1 TURKISH EXPERIENCE IN PUBLIC-PRIVATE PARTNERSHIPS.

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TURKISH EXPERIENCE TURKISH EXPERIENCE IN IN

PUBLIC-PRIVATE PARTNERSHIPSPUBLIC-PRIVATE PARTNERSHIPS

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OutlineOutline

Background of PPP Projects in TurkeyBackground of PPP Projects in Turkey

Sectoral Distribution of PPP ProjectsSectoral Distribution of PPP Projects

Legal Framework in PPPLegal Framework in PPP

Demands by the Public Institutions Regarding the Demands by the Public Institutions Regarding the

PPP ApplicationsPPP Applications

Fundamental Problems of PPP Applications in Fundamental Problems of PPP Applications in

TurkeyTurkey

Requirements for Succesfull PPP ProjectsRequirements for Succesfull PPP Projects

Draft PPP LawDraft PPP Law

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Need for Public-Private Need for Public-Private PartnershipsPartnerships

The need for additional finance under the ongoing The need for additional finance under the ongoing economic programeconomic program

Faster implementation of the projects Faster implementation of the projects

Reduced operation and construction costs Reduced operation and construction costs

Transfer of managerial skills of the private sector Transfer of managerial skills of the private sector to the infrastructure management and public to the infrastructure management and public service provisionservice provision

Enhanced public management systemEnhanced public management system

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Critics Regarding Public-Private Critics Regarding Public-Private Partnerships Partnerships

Costly, Complicated and Time Consuming Tender Costly, Complicated and Time Consuming Tender ProcessProcess

– Many stakeholders and many negotiations over many documentsMany stakeholders and many negotiations over many documents– Costly tender processesCostly tender processes

An Incentive for More Costly ProjectsAn Incentive for More Costly Projects– Higher cost of capital for the private sectorHigher cost of capital for the private sector– Incentive to increase the costs in the “cost+profit” methodIncentive to increase the costs in the “cost+profit” method

Excessive Sensitivity to Political and Economic StabilityExcessive Sensitivity to Political and Economic Stability– Sensitivity of Foreign Direct Investment to political and economic Sensitivity of Foreign Direct Investment to political and economic

stabilitystability– Higher country risks in developing countriesHigher country risks in developing countries

Long Term ProjectsLong Term Projects– Long Pay Back Periods Long Pay Back Periods – Detailed ForecastsDetailed Forecasts

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Background of PPP Projects in Background of PPP Projects in TurkeyTurkey

Concessions During The Empire of OttomanConcessions During The Empire of Ottoman

Public Service Concessions Concessions in Manufacturing Public Service Concessions Concessions in Manufacturing

Food, Paper, Chemistry, TextileFood, Paper, Chemistry, TextileElectricity, Gas, Tunnel, Port, Electricity, Gas, Tunnel, Port,

Pier, Lighthouse, Tram, Pier, Lighthouse, Tram, Telephone, Post, TelegraphTelephone, Post, Telegraph

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Sectoral Distribution of PPP ProjectsSectoral Distribution of PPP Projects

TransportationTransportation1.1. Air TransportationAir Transportation

Antalya Airport I. and II. International Passenger Terminals (BOT)Antalya Airport I. and II. International Passenger Terminals (BOT)Atatürk Airport International Passenger Terminal (BOT)Atatürk Airport International Passenger Terminal (BOT)

2.2. Road TransportationRoad TransportationGöcek Tunnel (BOT)Göcek Tunnel (BOT)Motorway Service Facilities (BOT)Motorway Service Facilities (BOT)

3.3. Maritime TransportationMaritime TransportationÇanakkale Kepez Port Superstructure Facilities (BOT)Çanakkale Kepez Port Superstructure Facilities (BOT)Güllük Pier (BOT)Güllük Pier (BOT)Trabzon Port (TOR)Trabzon Port (TOR)

4.4. Rail TransportationRail TransportationAntalya-Alanya Railway Project (BOT) Antalya-Alanya Railway Project (BOT) (no proposal was received in the tender)(no proposal was received in the tender)

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Sectoral Distribution of PPP Sectoral Distribution of PPP ProjectsProjects

EnergyEnergyBursa Natural Gas Power Plant (BO)Bursa Natural Gas Power Plant (BO)Ankara Natural Gas Power Plant (BO)Ankara Natural Gas Power Plant (BO)Unimar Natural Gas Power Plant–Trakya (BOT)Unimar Natural Gas Power Plant–Trakya (BOT)

TourismTourismTurgut Reis Marina (BOT)Turgut Reis Marina (BOT)

Customs Customs İpsala Border Gate (BOT)İpsala Border Gate (BOT)

Drinking WaterDrinking WaterYuvacık Dam (BOT)Yuvacık Dam (BOT)

Kamu Hizmeti İmtiyazları İmalat Sanayii İmtiyazlarıKamu Hizmeti İmtiyazları İmalat Sanayii İmtiyazları

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Build-Operate-Transfer LegislationBuild-Operate-Transfer Legislation

Build-Operate LegislationBuild-Operate Legislation

Build-Build-Lease-Lease-Transfer LegislationTransfer Legislation

Transfer of Operation Rights and Long Term Leases Transfer of Operation Rights and Long Term Leases LegislationLegislation

Other Legislation Related to PPP ModelsOther Legislation Related to PPP Models

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Build-Operate-Transfer LawsBuild-Operate-Transfer Laws The Law on the The Law on the BBuild-uild-OOperate-perate-TTransfer No. 3996 ransfer No. 3996

(Official Gazette: 13 June 1994, no 21959)(Official Gazette: 13 June 1994, no 21959)

The Law on Turkish Electricity Authority for The Law on Turkish Electricity Authority for Generation, Transmission, Distribution and Trade of Generation, Transmission, Distribution and Trade of Electricity No. 3096 (Official Gazette: 19 December Electricity No. 3096 (Official Gazette: 19 December 1984, no 18610)1984, no 18610)

The Law on Construction, Maintenance and The Law on Construction, Maintenance and Operation of Motorways. No. 3465 (Official Gazette: Operation of Motorways. No. 3465 (Official Gazette: 2 June 1988, no 19830)2 June 1988, no 19830)

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Build-OperateBuild-Operate LawsLawsThe Law on the Establishment and Operation of ElectricThe Law on the Establishment and Operation of Electricityity Production Plants and Production Plants and Energy Sales No. 4283 (Official Gazette: 19 July 1997, no 23054) Energy Sales No. 4283 (Official Gazette: 19 July 1997, no 23054)

Build-Lease-Transfer LawsBuild-Lease-Transfer LawsThe Law on Build-Lease-Transfer in health sector No. 5396 (Official Gazette: 15 The Law on Build-Lease-Transfer in health sector No. 5396 (Official Gazette: 15 July 2005, no 25876)July 2005, no 25876)

Transfer of Operation Rights Law Transfer of Operation Rights Law The Law on Privatization No. 4046 (Official Gazette: 27 November 1994, no The Law on Privatization No. 4046 (Official Gazette: 27 November 1994, no 22124) 22124) Law No. 5335 (transfer of operation rights of airports and passenger terminals by Law No. 5335 (transfer of operation rights of airports and passenger terminals by State Airports Authority) State Airports Authority) (Official Gazette: 27 (Official Gazette: 27 April 2005April 2005, no , no 2579825798))

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Other Legislation Related to PPP ModelsOther 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 Demands by the Public Institutions Regarding the PPP ApplicationsRegarding the PPP Applications

General Directorate of General Directorate of State Airports AuthorityState Airports Authority•Rehabilitate-Operate-Transfer, Long Term LeasesRehabilitate-Operate-Transfer, Long Term Leases

Ministry of HealthMinistry of Health•Design-Build-Finance-Operate-Transfer, Rehabilitate-Design-Build-Finance-Operate-Transfer, Rehabilitate-Operate-TransferOperate-Transfer

•Establishing an administrative structure for the PPP Establishing an administrative structure for the PPP ProjectsProjects

•A new comprehensive and flexible legal frameworkA new comprehensive and flexible legal framework

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Demands by the Public Institutions Demands by the Public Institutions Regarding the ApplicationsRegarding the Applications

General Directorate of State RailwaysGeneral Directorate of State Railways•A new legislation for new PPP modelsA new legislation for new PPP models

DLHİDLHİ•Complete(finish)-Operate-Transfer, Lease-Operate-TransferComplete(finish)-Operate-Transfer, Lease-Operate-Transfer

•Project prioritization in accordance with the development plans and sectoral Project prioritization in accordance with the development plans and sectoral master plansmaster plans

•Effective coordination among related public bodies responsible and authorised with Effective coordination among related public bodies responsible and authorised with the implementation of the PPP projectsthe 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 Fundamental Problems of the PPP Applications in TurkeyApplications in Turkey

1. Limited Number of PPP Models in the Laws1. 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 Laws2. Lack of Harmonisation among PPP Laws• Several sector specific and model specific PPP

laws

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Fundamental Problems of the PPP Fundamental Problems of the PPP Applications in TurkeyApplications in Turkey

3. Lack of Central Administrative Structure 3. Lack of Central Administrative Structure for the PPP Projectsfor 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 Requirements for Succesfull PPP ProjectsPPP 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 for the Ongoing ProblemsOngoing 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 LawDraft 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

1 TURKISH EXPERIENCE IN PUBLIC-PRIVATE PARTNERSHIPS.

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