Multi-year Expert Meeting on Transport and Trade Facilitation:

Public and Private Partnerships for the

Development of Infrastructure to Facilitate Trade and Transport

8-10 December 2009

TRANSPORT AND TRADE FACILITATION IN SOUTH EASTERN EUROPE

THE NEED TO DEVELOP INNOVATIVE FINANCING SOLUTIONS

Submitted by

Ministry of Transport Republic of Turkey

This expert paper is reproduced by the UNCTAD secretariat in the form and language in which it has been received. The views expressed are those of the author and do not necessarily reflect the view of the United Nations.

TRANSPORT AND TRADE FACILITATION TRANSPORT AND TRADE FACILITATION IN IN

SOUTH EASTERN EUROPE SOUTH EASTERN EUROPE

THE NEED TO DEVELOP INNOVATIVE THE NEED TO DEVELOP INNOVATIVE FINANCING SOLUTIONSFINANCING SOLUTIONS

Ministry of TransportMinistry of TransportRepublic of TurkeyRepublic of Turkey

• A candidate member to EU,• Located in the main artery of trade between

Europe, Asia, Middle East Countries,• Providing suitable junction combinations

between potential regions.• Possess: territory both in Europe and Asia

Continents connected by two straits, coastal strips in four different sea boundaries (Black Sea , Marmara, Aegean Mediterranean ).

TURKEY

22

33

• Black Sea CIS (Commonwealth of Independent States) and Asian landlocked countries, transportation demand arises due to establishment of new trade links.

• Within this context, formulation of New European Transportation Policy is unavoidable following the discussion on new transport corridors.

Under the impact of the recent geo-political developments in Eastern Europe and Asia,

44

Motorways of the Sea concept, gains importance and

shifting the balance between the modes proves to be a remedy for the traffic bottlenecks faced in the existing European transport network ,while

diversion of the traffic towards southern axis to the Mediterranean corridor to be more likely solution.

Mediterranean region, has considerable share among the worldwide container traffic throughput, while

East Mediterranean where Turkey is located, including Black Sea Region shows a rapid increase in comparison with the West

European Transport Policy

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EXISTING AND EXISTING AND FUTURE FUTURE

INFRASTRUCTUREINFRASTRUCTURE

66

Role of transport sector has incontestable impact on the trend of economic growth and developmentpatterns for Turkey. The formulation of transport policy is the main task of Ministry of Transport

•Determining the means to facilitate international and domestic transport of goods considering future prospects based on peace, political stability and integration within the framework of international trade routes,•Maintaining regional balance between the modes of transport•Minimizing ecological threats caused by transport,•Maintaining rational use of energy•Maintaining safety of transport

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Ministry of Transport is responsible for

•Overall planning programming, design and constructionand operation of public railways (including urban rail mass transport)

• Ports and

•Airports infrastructure and approval of private sector projects in related fields.

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At PresentAt Present

Rail network 11000 km

major public ports 318 mil. tons

container throughput 5 million TEU

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The locality of Turkey enforcesto realize

Efficient junctional role ,Maintain efficient corridors on both east –west and north –south axis for international multimodal network,Develop Euro- Asian transport linkages via Turkey,

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EXISTING RAILWAYS

1111 1212

( ) p

101016

EXISTING AIRPORTS

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NewNewPProjectsrojects

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Priorty port projects • Filyos port • Candarlı port • Mersin Container port

Main objective

• Hubport functıon for the main shipping lines passing through mediterranean for the maritime traffıc to east .

CANDARLI PORTGATE ON AEGEAN

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ÇANDARLI PORT

çandarlı port

pire

1818

operational plan

CAPACITY

1. STAGE: 2.000.000 TEU/YEAR

2. STAGE: 2.000.000 TEU/YEAR

TOTAL : 4.000.000 TEU/YEAR

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FİLYOS PORT

TURKISH GATE OPENİNG TO

BLACKSEA2020

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Filyos Port Layout

• Open Anatolian Market to Asia, Blacksea, East European Countries.

• 25 million tons/year capacity

• The railway connected facility will accomodate bulk and container vessels basically, providing deep berths

• Free Trade Zone,behind the port• Activate trade in Black sea

FİLYOS PORT

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MERSİN CONTAINER PORT

ASIAN GATE TO MEDİTERRANEAN

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•The existing port facilities in The Turkish Eastern Mediterranean coastline is unsufficient to respond to the future demand for the marine bound traffic.

•Thus Mersin Container Port Project is planned to provide Hub function and act as a gateway facility between Mediterranean container Shipping lines and Mid Asian landlocked countries.

Mersin Container Port

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Hinterland

MEDİTERRANEAN PORTS CAPACITY AND TRANSSHİPMENT RATIOS

MERSİN CONTAINER PORT LAYOUT

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RAILWAYPROJECTS

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• The project is a railway line of 77 km. • 1.4 km is the strait crossing in the form of

immersed tubes • 12.2 km. as bored tunnel. • capacity of 75 000 passenger/ hour/ oneway.• The construction is now being continued and

planned to be completed in 2012

MARMARAYIstanbul Tube Tunnel Project

3131 32

Immersion of the Elements

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Photos of the Marmaray

3434

Photos of the Marmaray

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Photos of the Marmaray

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Brıef ınformatıon

Project tıtle : İSTANBUL STRAIT ROAD TUNNEL CROSSING PROJECT- ıstanbul TURKEY: İstanbul, Turkiye

CONTRACT TYPE BOTAdministration : Republıc of TURKEY- Ministry of Transport DLHCOMPANY : TURKISH -KOREA N JOİNT VENTURE

CONTRACT PERİOD : 30.5 YEARSCONSTRUCTİON : 55 MONTHS (4.6 yıl)OPERATİON : 311 months (25.9 yıl)

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• TOTAL LENGTH OF THE PROJECT İS 14.6 KM. . • THE STRAİT ROAD TINNEL CROSSİNG PROJECT CONSİSTS OF

3 SECTİONS• .

SECTION 2 STRAITROAD UNDERTUNNEL

.

SECTION3ASIANSİDE CONNECTIONSECTION 1

EUROPEANSİDE CONNECTION.

STRAIT ROAD TUNNEL CROSSING PROJECT

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TBM TUNNEL SHAFT CONNECTION

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OPERATION CENTEROPERATION CENTER

power distribution

• tv system• anoucement system • drainage system • discharge system

• power distribution • lightining • air ventilaton• fire prevention• monitoring an d control

ELECTRO MECHANIC SYSTEM

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1- Ankara – İstanbul Rehabilitation Project - under contruction

2- Ankara – Konya Railway Project - under construction3- Ankara – Sivas Railway Project - under construction4- Tekirdag – Muratlı Bandırma- Izmir Railway Connection

Project - under construction5- Sivas – Kars railway connection 6- Kars – Tbilisi Connection Project - under construction7- Ankara – Izmir Railway connection completed design

stage

are other outstanding railway projects.

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KapıkuleKırklareli

ArifiyeAdapazarı

Balıkesir

Manisa

Denizli

MALATYA

İSTANBUL

Eskişehir

Alayunt

KONYAKaraman

Ulukışla

Kayseri MuşTatvan Van

Kapıköy

Yolçatı

Diyarbakır Kurtalan

Gaziantep

MardinNusaybinNarlı

K.maraş

MersinYenice

Çankırı

Samsun

Çarşamba

Amasya

Hanlı Bostan kaya

Çetinkaya

Kars

ErzurumIrmak

Van Gölü

K A R A D E N İ Z

E G

E D

E N

İ Z İ

Ortaklar

Söke

Tire

Ödemiş

Eğirdir

Menemen

Torbalı

İskenderun

Aydın

İzmit

Turhal

Uşak

Horasan

Divriği

ADANA

SİVAS

Zonguldak

ANKARA

İZMİR

Ereğli

Erzincan

Elazığ

SincanYozgat

Yerköy

Yıldızeli

AFYON

Polatlı

İnönü

Çobanbey

Trabzon

Palu

Tirebolu

Osmaneli

BURSA

Ayazma

JOURNEY TIME : (HOUR : MINUTE)

CURRENT FUTUREAnkara-İstanbul 7:00 3:00İstanbul-Konya 12:25 3:45Ankara-Konya 10:30 1:15 Ankara-Sivas 10:29 2:00İstanbul-Sivas 17:29 5:00Ankara-İzmir 13:06 3:20Bursa-Osmaneli

PLANNED HIGH SPEED LINES

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STATIONS will be BUILD with PPP

İSTANBUL

EDİRNE

ESKİŞEHİR

POLATLI

ANKARA

KONYA

İZMİR

SİVAS

AFYON

KAYSERİ

BURSAYOZGAT

HIGH SPEED LINES UNDER CONSTRUCTION

HIGH SPEED LINES PLANNED

STATIONS will be BUILD with PPP 4444

It is estimated to serve 50,000 pax daily after completion of Ankara-Istanbul, Ankara-Konya and Ankara-Sivas High Speed Railway Projects

TOTAL CONSTRUCTION AREA : ~ 130.000 m2

Dimensions : 340 x 80 m2

Height : 34 m Railway Station : 87.880 m2

Parking Area : 41.400 m2

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HIGH SPEED TRAIN STATIONS to be BUILD with PPP

İSTANBUL

BURSA ANKARA

KONYA

İZMİR AFYON

KAYSERİ

HIGH SPEED LINES UNDER CONSTRUCTION

HIGH SPEED LINES PLANNED

HIGH SPEED RAILWAY STATIONS (with PPP)

ESKİŞEHİRSİV

ASYOZGAT

RAILWAY STATIONS WILL BE CONSTRUCTED AS GREAT LIVING SPACES AND MALLS

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BURSA – OSMANELİ HIGH SPEED RAILWAY PROJECT

İSTANBUL

İZMİR

ANKARA

BURSAOSMANELİ

Electrified – Signalled - Double Track

Total Length : ~ 105 Km

Design Speed : 250 km/s

Minimum Curve Radius : 5000 m

Maximum Grade : ‰ 12

Estimated Project Cost : € 300 million

Incoming:

15 million tonnes

Outgoing:

23 million tonnes

Annual Potential Freight & Pax Volumes

Bursa-Istanbul: 4 million pax

Road : 4 h

Rail : 2 h

Bursa-Ankara:1,75 million pax

Road : 6 h

Rail : 2 h 20 min.

İSTANBUL

ANKARA

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LOGISTIC CENTERS CONSTRUCT WİTH PPP

OBJECTIVE: Establishing modern logistic centres at places, esp. close to Organized Industrial Zones, having a great freight potential, and convenient for economic developments.

DEFINITION: It is planned to construct and/or operate, preferably by PPP model, 12 logistic centres, which encompass all activities regarding transport, logistic and distribution of freight.

EXPECTED BENEFITS: Developed combined transport and increased share of railways

Hasanbey / ESKISEHIRHasanbey / ESKISEHIR

Kayacik / KONYAKayacik / KONYA

USAKUSAK

Bogazkopru / KAYSERIBogazkopru / KAYSERI

Palandoken / ERZURUMPalandoken / ERZURUM

Yenice / MERSINYenice / MERSIN

KosekoyKosekoy / IZMIT/ IZMIT

Ispartakule/ ISTANBULIspartakule/ ISTANBUL

KaklKaklıık / DENIZLIk / DENIZLI

Gelemen / SAMSUNGelemen / SAMSUN

GGöökkkkööy / BALIKESy / BALIKESİİRR BozBozüüyyüük / Bk / BİİLECLECİİKK

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The following intermodal links will be introduced as candidate arteries via Turkey to formulate accessibility between Trans European network and related markets

1.Mediterranean– Mersin Container Port- railway connection- Filyos Port, Samsun port-BLACK sea 2.Mediterranean – Mersin container Port- Railway - Caucasian markets3.Mediterranean – Mersin Container Port Mersin Port, Iskenderun Port - Railway - Middle East Countries4.Aegean Sea -İzmir Port or North Aegean Port - Railway - Caucasian, Mid Asian markets 5.Corridor IV - Marmaray Bosphorus Tunnel Project - railway – Kars Tiblis project- Caucasion Asian markets

These links will also provide alternative routes for the congested Strait passages causing environmental threat and delay.

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The above mentioned links are being evaluated under the

TINA Turkey Study which has been started in December 2005 and expected to be completed by end of 2006 where all required infrastructural needs will be assessed for the purpose of establishment of interconnectivity and interoperability between EU and Turkey.

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AIRPORTS

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• Air transportation in parallel to its importance and accelerated development trend among the world, Turkey has put utmost attention to maintain efficient service both on international and domestic basis following all technological developments and changes at aviation sector,

• At present 45 airports are under operation

• 12 out of these airports are open both for scheduled and non-scheduled international flights and domestic flights;

AIR TRANSPORTATION

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The BOT Model implementations are very successful at the passenger terminals of airports in Turkey. The seven BOT Model Terminal Airport Terminal Projects are as follows:

BUILD OPERATE TRANSFER PRACTICES AT AIRPORTS

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1. Antalya Aırport 1.Internatıonal Lınes Termınal Project

2. Antalya Aırport 2.Internatıonal Lınes Termınal Project

3. Istanbul Ataturk Aırport Internatıonal Lınes Termınal Project

4. Dalaman Aırport Internatıonal Lınes Termınal Project

5. Ankara Esenboga Aırport Domestıc & Internatıonal Lınes Termınal Project

6. İzmir Adnan Menderes Aırport Internatıonal Lınes Termınal Project

7. Bodrum Milas Aırport Internatıonal Lınes Termınal Project (still in progress)

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AtatAtatüürk Airportrk Airport5555

• Through these projects, a total investment of USD 1,4 billion has been financed by the private sector, without using public resources.

• The annual additional passenger capacity of these passenger terminals is 44 million.

• Within the scope of airport projects realized with BOT model has been completed in 1 ½ years on average.

• Total number of passengers guaranteed for operation period is 108 million and total guaranteed income is 1,5 billion $ . 5656

RENTED AIRPORTS VIA OPERATING RIGHTS TRANSFER

ISTANBUL ATATURK AIRPORT TERMINALS

ANTALYA AIRPORT TERMINALS

ISTANBUL SABiHA GOKCEN AIRPORT TERMINALS

ANTALYA/GAZiPASA AIRPORT

ZONGULDAK/CAYCUMA AIRPORT

The total rent amount of above mentioned three Projects are approximately 9,2 Billion $.Istanbul Sabiha Gokcen Airport’s passenger capacity is increased 20 Million.

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NEW BOT AND LEASING/OPERATION RIGHTS TRANSFER PROJECTS

Rental studies are carrying for Samsun, Sinop, Tokat and Nevsehir Airports.

Istanbul Ataturk Airport Cargo Terminal,

Zafer Regional Airport (between Kutahya, Afyon, Usak provinces) and

Cukurova Airport (between Mersin and Adana provinces) are also planned to realize by BOT Model and studies are carrying on for these projects.

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• Lack of finance sources is the main bottleneck,

• The level of public investment share in the general budget has negative impact on the growth rate.

Finance methods?

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• General Budget projects, financed by local sources are realised under local bidding law 4734

• BOT type of bidding is applied for attractive infrastructure Projects under the law 3996

• Projects financed through foreign finance sources where specific bidding procedures related to bilateral agreements are applied.

At present infrastructure Projects are tendered under by the following methods;

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• New approaches towards formulating the contribution of private sector sources and dynamism together with risk sharing is of question.

Public Private Partnership (ppp)• allocation and share of responsibilities, costs and risks,

revenues and benefits in optimum proportions between the private and public sector during creation of public service.

• The assessment of optimum proportions and definition of the role of each party comprises the backbone of the Public Private Partnership modeling.

alternative finance models

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BOT MODEL CONTRACTİNG

BOT model is used for transportation infrastructural projects under the Law numbered 3996 issued in 1994.Till now; •In port sector 16 projects involving 12 marinas and 4 port facilities •In Air transport sector 7 airport terminal projectshas been contracted on BOT basis .

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Airport terminal projects have been successsful owing to

• shorter recovery investment period and

•guarantees issued by the government

The total cost of 7 projects 1.5 billion USD$. And additional capacity created 50 million passengers per year.

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However in port sector infrastructure projects,However in port sector infrastructure projects,

•No government guarantees are allowed•Requirement of high investments and long recovery investment periods brought out failure of some of the contracts.• Also in these contracts the BOT contractor was obliged to finalize the settlement plans.

EİA Study approvals, which caused delays in the implementation schedule

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A good example in port sector

TURGUTREIS MARINA•the infrastructure of which has been implemented successfully with a 20 million US dollars investment cost,•is now being in operation for a duration of 22.5 years concession period , 460 yacht capacity

6666

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• Infrastructure has been implemented by public but superstructure is being completed by the company is now in operation..

• The cost of the Project is 14.6 million US dollars

• operational period is 29 years.

Çanakkale Port

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• is contracted on BOT model to meet passenger traffic demand of South Western Anatolia.

• The cost of the BOT contract is: 10 million $ / concession operation period 12 years

• two 20.000 gross ton passenger ships will accommodate at the same time. providing ferryboat ramp function. The Project is under construction now.

Bodrum passenger terminal

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• Planned to meet the dry bulk demand of South Western hinterland of Turkey In South Western Aegean Anatolia, where there are large scale sources of (feldspat) minerals, ore to be exported to other countries.

• Will provide savings in economy and time. • The construction has been completed and

operation phase has just started • Investment is 12,5 million $ • Operation period 7 years • BOT contract

Güllük Bulk Terminal

7171 7272

• As another approach to minimize the cost to be borne by the contracter and to increase the profitability of the project, the main components of the construction of infrastructure are implemented by public,

• Thus the main item of the investment required in the BOT contract, becomes completion of the infrastructure together with the realization of necessary superstructural facilities required for efficient operation.

• Within this understanding new port projects are tendered, of which the main components of the infrastructure have already been completed by public are tendered

For New BOT Projects

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Within this understanding Within this understanding

• marina projects, of which the main components of the infrastructure have already been completed by public are already tendered

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AN EXAMPLEFOR

THE BOT MODEL TENDER EVALUATION

PROCEDURE7575

a- The tenderers are prequalified with respect to their experience for similar work and financial level

b- Technical evaluation of the proposal in terms of • Physical and functional characteristics • Environmental measures• Economic viabilityc- Financial evaluation of the tender

• Amount of payments offered for the utility of land • Investment period • Operational period• Amount and type of investmentd- Final evaluation40% of Technical score + 60% of the financial score =

final score The highest final score is awarded. 7676

With reference to our experience and lessons acquired, the below points are highlighteda- Maturity of the Project•Aim of the Project should be in line with national policies-Feasibility EIA engineering surveys and settlement plan approvalsb- Optimum formulation of the vital parameters on• Allocation of risks • Cost revenues• Guaranties obligations extent of responsibility and liabilities• Optimum period of partnership

SUCCESS IN THE BOT PROJECTS DEPENDS ON FOLLOWING PARAMETERS

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On the other hand for transportinfrastructure projects

long investment periods

huge investment amounts

global economic crisis conditions some further remedies are to be considered (such as ıntroduction of guaranties and longer conssession periods shadow tolls etc.)

Thus defining a BOT model is an art where related tools are to be designed in harmony to produce success in achieveing benefits on each party in quality and quantity.

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Under Emergency Action Plan which Turkish Government has formulated, Ministry of Transport is authorised for the task of development of alternative Finance models.

Within the scope of this responsibility a report has been prepared reflecting the existing situation and bottlenecks concluding with recommendations to overcome the bottlenecks, the outcomes of which are summarized as.

A- Short term approach

1- To enable improvement under the prevailing laws within the scope of deficits related to application, the necessary steps will be formulated with regard to problems encountered during implementation of BOT contracts.

2- Modification and rearrangement of the existing laws

PUBLIC PRIVATE PARTNERSHIP

7979

B- Long term approach

•Adjustment of the legal framework and Introduction of a new law related to purely Public Private Partnership concept identifing, defining the role of public and private sector and activitywise planning essential tasks, to be undertaken.•Establishment of an authorised governmental body to be in charge of PPP activities.

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As conclusion,

•under the spirit of globalization, •implementation of priority environment friendly transport projects will not only be of national concern , •but will comprise to be the focus of international common interest.•Therefore further efforts on the formulation of cost and time saving finance models is an essential requirement

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