Econostrum | Economic News in the Mediterranean

Turkey has experience with PPP

Written by Guillaume Perrier, à ISTANBUL on Tuesday, May 24th 2011 à 14:58 | Read 666 times

In Turkey, a growing number of infrastructure projects are financed by PPP. Important amendments to legislation have allowed this model to become commonplace.

The Canal Istanbul project (Photo: DR)
The Canal Istanbul project (Photo: DR)
TURKEY. The project to build an artificial canal (Canal Istanbul), which will be built to ease congestion in the Bosporus Strait, should to a large extent be financed by public-private partnerships (PPP), as announced the Turkish Prime Minister Recep Tayyip Erdogan in early May 2011. 

The Turkish government will use the Build-Operate-Transfer (BOT) model, a model currently used in Turkey to finance large works and infrastructure projects. 
Needs are great but the ability of the public sector to provide finance is limited. Since 2008, the ruling conservative party in Turkey (JDP), a disciple of liberal economic policies, has therefore adopted legislative reforms to promote BOT contracts and provide a single text as a framework for the various types of PPP.
With the country experiencing rapid growth, the number of PPP has multiplied in recent years. "Compared with other emerging economies, Turkey already has high-quality infrastructure.  But it will have to keep developing in order to catch up with Member States of the EU and European standards", said Andrew Vorking, Secretary-General of the World Bank, at a summit on the PPP organised by the UNDP in Istanbul in 2006.  
However, it has long used such a system. During the Ottoman Empire, the State awarded concessions to companies, often foreign companies, for the provision of electricity, tobacco, postal services, industries, etc. And in 1984, Ankara adopted its first law to authorise electricity generation by private companies, clearing the path for the first PPP. "The PPP is another step towards the deregulation of the economy", says Ali Güner Tekin, former director of the privatisation department. 

Roads, ports, customs...

Since then, the construction of motorways (Istanbul-Gebze-Izmir and Ankara- Izmir), ports (such as Trabzon), customs services at borders with Bulgaria, Greece, Iraq and Syria and terminals at international airports have imitated this pattern.  

The JDP has launched a number of projects in the form of BOT in energy (power stations, barrages and wind farms), transport, tourism (around ten marinas), mines and health.  

The Turkish government has extended the scope of these contracts to education, culture and justice "to compensate for the absence of clear rules in these sectors”, explains Mehmet Uzunkaya, expert to the sub-secretariat to the Plan.   
The new legislation is supposed to make the allocation process more transparent. It has also allowed the establishment of a specialist central administration within the sub-secretariat to the Plan. In 2010, a second law saw the light of day to coordinate procedures and "develop second-generation PPP", according to Ali Tekin: variants on the BOT, where the private partner is responsible for one or more stages, from the design, location, scope and operation to the transfer of the activity.  



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