Master Slide

1
PUBLIC-PRIVATE PARTNERSHIP TURKISH
EXPERIENCE Mehmet UZUNKAYA Planning Expert
Undersecretariat of SPO
 Concessions and Public-Private
Partnerships Ankara, 10-11 March 2008
2
PPP in TurkeyOTTOMAN PERIOD

• Public service concessions
• Railroad, Post, Telegram, Telephone,
  Lighthouse, Port, Pier, Tram, Tunnel,
  Electricity, Gas, Water, etc.
• Manufacturing Industry Concessions
• Food, Weaving, Quarry-terrain, Metal Objects,
  Paper, Chemistry, Rubber.

3
PPP in TurkeyRECENT HISTORY

• Turkey is one of the first countries to apply
  PPPs since 1980s.
• One of the leading laws in this area is the Law
  3096 on the Assignment of Institutions other than
  Turkish Electricity Administration for
  Electricity Production, Transmission,
  Distribution and Trade dated 1984.

4
PPP in TurkeyMETHODS COVERED BY THR CURRENT
LEGISLATIVE INFRASTRUCTURE

• Build Operate - Transfer (Laws no 3996, 3465,
  3096)
• Build - Operate (Law no 4283)
• Build - Rent - Transfer (Law no 5396)
• Transfer of operation rights (Law no 4046, 5335,
  3465, 3096)
• Long term leasing (Law no 5335, 4046)

5
PPP in TurkeyLAWS AND REGULATIONS

• BUILD OPERATE - TRANSFER LEGISLATION
• Decision no. 94/5907 on the Law 3996 on
  Performance of Certain Investments and Services
  within the framework of Build-Operate-Transfer
• 4 Regulations related to Law 3096 on Assignment
  of Institutions other than Turkish Electricity
  Administration for Electricity Production,
  Transmission, Distribution and Trade
• Law no. 3465 on Assignment of Institutions other
  than General Directorate of State Highways for
  Highway (with tolls) Construction, Maintenance
  and Operation and Regulation no. 93/4186
  regarding this Law

6
PPP in TurkeyLAWS AND REGULATIONS

• BUILD OPERATE LEGISLATION
• Law no. 4283 on Establishment of Electricity
  Production Facilities with Build-Operate Model
  and their Operation and Regulation of Electricity
  Sales and Regulation no. 97/9853 regarding this
  Law
• BUILD RENT TRANSFER LEGISLATION
• Law on the Addition of an Article to the Health
  Services Law no. 5396 and Regulation no.
  2006/10655 regarding this Law
• LEGISLATION ON TRANSFER OF OPERATION RIGHTS AND
  LONG TERM LEASING
• Privatisation Law no. 4046
• Law no. 5335
• (Law authorising the State Airports Authority to
  totally or partially transfer its airports to the
  private sector through long term leasing or
  transfer of operation rights methods)

7
PPP in TurkeySECTORS COVERED BY THE CURRENT
LEGISLATIVE INFRASTRUCTURE

• ENERGY
• Electricity generation, transmission,
  distribution and trade
• Dams
• TRANSPORTATION
• Highways, bridges, tunnels, carparks, highway
  operation facilities
• Railroads
• Ports and airports for civil use
• AGRICULTURE
• Irrigation
• DRINKING WATER, SEWAGE
• Drinking water
• Water treatment facility
• Sewage system

• HEALTH
• Hospitals
• TOURISM
• Marinas
• GENERAL ADMINISTRATION
• Customs
• MINING
• Mines and operation facilities
• ENVIRONMENT
• Investments on prevention of pollution
• MANUFACTURE
• Factories and similar facilities
• COMMUNICATION

8
PPP in TurkeySECTORAL PRACTICES

• ENERGY
• BOT PROJECTS
• Marmara Ereglisi-Trakya Natural Gas
• Marmara Ereglisi-Unimar Natural gas
• Gebze-Dilovasi Natural Gas
• Esenyurt Natural Gas
• Birecik Dam and HP
• Berdan HP
• Çal HP
• Çamlica HP
• Aksu-Çayköy HP
• Fethiye HP
• Tohma-Medik HP

• Girlevik II-Mercan HP
• Gaziler HP
• Gönen HP
• Kisik HP
• Hasanlar HP
• Suçati HP
• Dinar II HP
• Ahiköy I-II HP
• Sütçüler HP
• Bozcaada Wind Power
• Çesme-Alaçati Wind Power
• HP Hydroelectric Plant

9
PPP in TurkeySECTORAL PRACTICES

• ENERGY
• BO Projects
• Gebze Natural Gas Combined Binary Power Plant
• Adapazari Natural Gas Combined Binary Power Plant
  
• Izmir Natural Gas Combined Binary Power Plant
• Ankara Natural Gas Combined Binary Power Plant
• Iskenderun Geothermal Power Plant
• TOR Projects
• Çayirhan Geothermal Power Plant
• Hazar I-II HP

10
PPP in TurkeySECTORAL PRACTICES

• TRANSPORTATION
• AIR TRANSPORTATION
• Antalya Airport International Terminals I and II
  (BOT)
• Atatürk Airport International Terminal Building
  (BOT)
• Dalaman Airport International Terminal Building
  (BOT)
• Izmir Adnan Menderes Airport International
  Terminal Building (BOT)
• Ankara Esenboga Airport Domestic and
  International Terminals (BOT)
• Sabiha Gökçen Airport International Terminal
  Building and Supplementary buildings (BOT)
• Atatürk Airport Domestic and International
  Terminals (long term leasing)
• Antalya Airport Domestic and International
  Terminal Buildings (long term leasing)
• Zonguldak Çaycuma Airport (long term leasing)
• Antalya Gazipasa Airport (long term leasing)
• LAND TRANSPORTATION
• Göcek Tunnel (BOT)
• Highway Service Facilities (BOT)

11
PPP in TurkeySECTORAL PRACTICES

• TRANSPORTATION
• SEA TRANSPORTATION
• Çanakkale Kepez Port Superstructure Facilities
  (BOT)
• Güllük Quay (BOT)
• Bodrum Passenger Quay (BOT)
• Trabzon Port (TOR)
• RAIL TRANSPORTATION
• Antalya-Alanya Railroad Project (BOT)
• (no tender was submitted)
• Reconstruction of the Kapikule Border Train
  Station ()
• URBAN TRANSPORT
• Istanbul Bosphorus Tunnel Road (BOT) ()
• () HPC Authorisation was received for BOT
  contract, HPC authorisation will be taken for
  implementation contracts

12
PPP in TurkeySECTORAL PRACTICES

• TOURISM
• Bodrum Turgut Reis Marina (BOT)
• Didim Marina (BOT)
• Çesme Marina (BOT)
• Sigacik Marina (BOT)
• Kas Marina (BOT)
• Alanya Marina (BOT)
• Mersin Marina (BOT)
• Dalaman Marina and Quay (BOT)
• Datça Marina (BOT)
• Tekirdag Marina (BOT) ()
• Yalova Marina (BOT) ()
• Afsa Island Marina (BOT) ()
• () HPC Authorisation was received for BOT
  contract, HPC authorisation will be taken for
  implementation contracts
• .
• DRINKING WATER
• Yuvacik Dam (BOT)

13
PPP in TurkeySECTORAL PRACTICES

• GENERAL ADMINISTRATION
• Edirne Ipsala Border Gate (BOT)
• Igdir Gürbulak Border Gate (BOT)
• Sirnak Habur Border Gate (BOT)
• Edirne Kapikule Border Gate (BOT)
• Artvin Sarp Border Gate (BOT)
• Hatay Cilvegözü Border Gate (BOT) ()
• Mardin Nusaybin Border Gate (BOT) ()
• Edirne Hamzabeyli Border Gate (BOT) ()
• Pazarkule Border Gate ()
• Esendere Border Gate ()
• Türkgözü Border Gate ()
• Dilucu Border Gate ()
• Akçakale Border Gate ()
• Öncüpinar Border Gate ()
• Yayladag Border Gate ()
• Kirklareli Dereköy Border Gate (BOT) ()
• Istanbul Halkali Border Gate (BOT) ()

14
PPP in TurkeyPROJECTS AT THE PREPARATION STAGE
PROPOSED BY THE DG STATE HIGHWAYS

• TRANSPORTATION
• Gebze-Orhangazi-Izmir Highway (Including the
  Izmit Körfez passage)(377 km) ()
• Kinali-Malkara-Çanakkale-Savastepe Highway
  (Including the Çanakkale strait passage) (566
  km)
• Ankara-Izmir Highway (503 km)
• (Ankara-Izmir)Ayr.-Afyon-Burdur-Antalya Highway
  (345 km)
• (Ankara-Izmir)Ayr.-Eskisehir-Bursa Highway (202
  km)
• () HPC Authorisation was received for BOT
  contract, HPC authorisation will be taken for
  implementation contracts.
• .

15
PPP in TurkeySOME METHODS NOT COVERED BY THE
CURRENT LEGISLATION

• Design Build Finance - Operate
• Build Own Operate - Transfer
• Rehabilitate Operate - Transfer
• Build Own Operate
• Build Transfer Operate
• Made additional investment - Operate
• Establishing a company with the private sector
• Shadow tolls

16
PPP in Turkey SOME METHODS NOT COVERED BY THE
CURRENT LEGISLATION

• Justice Services
• Education Services
• Cultural Services
• In order to set up the legal basis for the shadow
  toll application, which is not covered by the
  existing legislative infrastructure, a draft law
  on amending Law no. 3996 was prepared by the
  Ministry of Finance and was submitted to the
  Parliament. The draft was approved by the
  Planning and Budget Commission. It is expected to
  enter into force in 2008.

17
PPP in TurkeyMAIN PROBLEMS

• Lack of Institutional Capacity and Structuring in
  PPP Applications
• Failure to carry out preparation activities for
  PPPs in time and sufficiently to help with the
  analyses on technical, economical and financial
  feasibility of the projects, economical and
  social costs, returns and risks.
• Lack of interest by the public sector to PPP
  projects as they are financed and operated by the
  private sector.
• Lack of experience in the public institutions
  related to PPP projects which require more
  complex processes than the classic financing
  methods (differences of knowledge and experience
  between public and private entities)
• Lack of a specialised unit responsible for the
  analysis, prioritisation and selection of the PPP
  Projects.
• Lack of a sectoral standardisation related to the
  project documents (feasibility studies,
  contracts, etc).

18
PPP in TurkeyMAIN PROBLEMS

• Unorganised structure of the existing legislation
  and its narrow scope covering few models
• Regulation of different models by different laws
  and regulations.
• Shortage of different models The legislation
  only covers BOT, BO, TOR, Build-Rent-Transfer and
  Long term leasing methods.

19
PPP in TurkeyPROPOSALS FOR SOLUTIONS

• Centralised Unit
• Establishment of a centralised unit which will
• Identify the PPP policies in Turkey,
• Monitor compliance of the PPP Projects to the
  development plans, programs and sectoral
  policies,
• Be responsible for the analysis, evaluation,
  prioritisation, selection and monitoring of the
  PPP Projects,
• Be specialised in PPP area,
• Prepare guidelines and standard documents for the
  implementing organisations.
• Drafting of a single framework law which covers
  applicable models and sectors
• Establishment of a national PPP strategy
• Raising awareness among and providing information
  to the public institutions about PPP processes

20
PPP in TurkeySTEPS TAKEN FOR SOLUTION

• Current Situation, Problems and Analysis of Needs
• Starting from 2005, a series of meetings was
  organised by the Undersecretariat of SPO with the
  participation of the relevant institutions and
  organisations in order to discuss realised PPP
  Projects, experiences, problems and solutions and
  new applicable models and a report was prepared
  as a result.
• PPP Draft Framework Law
• In light of the information acquired and the
  needs arose during those meetings, a draft PPP
  framework law, which covers all applicable models
  and sectors, was prepared by the Undersecretariat
  of SPO and submitted to the opinion of relevant
  institutions and.
• The draft law has been sent to the Prime Ministry
  and is expected to enter into force in 2008.
  Secondary legislation regarding this law will be
  prepared until the end of 2009.

21
PPP in TurkeyINNOVATIONS INTRODUCED BY THE DRAFT
PPP LAW

• Definition of the Public Private Partnership
  concept
• Unification of the PPP legislation
• Definition of PPP models and bringing flexibility
  to the models
• Extension of the scope by adding new sectors
• Introduction of objective criteria related to the
  PPP Process
• Introduction of the risk concept to the PPP
  Projects and definiton of the guarantees

22
PPP in TurkeyINNOVATIONS INTRODUCED BY THE DRAFT
PPP LAW

• Definition of the Public Private Partnership
  Concept
• This definition helps to regulate the different
  concepts of private sector participation to
  public services under one title, Public Private
  Partnership, which is a new concept for our
  country.
• Unification of the PPP Legislation
• With the draft law, one single framework is
  introduced for the unorganised legislation on
  PPPs. The existing legislation is simplified and
  a single process valid for all applications is
  developed by eliminating differences.

23
PPP in TurkeyINNOVATIONS INTRODUCED BY THE DRAFT
PPP LAW

• Definition of PPP models and bringing flexibility
  to the models
• The current models of BOT, BO, Build-Rent and
  Transfer of Operation Rights are now defined
  under one law, which also brings a flexibility to
  implement different types of these models.

24
PPP in TurkeyINNOVATIONS INTRODUCED BY THE DRAFT
PPP LAW
Works such as completion, renovation,development,
research, restoration, maintenance, repair, etc.
are within the scope of build. Shadow tolls
implementation is also covered by the law
25
PPP in TurkeyINNOVATIONS INTRODUCED BY THE DRAFT
PPP LAW

• Extension of the scope by adding new sectors
• Areas such as education, culture, justice and
  general administrative infrastructure, which are
  not covered by the existing Public Private
  partnership legislation, are regulated with this
  draft law.
• Introduction of objective criteria related to the
  PPP Process
• Feasibility study is introduced as a requirement
  in the selection of the projects and decision
  making process is more clearly and rationally
  defined.
• HPC (High Planning Council) process
• Obligation of a feasibility study
• Risk analyses

26
PPP in TurkeyINNOVATIONS INTRODUCED BY THE DRAFT
PPP LAW

• Introduction of the risk concept to the PPP
  Projects and definiton of the guarantees
• It is the first time with this Law that the
  efficient risk sharing concept, which is the
  basic element of successful PPP projects, is
  mentioned. Mechanisms are developed to monitor
  the financial liabilities for the public sector
  which might occur as a result of the guarantees
  and to ensure that these liabilities are in
  compliance with the the macro-economic balances.

27

• THANK YOU...