Presentation made by Özlem AYDIN SAKRAK, Turkish Treasury, at the 9th annual network meeting of Senior Infrastructure & PPP officials held at the OECD, Paris, on 1 March 2016

1. TURKISH EXPERIENCE
IN PUBLIC-PRIVATE PARTNERSHIPS
Özlem AYDIN ŞAKRAK
Senior Associate at PPP Department
Turkish Treasury
March 2016, Paris
Republic of Turkey
Undersecretariat of Treasury

2. Agenda
An Overview
PPP Market in Turkey
Major PPP Projects in the Pipeline
Strengths and Challenges
1

3. 3
An ambitious
objectives and
important
infrastructure gap
A long standing
experience in PPP
models
Crucial role of
private investment
in development
plans
Overview: TURKEY
(Source: Ministry of Development)
Share of the Investments in GDP (1998-2014)
2

4. $43
$72
In Operation
Contract Values in Billion $
Contract Values
(115 Billion $ in Total)
164
34
At construction
Number of Contracts
(198 in Total)
PPP Market in Turkey
3 *By November 2015 (Source: 2016 Annual Program)

5. Build
Operate
Transfer
98
Transfer of
Operating
Rights
78
Build
Lease
Transfer
18
Build
Operate
5
PPP Market in Turkey
4

6. PPP Market in Turkey
0
20
40
60
80
76
33
22 18 18 16 13
2 1
Number of Projects by Sector
5

7. Public Stakeholders in Turkey
7
MINISTRY OF
HEALTH
MINISTRY OF
CUSTOMS AND
TRADE
MINISTRY OF
TRANSPORT
IMPLEMENTING
INSTITUTIONS
TRANSPORT ENERGYCUSTOMSHEALTH
MINISTRY OF
ENERGY
UNDERSECRETARIAT
OF TREASURY
MINISTRY OF
DEVELOPMENT
MINISTRY OF
FINANCE
AUTHORISING
BODY
RELATED
INSTITUTIONS
HIGH PLANNING COUNCIL (HPC)
6

8. Credit Enhancement Tools
 Revenue Guarantees by procuring institutions
 Traffic guarantee
 Lease payment
 Conditional specific compensations
 Debt Assumption Commitment
 Exemption from VAT, stamp taxes and duties
7

9. A credit enhancement tool: Debt Assumption Commitment
In case of an early termination of the contract provided that
the project assets are taken over by the public administration
Limitations
 Only for foreign financing
 Partial debt assumption (Authority default & force
majeure: % 100, Company default: % 85)
 Only for BOT model and BLT models implemented with
general & special budget agencies
 A threshold for the investment amount
• for BOT projects > 1 billion TL
• for BLT projects > 500 million TL
 Subject to a budgetary limit – 3 billion $/annual (@ 2015)
8

10. Debt Assumption Commitment: Projects
Project
Debt
Assumption
Agreement
Date
Total Project
Cost
Loan
Eurasia Tunnel 11.12.2012 USD 1,2 Billion USD 960 Million
3rd Bosphorus Bridge 13.05.2014 USD 2,9 Billion USD 2,3 Billion
Gebze-İzmir
Motorway
05.06.2015 USD 6,3 Billion USD 5 Billion
Total USD 10,4 Billion USD 8,2 Billion
9

11. Eurasia Tunnel
► BOT model
► Connects the Asian and
European sides via a highway
tunnel going underneath the
seabed (only for light vehicles)
► Cost about USD 1.2 bln
► Loan: USD 960 mln
► Construction started in 2011
► Operation period 26 years
► Debt Assumption by Turkish
Treasury
10

12. Gebze-İzmir Motorway (incl. İzmit Bay Crossing)
► BOT model
► Over 400 kilometres of motorway – Connecting İstanbul, Bursa and
İzmir
► İzmit Bay Suspension Bridge – 4th longest in the world
► Samanlı Tunnel- longest motorway tunnel in Turkey
► Total Investment Amount: USD 6.3 bln / Loan: USD 5 bln
► Construction started- Operation period 15 years
► Treasury’s debt assumption
11

13. 3rd Bosphorus Bridge
► BOT model
► Total length 95 km including 3rd Bosphorus Crossing Bridge
► Total cost: USD 2.9 bln / Loan: USD 2.3 bln
► Construction period: 2 years and 6 months (started)
► Operation period: 7 years, 8 months and 20 days
► Approximately 1875 meter long 3rd Strait bridge, which has 2x 4 lanes of motorway
and 2x1 lanes of railway, is the most prominent part of the project.
► Debt Assumption by Turkish Treasury
12

14. Istanbul New Airport
 BOT model
 25 years operation period
 Contracted in 19 Nov. 2013
 Construction Cost: €10 bln
 4 phases, construction of
the initial phase is set to be
completed by the end of 2017
 150 million passengers
capacity
 Initial capacity 90 million
passenger per year
13

15. Health PPPs
 There are totally 34 PPP projects in the pipeline.
 For 18 of them, the projects’ contracts are signed.
 Total bed capacity is 27.911 for these 18 projects
 6 Projects has reached the financial close among these 18 Projects: Ankara
Etlik, Ankara Bilkent, Yozgat, Mersin, Adana, Isparta
 The SPV will supply and maintain the hospital facilities, while the provision
of medical care and services will remain the responsibility of the MoH
Source: Ministry of Health14

16. Strengths
Turkey’s strong economic fundamentals and dynamic
construction sector
A high level of support from the government for the
large PPP programme,
The existing successful PPP track record in certain
sectors
Credit enhancement tools
Comprehensive legal framework
15

17. There is room for improvement….
Effective appraisal and selection of projects
The institutional capacity of the related public bodies
Central administrative structure for the PPP Projects
Harmonization among PPP Laws
Effective monitoring and evaluation system
16

18. Thank you
Ozlem AYDIN SAKRAK
Senior Associate
Undersecretatiat of Turkish Treasury
ozlem,aydin@hazine.gov.tr