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Experience of in Public Private Partnerships for Infrastructure Development by Emre BASARAN State Planning Organization Motorways

Completed Projects  Service Areas on the existing motorways.  Göcek Tunnel Bidding Stage Bosphorus Highway Tunnel Planned Projects  – İzmir Motorway (including İzmit Bay Bridge) Göcek Tunnel Göcek Tunnel

 Project Cost is 14 million dollars.  L=926 m.  Existing highway is 6.1 km. long with 29 curves.  It was constructed in 2 years.  The duration of contract is 26 years.  There is no minimum traffic guarantee. Seaports (Completed Projects)

Seaport Type Duration of Contract Cost ($)

Çanakkale Kepez Port 29 years 14.600.000

Güllük Pier 6 years 6 months 16.642.266

Muğla Turgutreis Marina 22 years 6 months 22.000.000

Bodrum Pier 12 years 9.660.000 Seaports (Ongoing Projects)

Seaport Type Duration of Contract Cost ($) Didim Marina 22 years 6 months 12.000.000 Çeşme Marina 23 years 6 months 9.746.554 Sığacık Marina 23 years 6 months 5.296.960 Kaş Marina 23 years 6 months 11.607.480 Marina 23 years 6 months 5.302.474 Çanakkale Kepez Port Çanakkale Kepez Port

 The substructure of the port was completed through public procurement.  The Project Company constructed the superstructure of the port in exchange for the operation revenues.  The construction cost is 14.6 million dollars.  Duration of contract is 29 years.  The Project Company pays a concession fee to the government which is escalated at a constant annual rate. Airports

Capacity Duration of Start of Airport Terminal pass./yr Contract Operation Domestic& 15 years Esenboğa International 10.000.000 8 months October 13, 2006 1 International 5.000.000 9 years April 1, 1998 45 months Antalya 2 International 5.000.000 26 days April 17, 2005 Domestic& 77 months Dalaman International 5.000.000 20 days 2006 Adnan 6 years Menderes International 5.000.000 7 months N/A Atatürk International 20.000.000 N/A January 10, 2000 Esenboğa Airport Esenboğa Terminal

 The total cost of the project is 189 million Euros.  The construction took 24 months.  The project includes the construction of the terminal building, and a parking lot.  Duration of contract is 15 years and 8 months. Power Plants

BOT Projects (Natural Gas)

Project Cost Annual Contract Start of Million Capacity Generation Treasury Type Location Duration Operation $ MW kWH Guarantee

Natural Gas İstanbul 20 May 22, 1999 158,1 180 1.400.000.000 Yes

Natural Gas Tekirdağ 20 June 4, 1999 532,7 478 3.600.000.000 Yes

Natural Gas Tekirdağ 20 June 12, 1999 560,8 478,2 3.600.300.364 Yes

Natural Gas Sakarya 20 January 21, 1997 70,4 253,4 1.963.604.357 Yes Power Plants

BOT Projects (Natural Gas)

Project Cost Annual Contract Start of Million Capacity Generation Treasury Type Location Duration Operation $ MW kWH Guarantee

Natural Gas İstanbul 20 May 22, 1999 158,1 180 1.400.000.000 Yes

Natural Gas Tekirdağ 20 June 4, 1999 532,7 478 3.600.000.000 Yes

Natural Gas Tekirdağ 20 June 12, 1999 560,8 478,2 3.600.300.364 Yes

Natural Gas Sakarya 20 January 21, 1997 70,4 253,4 1.963.604.357 Yes Power Plants

BOT Projects (Hydro Power)

Project Cost Annual Contract Start of Million Capacity Generation Treasury Type Location Duration Operation $ MW kWH Guarantee

Hydro September (Run of river) Sivas 20 12, 1999 6,5 4,5 22.000.000 No

Hydro November (Run of river) Isparta 50 1, 1989 3,3 13 36.000.000 No

Hydro October 4, (dam) 15 2001 1776,4 672 2.500.000.000 Yes

Hydro January (Run of river) 20 12, 2001 2,3 2,2 11.750.000 No

Hydro December (Run of river) Afyon 15 1, 2000 3,3 3 16.260.000 No Power Plants BOT Projects (Hydro Power) Project Cost Annual Contract Start of Million Capacity Generation Treasury Type Location Duration Operation $ MW kWH Guarantee Hydro December 1, (Run of river) Muğla 15 1999 17,7 16 90.000.000 Yes Hydro March 1, (Run of river) Erzincan 20 2001 5,4 11,58 41.000.000 No Hydro June 18, (Run of river) Isparta 20 1998 3,4 2 12.200.000 No Hydro December (Run of river) 15 27, 1996 8,3 10 47.000.000 No Hydro November 7, (Run of river) Iğdır 20 2002 7,6 11,1 50.600.000 No Hydro March 7, (Run of river) Çanakkale 20 1998 5,9 10,6 47.191.400 Yes Power Plants BOT Projects (Hydro Power)

Project Annual Contract Start of Cost Capacity Generation Treasury Type Location Duration Operation Million $ MW kWH Guarantee

Hydro May 17, (Run of river) Düzce 20 1991 5,6 9,35 41.600.000 No

Hydro December (Run of river) 15 12, 1998 97,4 84 429.000.000 Yes

Hydro December (Run of river) 20 23, 1998 10,3 12,5 58.310.000 Yes

Hydro January 5, (Run of river) K.Maraş 15 1994 5,2 9,6 32.070.000 No

Hydro January (Run of river) K.Maraş 15 18, 2000 9,2 7 27.735.000 Yes Power Plants

BOT Projects (Wind)

Project Cost Annual Contract Start of Million Capacity Generation Treasury Type Location Duration Operation $ MW kWH Guarantee

November Wind İzmir 20,5 28, 1998 9 7,2 18.980.000 Yes July 25, Wind Çanakkale 20,5 2000 12 10,2 29.880.000 No Power Plants

O&M Contracts

Project Cost Annual Power Contract Start of Million Capacity Generation Treasury Plant Type Loctn. Duration Operation $ MW kWH Guarantee

Thermal June 30, Çayırhan (Coal) 20 2000 275 620 3.632.000.000 Yes

Hydro (Run of December Hazar river) Elazığ 22 9, 1996 11,1 29,8 56.000.000 No Power Plants

BO Projects

Annual Contract Start of Capacity Generation Treasury Type Location Duration Operation MW kWH Guarantee

Thermal (Coal) Hatay 16 June 1, 2003 1210 9.133.467.500 Yes January 1, Natural Gas Ankara 16 2003 770 6.167.133.687 Yes October 10, Natural Gas Sakarya 16 2002 770 6.424.023.125 Yes October 26, Natural Gas Kocaeli 16 2002 1540 12.885.766.625 Yes March 28, Natural Gas İzmir 16 2003 1520 12.682.715.000 Yes Dam and Hydropower Plant Birecik Dam and Hyrdopower Plant

 The sponsors offered to implement the project with BOT model in 1986.  The project and the contract were modified several times.  The project company was established in 1993. 30% of the shares were owned by a State Enterprise.  The project company borrowed 416 million DM of commercial credit and 1,266 million DM of export credit. The repayment of both credits were guaranteed by Treasury. Birecik Dam and Hyrdopower Plant

 The construction was initiated in 1996, and took five years.  Duration of contract is 15 years.  Every 6 months, the expected flow is determined by taking the average of the past 3 years. According to that flow, the amount of electricity to be produced is calculated.  The tariff is calculated by dividing the predetermined revenue of the company by the electricity produced. Customs Service

Border Gates İpsala Gürbulak in operation Habur Cilvegözü (under construction) Sarp in planning stage Kapıkule Gürbulak Border Gate Gürbulak Border Gate Gürbulak Border Gate

The gate and the customs office have been renovated by International Freight Companies Association in exchange for operation revenues. The duration of contract is 15 years. The construction cost is 7.5 million dollars. Yuvacık Dam 1st PPP Project in Turkey Purpose of Project Project History (1)

. General Directorate of State Water Works (SWW) completed its feasibility study about the water demand in Izmit Bay Area in 1983. .Yuvacik Dam is designed to provide 142 million cubic meter of water annually. .The construction was initiated in 1987. .A group of sponsor companies offered to implement the project with BOT in 1989. Project History (2)

.In 1995, a Project Company was established, the project was transferred to the Izmit Municipality, and the contract between the Municipality and the Project Company came into effect. .BOT Law was enacted in 1994 in order to encompass the project in legal aspects. .In 1999, the operation was initiated. Conditions of Contract

.The duration of contract is 15 years. .Take or Pay Contract: The Municipality pledged to pay for 142 million cubic meter of water each year whether it took delivery or not. .Treasury provided guarantee for the payment in case the municipality was not able to purchase. .The tariff would be determined by the Project Company each year regarding a certain level of revenue. Financial Arrangements

.The total cost is 890 million dollars. .757.7 million dollars of syndicated loan was borrowed by the Project Company. .The Municipality borrowed from the international loan market in order to contribute to the equity of the Project Company. The repayment of the loan was guaranteed by Treasury. Risk Allocation Risk Party Public Private Availability ✔ Completion (construction&design) ✔ ✔ Financial ✔ Force Majeure ✔ Demand ✔ Operating ✔ Revenue ✔ Technical (engineering&design) ✔ ✔ Project Results (1)

.Due to escalated cost of construction and devaluation of Turkish Lira, the unit price of water is set very high. .Istanbul Municipality and industrial organizations renounced consuming water of Yuvacik Dam due to high tariff. .Izmit Municipality was obliged to pay for the amount of water which was not completely delivered according to the off-take agreement. Project Results (2) .Izmit Municipality fell into financial difficulties. Treasury, the guarantor of the last resort, paid for the water which was not being consumed. .Since 1999, Treasury paid around 1.5 billion dollars to the Project Company in accordance with the off-take agreement. .Due the drought in the region, the dam cannot provide 142 million cubic meter of water annually. .The Municipality is seeking new resources. Lessons .A consistent, well-defined legal framework is a must. .Public Sector Comparator should be applied. .There must be a thorough definition of risks and well- defined scheme for risk allocation. .The bidding process should be transparent and competitive. .The institutional capacity must be at adequate level for managing PPP projects. Emre BAŞARAN

T.R. PRIME MINISTRY STATE PLANNING ORGANIZATION

Necatibey Cad. No: 108 06100 Yücetepe-ANKARA-TURKEY

Phone #: +90 312 294 63 03 Fax #: +90 312 294 63 78

[email protected]