A Milestone Project: Istanbul Strait Road Tube Crossing
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TURKISH PPP EXPERIENCE And A Milestone Project: Istanbul Strait Road Tube Crossing Emre AYKAR President – CICA (Confederation of International Contractors’ Association), Vice President – TCA (Turkish Contractors’ Association) Partner, Member of the Board – Yapı Merkezi September 2, 2015 – Kuwait City Turkish PPP Experience Contents 1. A General Outlook to Turkish PPP Experience with Reference to Major Ongoing PPP Projects 2. Presentation of Istanbul Strait Road Tube Crossing (The Eurasia Tunnel) Project 3. Final Remarks September 2, 2015 – Kuwait City Main Idea of the Presentation How to transform a desirable project on a government wish list to an attractive investment opportunity for potential private sector partner? September 2, 2015 – Kuwait City A General Outlook to Turkish PPP Experience with Reference to Major Ongoing PPP Projects September 2, 2015 – Kuwait City A General Outlook to Turkish PPP Experience Macroeconomic Outlook of Turkey in 2014 Population 76,9 Mil. Annual Pop. Growth 1,3% GDP USD 800 Bil. GDP Growth Rate 2,9% GDP Per Capita USD 10.404 Unemployment Rate 9,48% Inflation Rate 8,17% Exports USD 157,6 Bil. Imports USD 242,2 Bil. Current Account (% of GDP) -5,7% Public Debt (% of GDP) 33,1% Foreign Direct Investment USD 12,5 Bil. Number of Tourists 37 Mil. September 2, 2015 – Kuwait City A General Outlook to Turkish PPP Experience Vast Investment Needs Transportation Energy Education Healthcare Defense Housing September 2, 2015 – Kuwait City A General Outlook to Turkish PPP Experience GDP Growth and GDP Per Capita in Turkey GDP Growth and GDP per capita in Turkey 10,00 9,20 12.000 8,80 8,40 10.822 8,00 10.444 10.428 10.459 10.404 6,90 10.003 10.000 9.247 6,00 4,70 8.561 4,20 8.000 4,00 7.597 7.036 2,90 2,10 2,00 6.000 0,70 - ($) GDP PER CAPITA GDP GROWTH RATE (%) RATE GDP GROWTH 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 4.000 -2,00 2.000 -4,00 -4,80 -6,00 - YEARS GDP Growth Rate (%) GDP Per Capita ($) September 2, 2015 – Kuwait City A General Outlook to Turkish PPP Experience Turkey’s Fiscal Position is Supportive 4,5 120 111,1 4 3,9 100 3,5 89,1 3 Maastricht Criteria: 3% 3 80 2,5 Maastricht Criteria: 60% 2,1 60 GDP GDP (%, 2014) 2 - to - 1,5 Debt 40,1 40 Budget Deficit BudgetDeficit GDP to (%, 2014) 33,1 1 0,8 20 0,5 0 OECD EU -28 Emerging Markets Turkey 0 OECD EU -28 Emerging Markets Turkey September 2, 2015 – Kuwait City A General Outlook to Turkish PPP Experience But Fiscal Space Has Its Limits • Public investment is limited by budgetary resources • Or limited by a politically painful set of options: Raise taxes Cut Spending Borrowing September 2, 2015 – Kuwait City A General Outlook to Turkish PPP Experience Turkish Government Has a Positive Approach for PPP’s • Financial Benefits Substantial Increase in FDI levels Efficient utilization of International Bank and Capital Markets • Macroeconomical Benefits Creating new focused sectors /higher employment and new brand names • Central Budget Benefits Easing the financial burden in central budget (Off-balance sheet) Thus improving sovereign debt and credit ratings • Fair share / usage of infrastructures Projects are funded / paid for by the real end-users • Feasibility / Project Realization Benefits The Government can focus, assign and direct funds to other more social projects No cost overruns / No time overruns / higher service life quality) September 2, 2015 – Kuwait City A General Outlook to Turkish PPP Experience PPP Implementation in Turkey PPP Model Sectors Involved Build-Operate-Transfer Energy, Airports, Ports Transfer of Operating Rights Energy (HEPP), Highways, Bridges, Ports Build-Lease-Transfer Healthcare Build-Operate (At the begining Energy years of PPP Implementation) September 2, 2015 – Kuwait City A General Outlook to Turkish PPP Experience PPP Implementation in Turkey Project in Operation Project in Financial Total Close/Construction Project Number 153 30 183 Project Value USD 40 bln USD 62 bln USD 102 bln Some of the Main PPP Types Qty. Sectors Involved Build-Operate-Transfer 98 Energy, Airports, Ports Transfer of Operating Rights 69 Energy (HEPP), Highways, Bridges, Ports Build-Lease-Transfer 11 Healthcare Other 5 Various September 2, 2015 – Kuwait City A General Outlook to Turkish PPP Experience PPP Implementation in Turkey Projects Project Value Energy USD 21.5 Bil. Airports USD 56.6 Bil. Motorways USD 11.5 Bil. Harbor USD 2.0 Bil. Marina USD 1.6 Bil. Healthcare Facilities USD 6.8 Bil. Industrial Facilities USD 1.3 Bil. Bordergate USD 0.4 Bil. Railway USD 0.2 Bil Total USD 102 Bil. September 2, 2015 – Kuwait City A General Outlook to Turkish PPP Experience The Most Succesful PPP Implementation by Sector: Aviation • The number of airports in 2002 was 26. In 2013 this number reached 53 • Out of the 27 newly-built airports, 17 are currently involved in a PPP scheme • 11 of these airports’ are being realized under a BOT structure and another 6 airports’ operating rights are transferred to Private Sector. 2013 • In 2013, out of the total passengers travelling to domestic destinations 71% travelled through airports operated by Private sector under PPP schemes. The same ratio is 97% for passengers flying international destinations September 2, 2015 – Kuwait City A General Outlook to Turkish PPP Experience Major Ongoing PPP Projects in Turkey The 3rd Bosphorus Bridge and the Northern Marmara Motorway Project Istanbul 3rd Airport Gebze-Orhangazi-İzmir Motorway Project (Incl. Izmit Bay Crossing and Approach Roads) Bilkent Integrated Health Campus Project September 2, 2015 – Kuwait City A General Outlook to Turkish PPP Experience The 3rd Bosphorus Bridge • Client: General Directorate of Highways • Investors: IC İçtaş – Astaldi Consortium • Scope: Construction of the 3rd Bosphorus Bridge (1,408m) and 115km motorway. The bridge will have 8 lanes of motorway and 2 lanes of railway at the same level September 2, 2015 – Kuwait City A General Outlook to Turkish PPP Experience The 3rd Bosphorus Bridge • Total Investment Cost: USD 2,5bln • Construction Period: 3 Years • Operation Period: 7 Years and 2 Months o Minimum Revenue Guarantee o Freight Transportation (Rail + Road) will be diverted out of the city limits o To be the longest spanning suspension bridge in the world that has a rail system on it September 2, 2015 – Kuwait City A General Outlook to Turkish PPP Experience Istanbul 3rd Airport • Client: Ministry of Transport, Maritime and Communications • Investors: Cengiz-Kolin-Limak-MAPA-Kalyon Consortium • Scope: Project total area of 76,500,000m2 (6 runways, 6 taxiways, high- speed and connection taxiways, Air traffic, Communications and meteorology systems, other service buildings and systems) September 2, 2015 – Kuwait City A General Outlook to Turkish PPP Experience Istanbul 3rd Airport • Total Investment Cost: EUR 9 bln • Contract Value: EUR 22 bln (excl. VAT) • Construction Period: 5 Years • Operation Period: 25 Years Notes: o The project is to be completed in several phases o At completion the airport’s capacity will be sufficient to service 150,000,000 passengers per year o Istanbul to become a regional and international hub for air passenger traffic o PPP structure is based on many succesfully completed airport concessions in Turkey’s past. September 2, 2015 – Kuwait City A General Outlook to Turkish PPP Experience Gebze - Orhangazi - Izmir Highway • Client: General Directorate of Highways • Investors: Nurol-Özaltın-Makyol-Astaldi- Göçay Joint Venture • Scope: The project has total 427km length consisting of 384km motorway and 43km connection roads; Including a suspension bridge (İzmit Bay Crossing Bridge) of about 2,6km in length September 2, 2015 – Kuwait City A General Outlook toTurkish PPP Experince Gebze - Orhangazi - Izmir Highway • Total Investment Cost: EUR 10bln • Construction Period: 7 Years • Operation Period: 15 Years 4 Months • Notes: o The project will reduce travel time from Istanbul to İzmir, two of the main economic centers in Turkey, from 10 hours to 4 hours o The area across which the project stretches has one third of Turkey’s population and includes the seven most industrialized cities contributing to 45% of GDP September 2, 2015 – Kuwait City A General Outlook toTurkish PPP Experince Bilkent Integrated Health Campus Client: General Directorate of Health Investments Investors: IC İçtaş – Dia Holding fzco Joint Venture Scope: To design, build, finance, maintain and transfer a hospital with a capacity of 3,804 beds. The total area is approx. 1,2M sqm. The project company will provide the facilities management services and other clinical and non-clinical support services over the course of the operating period. September 2, 2015 – Kuwait City A General Outlook toTurkish PPP Experince Bilkent Integrated Health Campus • Total Investment Cost: USD 850M • Construction Period: 42 Months • Operation Period: 25 Years • Notes: – Renumeration in availability payments – Strong support from Multilateral Banks and International Finance Institutions September 2, 2015 – Kuwait City Presentation of a Milestone Project: Istanbul Strait Road Tube Crossing (The Eurasia Tunnel) September 2, 2015 – Kuwait City Eurasia Tunnel Location September 2, 2015 – Kuwait City Eurasia Tunnel Current Traffic Situation on the Strait Crossings (Bosphorus Bridges) Bosphorus Bridge - (1st Bridge) Fatih Sultan Mehmet Bridge - (2nd Bridge) September 2, 2015 – Kuwait City Eurasia Tunnel Scope • Providing continuous flow of traffic between Asian and European Side of Istanbul in a safe, robust and comfortable fashion. • Significant time savings • Shortest path between Atatürk and Sabiha Gökçen airports • No effect on the “Silhouette of Istanbul” • Net savings in pollutant emissions with reduced travel time – An Environmental Fiendly Project September 2, 2015 – Kuwait City Eurasia Tunnel Scope Out of the total 14,6 km Project alignment, underground section (Part 2) section is 5,4 km. TBM section crossing the Bosphorus is 3,4 km while another 2,0 km is constructed using NATM and cut-cover methods.