Realização Parceiros Apoio

BUSINESS OPPORTUNITIES IN

TURKEY’S PPP MARKET

Emre AYKAR President – CICA (Confederation of International Contractors’ Association),

Vice President – TCA (Turkish Contractors’ Association)

Partner, Member of the Board – Yapı Merkezi

April 28th, 2015 – BRASILIA

CONTENTS

1. Presentation of Eurasia Tunnel Project

2. Ongoing Major PPP Projects in Turkey

3. Some Major Future PPP Projects in Turkey

1. Presentation of Eurasia Tunnel Project

EURASIA TUNNEL – Cross Section

PROJECT OVERVIEW - Location

PROJECT OVERVIEW – Contribution to Istanbul’s Highway Network

• 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 Friendly

Project

PROJECT OVERVIEW – Key Stakeholders

PROJECT OVERVIEW – Dates

Contract Signed: February 2011

Loan Agreements: December 2012

Start of Service: October 2016 (estimated)

Transfer (back to the Client): January 2042

Total Duration of the Concession: 29 Years 10 Months

PROJECT SPONSORS – Yapi Merkezi

Dubai Metro

Haramain High Speed Railway Madinah station

PROJECT SPONSORS – Yapi Merkezi

Ethiopia Awash – Kombolcha – Hara Gebaya R.

Four Seasons Hotel Ankara Konya High Speed Railway

PROJECT SPONSORS – Yapi Merkezi

Algeria Bir Touta – Zeralda Railway

Izmir Metro Casablanca Tramway

PROJECT SPONSORS – SK E&C

SK E&C has achieved success with its

development of the newest building

methods, creation of advanced

systems, and its extensive experience

and know-how.

BORED TUNNEL (TBM) – Geological Conditions

• Strait was formed by historic tectonic forces, leaving the Trakya Sandstone bedrock fold-

ed, faulted, intruded, intensely fractured and weathered.

• Soft ground consisits of alluvial deposits that have in-filled a past channel in the bedrock.

Alluvial deposits range from coarse-grained soils to fine-grained soils and can vary both

vertically and laterally as a result of depositional history.TBM tunnel passes through

mostly silty fine sand and some clay and sandy clay layers.

BORED TUNNEL (TBM) – Bored Tunnel Section

Upper Roadway Deck (Cast in

Situ)

Lower Roadway Deck (Precast)

Upper Corbel

Lower Corbel

Utility Gallery

Precast Segment Lining(t=600mm)

12.000 600 600

13.200

BORED TUNNEL (TBM) – Assembly of the Tunnel Boring Machine

BORED TUNNEL (TBM) – Excavation Pit (Asian Side)

BORED TUNNEL (TBM) – Internal View of the Tunnel

BORED TUNNEL (TBM) – Segment Stock and Delivering

BORED TUNNEL (TBM) – Upper-Deck Construction

BORED TUNNEL (TBM) – Upper-Deck Construction

BORED TUNNEL (TBM) – Upper-Deck Construction

FINANCIAL STRUCTURE – Summary Investment

Item Cost (USD)

EPC Costs: 814,000,000

Development and Admin: 115,000,000

Financial Costs: 81,000,000

Interest During Investment: 178,000,000

Reserves and Contingency: 57,000,000

TOTAL INVESTMENT COST 1,245,000,000

Equity (22.9%) 285,000,000

Senior Loans (77.1%) 960,000,000

FINANCIAL STRUCTURE – Financial Institutions and Credits

Multilateral Institutions:

European Investment Bank

European Bank for Reconstruction

and Development

Export Insurance Providers:

Korean Exim Bank

Korean Export Insurance Agency

(K-Sure)

Commercial Banks:

Standard Chartered Bank

Sumitomo Mitsui Banking

Corporation

Mizuho Bank

Garanti Bankası

Türkiye İş Bankası

Yapı Kredi Bankası

Deutsche Bank

Type of Facility Amount Extended (USD)

All facilities’ terms are 18 years

Direct Facilities: 550,000,000

Facilities under Export

Insurances:

210,000,000

Facilities Guaranteed by

Turkish Banks:

200,000,000

Total Credits: 960,000,000

FINANCIAL STRUCTURE – Development and Legal Framework

Development and updating of City Plans

Approvals from Protection Councils and other authorities

Creation of City Plans

Updating of Existing City Plans by Municipalities

Development of Debt Assumption Agreement

(between Lenders and Turkish Treasury)

Development of Direct Agreement

(between Lenders and Ministry of Transportation)

Development of Cooperation Protocol

(between Ministry of Transportation, Istanbul Metropolitan Municipality,

Turkish National Police and Turkish Highway Authority)

FINANCIAL STRUCTURE – International Project Financing Awards

26

Euromoney – Europe’s Best Project Finance Deal

EMEAFinance – Best PPP Project Deal

Infrastructure Journal – Best Innovative Deal

Thomson Reuters PFI – Best Infrastructure Deal

2. Ongoing Major 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

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

THE 3rd BOSPHORUS BRIDGE

• Total Investment Cost: USD 2,5bln

• Construction Period: 3 Years

• Operation Period: 7 Years and 2 Months

• Notes:

• State-backed Minimum Revenue

Guarantee

• Freight Transportation (Rail + Road)

will be diverted out of the city limits

• This will be the longest spanning

suspension bridge in the world that

has a rail system on it

• 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)

ISTANBUL 3rd AIRPORT

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:

– The whole project is to be

completed in several phases

– At completion the airport’s capacity

will be sufficient to service

150,000,000 passengers per year

– Istanbul is to become a regional

and international hub for air

passenger traffic

– PPP structure is based on many

succesfully completed airport

concessions in Turkey’s past.

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

GEBZE – ORHANGAZI – IZMIR HIGHWAY

• Total Investment Cost: EUR 10bln

• Construction Period: 7 Years

• Operation Period: 15 Years 4 Months

• Notes:

– The project will reduce travel time

from Istanbul to İzmir, two of the

main economic centers in Turkey,

from 10 hours to 4 hours

– 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

BILKENT INTEGRATED HEALTH CAMPUS

• Client: General Directorate of Health Investments

• Investors: IC İçtaş – Dia Holding fzco Joint Venture

• Scope: To design, build, finance, operate 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.

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

Project in Operation

Project in Financial

Close/Construction

Total

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

73 Energy

29 Highways

21 Ports

18 Airports

15 Marinas

11 Healthcare

Projects Project Value

Energy USD 21.5 bln

Airports USD 56.6 bln

Motorways USD 11.5 bln

Harbor USD 2.0 bln

Marina USD 1.6 bln

Healthcare Facilities USD 6.8 bln

Industrial Facilities USD 1.3 bln

Bordergate USD 0.4 bln

Railway USD 0.2 bln

Total USD 102 bln

Implementation in Important Sectors:

3. SOME MAJOR FUTURE PPP PROJECTS IN TURKEY

ISTANBUL GRAND TUNNEL BOT PROJECT

KINALI – CANAKKALE HIGHWAY INCL.

DARDANELLES STRAIT CROSSING BRIDGE

ISTANBUL – ANKARA SUPER HIGH-SPEED RAILWAY

ISTANBUL GRAND TUNNEL BOT PROJECT

• 6,5km tunnel passing under Bosphorus with 2 highways and 1 metro line levels

• Approximate length of the tunnel with the three levels: 6,5km

• Diameter: 18,80m

• The deepest point below water: -110 m

• Total Investment Cost (approx): USD 6 bln

KINALI – CANAKKALE HIGHWAY AND DARDANELLE STRAIT BRIDGE

• 322km Highway from İstanbul to Çanakkale including 3,6km bridge between Gelibolu – Lapseki

• 2x3 highway lanes + railway

• The bridge will divert the traffic between Balkans and Anatolia out of Istanbul, shortening travel times and decreasing costs

• EPC Cost (approx): USD 4,5 bln / Investment (rough estimate) : USD 6bln

ANKARA – ISTANBUL SUPER HIGH-SPEED TRAIN

• Track Length: 350 km

• The travel time will be decreased from 5 hours to just 1 hour 15 minutes

• Max. Design Speed: 400 km/hr

• Investment (estimate): USD 7 bln

HOW ARE PPP’s USED IN TURKEY

• PPPs have been mainly used to attract local and international investors to participate in solving infrastructure needs of the country in addition to the classical method of government budget funding.

• In Turkey the main PPP subsectors heavily utilized have been; energy production and distribution, motorways, airports, ports, waste and wastewater treatment and hospitals.

HOW ARE PPP’s USED IN TURKEY

• The government has played a key role by supporting the bankability of the projects with strong administrative, legislative and financial support. This continuous support has persuaded the investors to enter the PPP market.

• The government has also followed best practices and good advices from international advisors; such as; Minimum Revenue Guarantees, Step-in Mechanism, Debt assumption Agreements, International Arbitration, etc.

HOW ARE PPP’s USED IN TURKEY

• The PPP projects which are in operation phase are mainly in energy, airports and ports. In this sectors there has been a substantial improvement in the quality of the services. In some of these service sectors such as airports Turkey has even created globally active and recognized brand names such as TAV.

FINAL REMARKS

• As of today, several local and international investors have committed to 183 projects under various PPP schemes in Turkey

• The total investment amount for these projects, either in operation or have been succesfully awarded to investors, is more than $ 100 bln.

• There are many big PPP projects planned which are in Turkey's «2023 Goals». This future pipeline of PPP investments are mainly in airports, highways, railways, education facilities, hospitals and waste/ waste water treatment facilities.

• The know-how gained through the previously completed PPP investments have contributed to the current solid legal, administrative and financial framework for PPP implementation in Turkey, through which the current great progress has been and the future bigger steps will be achieved.

FINAL REMARKS

As Turkish Contractors,

we are ready to cooperate on

PPP Projects

with our

Brazilian Colleagues

in Turkey, Brazil and the rest of the World!

FINAL REMARKS

THANK YOU FOR YOUR KIND ATTENTION

Emre Aykar emre.aykar@ym.com.tr