TURKISH EXPERIENCE IN PUBLIC-PRIVATE PARTNERSHIPS

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TURKISH EXPERIENCE IN PUBLIC-PRIVATE
PARTNERSHIPS
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Outline

• Background of PPP Projects in Turkey
• Sectoral Distribution of PPP Projects
• Legal Framework in PPP
• Demands by the Public Institutions Regarding the
  PPP Applications
• Fundamental Problems of PPP Applications in
  Turkey
• Requirements for Succesfull PPP Projects
• Draft PPP Law

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Need for Public-Private Partnerships

• The need for additional finance under the ongoing
  economic program
• Faster implementation of the projects
• Reduced operation and construction costs
• Transfer of managerial skills of the private
  sector to the infrastructure management and
  public service provision
• Enhanced public management system

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Critics Regarding Public-Private Partnerships

• Costly, Complicated and Time Consuming Tender
  Process
• Many stakeholders and many negotiations over many
  documents
• Costly tender processes
• An Incentive for More Costly Projects
• Higher cost of capital for the private sector
• Incentive to increase the costs in the
  costprofit method
• Excessive Sensitivity to Political and Economic
  Stability
• Sensitivity of Foreign Direct Investment to
  political and economic stability
• Higher country risks in developing countries
• Long Term Projects
• Long Pay Back Periods
• Detailed Forecasts

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Background of PPP Projects in Turkey

• Concessions During The Empire of Ottoman
• Public Service Concessions
  Concessions in Manufacturing

Food, Paper, Chemistry, Textile
Electricity, Gas, Tunnel, Port, Pier, Lighthouse,
Tram, Telephone, Post, Telegraph
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Sectoral Distribution of PPP Projects

• Transportation
• Air Transportation
• Antalya Airport I. and II. International
  Passenger Terminals (BOT)
• Atatürk Airport International Passenger Terminal
  (BOT)
• Road Transportation
• Göcek Tunnel (BOT)
• Motorway Service Facilities (BOT)
• Maritime Transportation
• Çanakkale Kepez Port Superstructure Facilities
  (BOT)
• Güllük Pier (BOT)
• Trabzon Port (TOR)
• Rail Transportation
• Antalya-Alanya Railway Project (BOT)
• (no proposal was received in the tender)

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Sectoral Distribution of PPP Projects

• Energy
• Bursa Natural Gas Power Plant (BO)
• Ankara Natural Gas Power Plant (BO)
• Unimar Natural Gas Power PlantTrakya (BOT)
• Tourism
• Turgut Reis Marina (BOT)
• Customs
• Ipsala Border Gate (BOT)
• Drinking Water
• Yuvacik Dam (BOT)
• Kamu Hizmeti Imtiyazlari Imalat Sanayii
  Imtiyazlari

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Legal Framework in PPP

• Build-Operate-Transfer Legislation
• Build-Operate Legislation
• Build-Lease-Transfer Legislation
• Transfer of Operation Rights and Long Term Leases
  Legislation
• Other Legislation Related to PPP Models

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Legal Framework in PPP

• Build-Operate-Transfer Laws
• The Law on the Build-Operate-Transfer No. 3996
  (Official Gazette 13 June 1994, no 21959)
• The Law on Turkish Electricity Authority for
  Generation, Transmission, Distribution and Trade
  of Electricity No. 3096 (Official Gazette 19
  December 1984, no 18610)
• The Law on Construction, Maintenance and
  Operation of Motorways. No. 3465 (Official
  Gazette 2 June 1988, no 19830)

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Legal Framework in PPP

• Build-Operate Laws
• The Law on the Establishment and Operation of
  Electricity Production Plants and Energy Sales
  No. 4283 (Official Gazette 19 July 1997, no
  23054)
• Build-Lease-Transfer Laws
• The Law on Build-Lease-Transfer in health sector
  No. 5396 (Official Gazette 15 July 2005, no
  25876)
• Transfer of Operation Rights Law
• The Law on Privatization No. 4046 (Official
  Gazette 27 November 1994, no 22124)
• Law No. 5335 (transfer of operation rights of
  airports and passenger terminals by State
  Airports Authority) (Official Gazette 27 April
  2005, no 25798)

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Legal Framework in PPP

• Other Legislation Related to PPP Models
• Public Procurement Law No. 4734 and Public
  Procurement Contracts Law No. 4735
• State Tender Law No.2886
• Law on Protection of Competition No. 4054
• Law on Municipalities No. 5272
• Law on Council of State No. 2575
• Financial Management and Control Law No. 5018

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Demands by the Public Institutions Regarding the
PPP Applications

• General Directorate of State Airports Authority
• Rehabilitate-Operate-Transfer, Long Term Leases
• Ministry of Health
• Design-Build-Finance-Operate-Transfer,
  Rehabilitate-Operate-Transfer
• Establishing an administrative structure for the
  PPP Projects
• A new comprehensive and flexible legal framework

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Demands by the Public Institutions Regarding the
Applications

• General Directorate of State Railways
• A new legislation for new PPP models
• DLHI
• Complete(finish)-Operate-Transfer,
  Lease-Operate-Transfer
• Project prioritization in accordance with the
  development plans and sectoral master plans
• Effective coordination among related public
  bodies responsible and authorised with the
  implementation of the PPP projects
• Municipalities
• Technical Assistant in the procurement and
  contracting phases
•  
• State Highway and State Hydrolic DGs
• New Model for Shadow Rate

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Fundamental Problems of the PPP Applications in
Turkey

• 1. Limited Number of PPP Models in the Laws
• Limited scope of the existing PPP legislation
  (legislation limited to BOT, BO, TOR and BLT
  models)
• 2. Lack of Harmonisation among PPP Laws
• Several sector specific and model specific PPP
  laws

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Fundamental Problems of the PPP Applications in
Turkey

• 3. Lack of Central Administrative Structure for
  the PPP Projects
• Assignment of different public bodies for the
  implementation of PPP Projects
• Lack of coordination among the related public
  bodies
• Lack of a central public body responsible for
  setting PPP policies and coordination

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Requirements for Succesfull PPP Projects

• A Comprehensive Legal Framework
• A Central Public Body
• Improving the Institutional Capacity of the
• Related Public Bodies
• Detailed Economic and Financial Feasibilities
• Proper Project Selection
• Effective Risk Management
• Competetive and Transparent Tender Process

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Suggestions for the Ongoing Problems
Enacting a new comprehensive PPP law in order
to extend the scope in terms of the applicable
PPP models and sectors Establishing a central
public body responsible for coordinating the PPP
process, policy setting and improving the
institutional capacity of the implementing
organizations
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Draft PPP Law

• A Draft PPP Law is Prepared by SPO
• A frame law arranging a great variety of PPP
  models
• A new and rational approach in project selection
  based on feasibility studies
• A new central governmental body responsible for
  PPP projects
• A New Purocurement Law Compatible with EU
  Lagislation (Draft Law Prapared by PPA)

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Thanks for Your Attention