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3nd PPP in Turkey Forum (26 Nov 2014)

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3nd PPP in Turkey Forum (26 Nov 2014)

  1. 1. PPP in Turkey Unlocking the Potential in Emerging Europe November 26, 2014 Mehmet Şimşek Minister of Finance 1
  2. 2. Outline Why PPP? PPP Implementations in Turkey Turkey’s Long Term Prospects 2
  3. 3. Why PPP? 3
  4. 4. Why PPP? Vast investment needs Fiscal Space Private sector creativity & dynamism 4
  5. 5. Vast Investment Needs Transportation Energy Education Healthcare Defense Housing 5
  6. 6. BudgetDeficit-to-GD(%,2014) Source: IMF, OECD, Ministry of Development, Treasury 3.9 3.0 2.1 0.8 0.5 1 1.5 2 2.5 3 3.5 4 4.5 OECD EU-28 EMs TURKEY Maastricht Criteria: 3% Debt-to-GDP(%,2014) 111.1 89.1 40.1 33.1 20 30 40 50 60 70 80 90 100 110 120 OECD EU-28 EMs TURKEY Maastricht Criteria: 60% Our Fiscal Position is Supportive, but
  7. 7. …Fiscal Space has its limits Public investment is limited by budgetary resources • Raise taxes • Cut spending elsewhere • Borrowing Or limited by a politically painful set of options 7
  8. 8. Cash flow vs. Net Present Value 8 Source: Queyranne , M., 2014, “Managing Fiscal Risks from Public-Private Partnerships (PPPs) “, IMF
  9. 9. Private Sector Creativity & Dynamism Private financing provided up front Competition and well-designed metrics Creative design, construction, operation, etc. 9
  10. 10. PPP Implementations in Turkey 10
  11. 11. PPP Implementations in Turkey Build-Operate-Transfer • Energy • Airports • Ports Transfer of Operating Rights • Energy (HEPP) • Highways • The Bridge • Ports Build-Operate • Energy Build-Lease-Transfer • Healthcare 11
  12. 12. PPP Implementations in Turkey 12 *In 2014 prices
  13. 13. PPP Implementations in Turkey: by $ Value 13 Source: 2015 Annual Program *In 2014 prices Projects Project Value* Energy $21.5 billion Airports $56.6 billion Motorways $11.5 billion Harbor $2.0 billion Marina $1.6 billion Healthcare Facilities $6.8 billion Industrial Facilities $1.3 billion Bordergate $0.4 billion Railway $0.2 billion Total $102 billion
  14. 14. PPP Implementations in Turkey: by Type 14Source: 2015 Annual Program 98 BOT (Build-Operate-Transfer) 69 TOOR (Transfer of Operating Rights) 11 BLT (Build-Lease-Transfer) 5 BT (Build-Transfer)
  15. 15. PPP Implementations in Turkey: by Sector 15Source: 2015 Annual Program 73 Energy 29 Highways 21 Ports 18 Airports 15 Marinas 11 Healthcare
  16. 16. PPP Implementations in Turkey: Risk Management Good Projects Good Institutions Good Laws & Regulations Good Budgeting, Accounting & Reporting 16
  17. 17. PPP Implementations in Turkey: Increasing Transparency We have almost finalised the process of harmonising our accounting records with the international standards PPP investments will be monitored in financial statements to be presented as commitments and assets 17
  18. 18. Energy 18
  19. 19. High Dependence on Energy Imports 74% Total Energy 92% Oil 98% Natural-Gas 19
  20. 20. Source: TURKSTAT, Bloomberg Energy Import Bill (Brent,$pbl) EnergyImports(Bn$) 20
  21. 21. Current Account Deficit Source: Central Bank of Turkey (12MonthRolling,USDbn) 21
  22. 22. 22 • Current Installed Capacity by 101% • Production of Electricity by 85% • Renewable Energy in Current Installed Capacity by 108% • Hydroelectric Installed Capacity by 82% • Wind Installed Capacity for 145 times • Geothermal Installed Capacity for 16 times • Natural Gas Pipeline Network for 5 times We have increased Energy
  23. 23. Total Electricity Generation Capacity 23Source: TEIAS (Turkish Electricity Transmission Company) Total electricity generation capacity increased rapidly after 1978
  24. 24. PPP in Energy Sector Thermal Power Plants Hydro-Electric Power Plants Electricity Distribution Companies 24
  25. 25. PPP in Electricity Generation 25 Project Approximate Capacity (MW) Afşin-Elbistan (Lignite) 8,000 Konya- Karapınar (Lignite) 6,000 Thrace (Lignite) 2,000 Kahramanmaraş-Elbistan (Lignite) 1,250 Nuclear (Sinop+Other) 10,000 Total 27,250
  26. 26. Building Nuclear Capacity Akkuyu: with Russia Sinop with a Japanese-French consortium Working on a 3rd plant 26
  27. 27. Privatization: Electricity Sector Distribution of networks : $12,7 bn Thermal power plants • 2,213 MW privatized • 8,000 MW in privatization portfolio, incl. powerplants in tender process 27
  28. 28. Privatization: Thermal Power Plants Kemerkoy Yenikoy Çatalağzı Yatağan 28
  29. 29. Privatization: Ports Kemerköy Kalamış Derince Ports 29
  30. 30. Transportation 30
  31. 31. Turkey: Investment in Transportation 2003-12: $75 billion 2013-23: $350 billion 31 Intensity of highway, motorway and railway networks in Turkey is about 1/5th of that in EU
  32. 32. Infrastructure Fuels the Economy Infrastructure development has the potential to* • Promote growth • Increase equity • Reduce poverty 1% increase in road network may increase productivity by 0.5ppt** 32 * Calderon and Serven 2010. ** Infrastructure Fedderke and Kaya (2013)
  33. 33. January 2003 1.714 Km Total of Motorways 4.387 Km Total of State and Provincial Dual Carriageways 6.101 Km Total October 2014 2.244 Km Total of Motorways 21.278 Km Total of State and Provincial Dual Carriageways 23.522 Km Total Highway Network Source: Ministry of Transport 33
  34. 34. Target for 2015 26,500 km Target for 2023 36,839 km Construction of Dual Carriageways 34
  35. 35. İSTANBUL EDİRNE ESKİŞEHİR Polatlı ANKARA KONYA İZMİR SİVAS AFYONKARHİSAR KAYSERİ BURSA ERZİNCAN ERZURUM KARS MERSİN ADANA DİYARBAKIR ELAZIĞ MALATYA ZONGULDAK SAMSUN Bandırma VAN MUŞ BİLECİK ÇANKIRI KIRIKKALE TEKİRDAĞ İZMİT BALIKESİR AYDIN DENİZLİ BURDUR ISPARTA UŞAK MANİSA KARAMAN NİĞDE OSMANİYE K.MARAŞ AMASYA BATMAN MARDİN Yerköy KARABÜK Yenişehir 405 km 212 km 533 km 624 km 105 km Completed (888 km) Under Construction (1796 km) Bidding Phase (454 km) Project Phase (354 km) GAZİANTEP Çobanbey 35 High Speed Railway Projects
  36. 36. Future Railways Investments By 2023 $ 45 billion worth of investment 10,000 km of new high speed railway network 4,000 km of new conventional line 36
  37. 37. • # of airports reached to 53 from 26 in 2002 • The ratio of airports with PPP , in domestic passengers reached 71% while passengers flying abroad reached 97% -in 2013. The 3rd Airport in Istanbul • 150 million passengers An area of 90 million m2 Construction Cost: €10 billion Rent (25 Years): €22.2 billion 37 PPP in Aviation
  38. 38. PPP in Aviation Zafer Airport Adnan Menderes Airport International Terminal 38 Çukurova Airport Antalya Airport International Terminal • Number of Contracted Projects = 17 • 11 BOT projects • 6 transfer of operating rights • Total Investment Value = $15.0 billion • Total ToR value = $28.9 billion
  39. 39. Projects of the Century - Marmaray Completed 39
  40. 40. Projects of the Century - Under Construction Tube Tunnel 3rd Bridge Izmit Gulf Transit Istanbul-İzmir Highway High-Speed Train through Ankara-Bursa-Istanbul 40
  41. 41. Projects of the Century – Channel Istanbul Planned 41
  42. 42. PPP in Ports Dalaman Marina Datça Marina Gazipaşa Marina Muğla-Ören Marina Kumkuyu Marina Karasu Port Project Projects under Construction 42
  43. 43. Healthcare 43
  44. 44. Healthcare: Targets Increase the number of healthcare facilities Enhance the quality of the healthcare services Apply state-of-the-art technologies in the hospital management 44
  45. 45. Healthcare Expenditures Source: Ministry of Finance 45
  46. 46. Healthcare Indicators Source: The Ministry of Health 46 (Years) 72 77 70 72 74 76 78 2002 2013 31.5 7,8 6.4 1.5 0 1 2 3 4 5 6 7 0 5 10 15 20 25 30 35 2002 2013 Infant Mortality Rate (Left Axis) Maternal Mortality Rate (Right Axis) Infant and Maternal Mortality Rate (perthousand) (pertenthousand) Life Expectancy At Birth
  47. 47. Healthcare Indicators Source: TURKSTAT 47
  48. 48. Tax Incentives for Healthcare Exports 18% VAT down to 8% 50% tax relief on CIT & PIT for exports in healthcare services PIT and CIT exemption for 5 years on proceeds gained from operating rehabilitation centers Regional Investment Incentives 48
  49. 49. PPP in Healthcare 49 Projects in Funding Phase • Kayseri • Ankara Etlik • Ankara Bilkent • İkitelli • Elazığ • Yozgat • Manisa • Adana • Mersin • Gaziantep • National Public Health Agency Projects in Tendering & Contract Phases • Isparta • Kocaeli • Eskişehir • Bursa • Konya Karatay • İzmir Bayraklı • İstanbul Bakırköy • İstanbul Üsküdar Projects worth almost $6bn with a 34 thousand bad capacity
  50. 50. Education 50
  51. 51. Ehnancing Human Capital Stock 51
  52. 52. 9.4 18.5 8 10 12 14 16 18 2002 2015 Source: Ministry of Finance Share of Education Budget% 52
  53. 53. 53Source: OECD 76 74 47 51 38 46 30 35 40 45 50 55 60 65 70 75 80 Science Math 2006 2009 2012 Enhancing Human Capital Stock: PISA Results, Gap b/w Turkey & OECD
  54. 54. Gross Schooling Rates 11.7 96.5 80.8 35.838.0 110.4 103.3 97.1 10 30 50 70 90 110 130 Preschool (age of 4-5) Primary School Secondary School Higher Education 2002-03 2013-14 Source: Ministry of Development * Decrease in 2013-14 preschool ratio (in comprasion with 2012-13) is due to the change in the method of calculation.
  55. 55. Educational Investments Over the last 12 years, we • opened 221.572 new classrooms • appointed 457.000 new teachers • distributed 1.9bn books free of charge Kaynak: MEB
  56. 56. Urban Renewal 56
  57. 57. Urban Renewal 253 thousand houses are now subject to urban renewal 565 thousand new houses have been built over the past 10 years 57
  58. 58. Strong Long-Term Prospects 58
  59. 59. Determinants of Long-Term Growth Quality of Institutions Demographics Productivity 59
  60. 60. Improving Quality of Institutions Corruption Perception: 2013: 53rd in 177 2002: 65th in 102 Ease of Doing Business: 2014: 55th in 185 2006: 84th in 175 Global Competitiveness: 2014: 45th in 144 2005: 71st in 117 Source: WB, WEF, Transparency International 60
  61. 61. Improving Macroeconomic Performance Improving Quality of Institutions Enhancing Human Capital Stock Improving Infrastructure Increasing Access & Quality of Health Services Enhancing Competition Increasing Labor Market Flexibility Deepening Capital Markets Investing in Local & Renewable Energy Enhancing Technological Readiness & Innovation Combatting Shadow Economy Narrowing Regional Development Gaps 61 Priorities & Reform Agenda to Boost Productivity
  62. 62. Favorable Demographics Source: Eurostat Shareof15-24yearsoldinTotalPop.(%) 16.8 7 9 11 13 15 17 19 21 Andorra Italy Greece Spain Portugal Germany Slovenia Ireland Bulgaria Luxembourg Switzerland Croatia Czech Republic Austria Liechtenstein Serbia Hungary Netherlands Finland France Denmark United Kingdom Norway Sweden Estonia Ukraine Malta Poland Latvia Slovakia Montenegro Lithuania Iceland Macedonia Georgia Turkey Moldova Azerbaijan 62
  63. 63. GDP per Capita Source: TURKSTAT, Medium-Term Program,PwC 2002 2050 2002 $ 3,492 2013 $10,807 2023 $ 25,000 2050 $ 50,000 63
  64. 64. GDP Source: TURKSTAT, Medium-Term Program,PwC 2002 2050 2002 $ 230 billion 2050 $ 5 trillion 2013 $ 822 billion 2023 $ 2 trillion 64
  65. 65. AnnualAverageGrowthRate(%,2001-11) Growth Rate of Working-Age Population Source: OECD, Eurostat, TURKSTAT 65 2.0 1.0 0.7 0.3 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 Turkey USA OECD EU-27
  66. 66. THANK YOU… 66
  • GarshasbKhazaeni

    Jan. 25, 2018
  • abdulkadiralici1

    May. 30, 2015
  • SenolVatansever

    Apr. 19, 2015

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