry overviews and comprehensive sector reports „„ assessing conditions for investment „„ site selection „„ finding companies for potential partnerships and joint ventures „„ negotiating with relevant Government institutions „„ facilitating legal procedures and legislation issues, such as: -- establishing business operations -- incentive applications -- getting licenses -- work/residence permits. Ispat’s UK representative is: Ahmet Iplikci Republic of Turkey Prime Ministry Investment Support and Promotion Agency of Turkey 2nd Floor Berkeley Square House Berkeley Square London W1J 6BD Tel: 0 20 7887 1987 Fax: 0 20 7887 6001 Mob: 07540 359 215 Email: aiplikci@invest.gov.tr38 RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011
  41. 41. 10 EURASIA RAIL EXHIBITIONwww.eurasiarail.comThe first ever exhibition focussing exclusively on rail was held in Ankara in March 2011. Thenext Eurasia Rail exhibition will be held on 8 – 12 March 2012, this time in Istanbul and EurasiaRail is confident that it will be bigger and better than the launch event. Eurasia Rail reported thatthe 2011 show was a great success. It said: 10„„ A pproximately 117 companies participated, 60 per cent of which were international.„„ I ts aim is for 250 companies in 2012 - 78 are already confirmed.„„ T urkey is enjoying US$25 bn of investment in rail, so there is already significant interest in the show and the rail market.„„ T he freight sector will benefit from being able to run through the Marmary tunnel at night. Consequently, the next event will include a focus on infrastructure and logistics in order to develop this sector and international traffic.10.1 Show Review UKTI East MidlandsUKTI East Midlands and UKTI West Midlands had joint stand space at the Eurasia Railexhibition in 2011, taking 11 participating UK companies. UKTI delegates commented theexhibition was well-organised, and while the number of visitors was modest, their quality wasencouraging, with key decision-makers in attendance and accessible to delegates. For example,there were senior officials from a variety of divisions of TCDD, contractors, and specialistsuppliers to the industry. As well as gaining market intelligence, UK delegates identified anumber of potential partners at the event and all of them achieved their objectives.UKTI East Midlands and a significant proportion of the UK delegates are planning to return toTurkey for the next show in Istanbul in 2012.UKTI East Midlands Contact is Mr Richard Burchell richard.burchell@uktiem.co.uk RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011 39
  42. 42. 11 11 Doing Business in Turkey The UK has stated publically that Turkey is a market with significant potential for growth and is keen to develop mutual trading links. UKTI has a strong team in Turkey to support UK business, and can assist in areas such as market research and identifying key stakeholders, including partners, agents or distributors. UKTI has a number of reports available off-the-shelf, or you may be able to commission the Overseas Market Introduction Service (OMIS) to prepare a bespoke report specific for your needs. OMIS is a cost-effective means of obtaining credible information specific to your company. The UKTI Trade team in Turkey presented the following summary of the market. An overview of Turkey presented by Ispat (The Turkish Inward Investment Agency) is also included in this report. 11.1 UKTI, Ankara – Market Overview, March 2011 „„ T urkey is world’s 15th, and Europe’s sixth largest economy. It is forecast to be in world’s top 10 by 2050 „„ T he FDI Global Rankings in 2008 (UNCTAD) placed Turkey 20th and the UK fourth in the world „„ U K is Turkey’s second largest export market in Europe, after Germany. Turkey is UK’s eighth largest export market in Europe. Turkey’s major import markets are Russia and Germany. The UK ranks 19th Turkey Exports to UK 2008 2009 Change 2010 Jan-Nov £5.32bn £3.86bn -27% +18% UK Exports to Turkey 2008 2009 Change £3.47bn £2.26bn -35% +35% In the first 11 months of 2010, bilateral trade was £7.4bn, exceeding the total for the whole of 2009 by £1.25b Main Exports (a) K to Turkey - machinery and mechanical appliances; pharmaceuticals; vehicles; iron and U steel; plastic. (b) urkey to UK - clothing and textiles; electrical machinery and equipment; vehicles; footwear; T machinery and mechanical appliances. Turkey: A High-Growth Emerging Market (HGEM) Turkey is designated by HMG as one of the world’s High Growth Emerging Market of significant potential and strategic importance to the UK economy. It places Turkey alongside the BRIC countries (Brazil, Russia, India, China40 RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011
  43. 43. 11InvestmentUK investors in Turkey include: Tesco; Vodafone; British Foods; BP; Shell; Lloyds List; HSBC;International Power; and Mott MacDonald.Inward Investment into the UK from TurkeyThe number of Turkish investors supported by UKTI increased from five in 2008/9 to 13 in2009/10 (a 160 per cent increase). There are 70 Turkish-owned businesses in the UK registered atCompanies House, with an annual turnover of £1.1 billion.Turkey: Killer Facts„„ T urkey has the youngest and fastest growing population in Europe (with 450,000 graduates a year).„„ T he Istanbul economy alone is larger than 12 EU countries.„„ T urkey will be second fastest-growing country in the world by 2018 (according to the OECD).„„ T he Turkish economy will outstrip Canada, Spain and Italy by 2025.„„ T urkey has the world’s second largest construction and contracting sector.„„ I t is Europe’s number one TV manufacturer.„„ I t is Europe’s leading passenger coach manufacturer.„„ T urkey is the world’s third largest mega-yacht producer.11.2 ECGD – Market Summarywww.ecgd.gov.ukThe Export Credits Guarantee Department (ECGD), the UK’s official export credit agencyundertook a market review of Turkey in 2010. It offers a very positive view of the current marketconditions (although, as market conditions are subject to change, please refer to ECGD forupdates or any conditions that may apply to transactions).ECGD can provide cover in Turkey (for political risk, insurance and finance guarantees) subjectto its terms and conditions. The organisation can look at projects of around £50 million quiteeasily, but would be prepared to consider cases of a considerably higher value, subject to content.It will consider sovereign or corporate borrowers. RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011 41
  44. 44. I APPENDIX I Case Study – The Marmaray Crossing The demand for travel across Istanbul, including the Bosphorus, is huge, with a population of at least 12 million to cater for and in excess of two million visitors at any one time. Whilst Istanbul has existing metro and rail systems, a new commuter rail system is being developed which will travel, via two immersed tunnels, under the Bosphorus Strait. It will connect the European side of the Strait to the Asian side, adding capacity of 75,000 people per hour in each direction. Much of the project has already been awarded, although a re-tender is underway for the railway systems segment following the late withdrawal of the party originally contracted. Five groups are contesting the re-run, with Bechtel representing the UK interest. The broad details of the project are: Category Volume Commuter Rail System 77 km At Grade European Side 19.6 km At Grade Asian Side 43.4 km Bored Tunnel 12.2 km Immersed Tube Tunnel 1.4 km Maximum Depth of Immersed Tunnel 56 m New Stations 4 Total Stations 40 Capacity Existing Rail 10,000/hr New Rail 75,000/hr Design Speed 100 kph Operational Speed 45 kph Headway (Peak) 2 to 3 minutes Reduction in Travel Time 81 minutes (Gebze to Halkali) The contract provides for: „„ pgrade of existing track and stations to cater for enhanced passenger numbers u and freight services „„ N ew signalling and telecoms, including a new control centre „„ A utomatic Fare Collection system upgrade that will allow integrated ticketing with all modes, and provide an electronic wallet operation for modest value purchases „„ 4 4 train sets with five and 10-car configurations „„ s even transfer stations for intercity trains to enhance passenger service and mobility.42 RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011
  45. 45. IProject MapBenefitsThe project will help to relieve some of the pressure on Istanbul’s bridges and reduce carcongestion in the city, with a reduction in carbon emissions as a result. However, there is someconcern that, even with the rail system working at capacity, road traffic levels will not actuallydecline, as demand for transport remains high in and around Istanbul and new drivers will replacethose who switch to trains. Istanbul has about 73 per cent employment on the European side andaround 35 per cent of the population on the Asian side.One key benefit is the considerable reduction in journey times for the estimated one millioncommuters who will use the lines.The scheme is running behind schedule due to significant archaeological finds made duringconstruction, including seven whole shipwrecks and numerous artefacts around the constructionsites. Turkish heritage is protected in law by the Ministry for Culture. Further issues have beencaused by a contractor dropping out of a contract for systems, necessitating a re-tender, which isnow under evaluation (see below).FundingThe contract was originally split into three areas, with Japanese International CooperationAgency (JICA) funding for the tunnel construction and European Investment Bank funding forthe other two packages: Ref Element Detail Funds BC1 Bosphorus Crossing Immersed tube tunnels. JICA Bored tunnels on both sides. Construction of four new stations. CR1* Upgrade of Commuter Rail Improvement of existing track. EIB Addition of a third track – for commuter and freight. CEB Signalling and telecoms control centre. Fare collection systems. CR2 New Rolling Stock 44 train sets (10-car and five-car) EIB RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011 43
  46. 46. I *Due to the withdrawal of the contracted party, CR1 has been re-tendered and is now referred to as CR3. It is now funded by CEB, the Council of Europe Development Bank. The tender is due to be awarded mid-2011 and contenders include, Bechtel UK, two Italian consortia, one Chinese and one Spanish consortia. CR1 is now in litigation, the original winning bidder is being challenged on its withdrawal from the contract. BC1 (the Bosphorus Crossing) is being undertaken by a Turkish / Japanese consortium, whilst Hyundai / Rotem of Korea have won CR2, with some technology transfer that will allow local content. The Treasury of Turkey, under the Ministry of Finance, is responsible for arranging the financing of the Marmaray Crossing project. It also has responsibility for deciding the fare prices and the fare principles. Construction Team Avrasaya has been the consultant engineer to DLH since the beginning of the project. Avrasya consult is an international team of three partners from Turkey and Japan. The team is also assisted by local consultants from Turkey: „„ Oriental Consultants is the lead partner from Japan „„ Yüksel Proje Uluslarası A.Ş. is the local partner from Turkey „„ JARTS is the specialist partner from Japan. These three partners form the joint venture, which is in association with the following two Turkish companies: „„ Terzibaşıoğlu Müşavir Mühendislik Ltd. Şti. (TMM) „„ Yerbilimleri Etüd ve Müşavirlik Ltd. Şti (SIAL) Crossing Construction An immersed tunnel was chosen to avoid the excessive gradient that a bored tunnel would require. One hundred and eleven segments, each weighing 20,000 tonnes, were constructed nearby and floated into position. Tight control was required for sinking them into position, given the water flows and traffic in the Bosphorus area. Historical Discoveries and Impact on the Project The first underwater link across the Marmary was proposed in 1860. Since then, a series of schemes have been put forward until the current project was finally agreed and executed. Indeed, a tunnel excavation was found during the construction works believed to be about 1,700 years old. In addition, the artefacts found during excavation include important ancient ruins, burial grounds, an ancient harbour and seven ships that are virtually intact, including some laden with cargo, gold coins and numerous household items. The consequences to the project of the historical findings are that: „„ one high-speed rail link and one intercity station have been cancelled „„ the cost of the archaeological excavations is US$35 million „„ the cost of prolonging the contract is US$60 million „„ the total time lost is around 4.5 years.44 RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011
  47. 47. IFuture ConnectionsNew rail systems are planned to facilitate movement across the city on both European and Asiansides, with daily demand growing from around 1.1 m crossings in 2009 to 1.6 million.Seismic ConcernsIstanbul is in an earthquake zone, and measures have been taken to mitigate the impact of amajor earthquake (we understand that the tunnel has been designed to withstand an earthquake ofaround 7.5 on the richter scale.There is a major fault line 16 km from the project. The seismic history was profiled and a solutionprovided during the preparation phase:Environmental MitigationA major effort was made to ensure that the project was delivered with minimal impact on theenvironment. This included provision for major fish migrations from the Black Sea to theMarmary and vice versa. RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011 45
  48. 48. II APPENDIX II Case Study – High-Speed Rail Project The Ministry of Transport and Communications has pledged to construct a high-speed network around Turkey with the intention of reducing journey times, and creating an affordable and sustainable means of transport. The aim is to extend the network to 14,336 km of track, of which around 10,000 km will be high-speed, by 2023, the centenary of the Republic. All new high- speed lines will be double-track and electrified, and capable of running at 250 kph. Rolling stock will be part-supplied within Turkey. One example is the Ankara to Istanbul line. At 533 km long, the line, which is a double-track, electrified, and signalled rail system, will be available for operation at 250 kph. This will reduce the journey time from the current 6 and a half hours to three hours between Ankara and Istanbul. Growth in Market Share (Passenger) The busiest route in the country is the Ankara to Istanbul corridor. Rail’s share of passenger transport on this route is projected to increase from 10 per cent to 78 per cent on completion of the high-speed railway. The journey time will be significantly reduced when the line from Esenkent to Eskişehir is fully- opened, with the benefits of travelling at high speed from city centre to city centre. The journey time will fall from over 6.5 hours to 4 / 4.5 hours, and as such, it will be equivalent to the air route. When the project is connected to the Marmary Crossing, seamless passenger transportation will be provided between Europe and Asia, taking Turkey firmly into the modern age of the train, and enhancing the case for Turkey‘s accession to the EU. There will be social benefits, too, with positive impacts on economic, social and cultural life. Turkey will become the sixth country in Europe and eighth in the world to be operating high-speed trains. High-Speed Routes46 RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011
  49. 49. APPENDIX IIITCDD SubsidiariesTCDD, the state-owned mainline rail company is not only fully vertically-integrated, it also hasa diversified range of activities that include: manufacturing rolling stock and track components,track and rolling stock maintenance, port operations, and more.Wholly-owned Manufacturing Units IIIMap Showing TCDD Subsidiary Operations RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011 47
  50. 50. III III.1 Tülom sas – Locomotives www.tulomsas.com.tr Tülomsas, a wholly-owned subsidiary of TCDD, is the only locomotive supplier in Turkey. It has a long history in manufacturing and maintenance, reaching back to 1894. To date, the company has produced over 700 locomotives and 7,500 freight cars. The facility has a history of working in joint venture partnerships with leading international companies. It has a wide range of capabilities, including engines for defence equipment, such as tanks and vessels. In 2003, Tülomsaş made an agreement with USA-company General Motors (GM) for technology transfer. GM manufactured the first six of 89 units of DE 33,000 diesel electric mainline locomotives for TCDD. Forty-two of the remaining 89 locomotives were built by 2006, whilst the remaining 47 locomotives will be manufactured with 51 per cent local content. More recently, a joint venture with General Electric (GE Transportation) has allowed the local production and introduction of GE’s most technically-advanced engine, Powerhaul, a series of locomotives that are also aimed at export from Turkey to markets in Northern Africa and the Middle East. The new engine claims to save up to 9 per cent of fuel compared to other models. Locomotive Factory The locomotive factory is the largest plant in Tülomsas. It has extensive manufacturing capabilities for a number of types of rolling stock, ranging from 360 to 4,300 HP, with all the workshops and facilities required for loco manufacture. Capacity Category Capacity Units pa Locomotives 60 Railway Maintenance Cars 100 Bogie Freight Cars 500 Diesel Engines 100 Alternators 100 Traction Motors 400 Steel and Iron Castings 2,500 mt48 RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011

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