NEW HORIZONS FOR PPPS IN TURKEY
Find here the article written by the Executive Director at Institute for Public Private Partnerships - IP3. Mr. David Baxter is one of our honourable speakers of Istanbul PPP Week.
Recently I was invited to be a speaker at the 1st Istanbul PPP Summit that will take place in Turkey between November the 2nd and the 5th of 2015. This invitation, which I have accepted, has prompted me to do some homework reading on the status of PPPs in Turkey. In this post I share some of the observations that I have managed to gather through perusing available online literature.
Public Private Partnerships (PPPs) are alive and well in Turkey. The ever-growing list of PPP projects that are being proposed, as part of a national strategic PPP infrastructure pipeline (included under the 10th National Development Plan), is driving the need to develop a enhanced PPP Enabling Environment that will entice private sector investors and ensure a forward looking favorable PPP climate.
PPP projects have been implemented in Turkey since 1994 through the adoption of the PPP Laws (3096 and 3996), which covered transportation, energy, and water projects built under BOT and BO models. Since the enactment of these PPP Laws investors, both domestic and international, have shown considerable interest in PPP projects in Turkey which are being driven by the Turkish Government’s need to address its huge infrastructure development needs and the need for an alternative source to fund these needs. Health PPPs have also been supported by legislation, specifically Law 5396 of 2005. The Privatization Law (4046) also allows an interface between PPP models and privatization implementation.
Large PPP projects (planned, under construction, or completed) cumulatively worth over $ 30 billion that are worth mentioning include the:
- Gebze-Izmir Highway BOT project
- The İstanbul third airport BOT project tender
- The North Marmara highway and Bosphorus Bridge project
- Kayseri Integrated Health Campus is the first PPP project in Turkey
- Ankara Etlik Integrated Health Campus Project
- Ankara Bilkent Integrated Health Campus Project
- Elazig Integrated Health Campus Project
- Ankara-Nigde Highway PPP project
- 30 BOT and BO power generation plants with a capacity of 8,500 MW
The Turkish Government and its PPP stakeholders have realized, that for PPPs to be successful, PPP best practices have to be identified, shared and nurtured by public and private sector parties. It is noteworthy to note that Boğaziçi University, a partner in the 1st Istanbul PPP Summit, has included a PPP training program as part of the Istanbul PPP Week under which the PPP Summit will fall. This to me points to the seriousness of the organizers and its public and private sector partners regarding the need to introduce an agenda that will nurture PPP best practices in Turkey.
It is in the best interest of the Turkish State to acknowledge that it has a responsibility to support PPP projects. For its national PPP program to grow, the Turkish State needs to ensure at a minimum: ongoing economic and political stability; support flexibility and transparency in contract negotiations; strengthen institutional assistance through capacity building programs; and foster momentum across all government institutions with an unwavering cohesive and collaborative national PPP program.
An enabling environment supported by legal recourse in Turkey will attract PPP private sector partners who are particularly partial to markets where there is transactional consistency and the “rules” of engagement are clearly articulated and understood.
It is encouraging to note that as Turkey enters a new round of even larger PPP projects (projected to be in the vicinity of $100 billion in the next 10 years) that the Government of Turkey intends to update and enhance its PPP program with new legal and administrative framework reforms. The next few years will be interesting in this regard as Turkey navigates the path towards reform. It would be best advised to ensure that the government takes note of international best practices and draws on the knowledge of international advisors to smooth the path forward. The creation of the Istanbul PPP Center of Excellence (PPPCoE) is a step in the right path. An institution of this nature can serve as an incubator for best practices and legal codes that will enhance the PPP climate in Turkey. In addition, the PPPCoE could serve as an institution that can help with the education of political stakeholders so that new draft laws when submitted to parliament are received by parliamentarians that can make informed decisions and champion necessary reform.
Hopefully the PPPCOE will collaborate with the working group that has been established to prepare draft PPP legislation. Five focus areas will be addressed for inclusion under the proposed PPP Framework. They include legislation on: Administrative Structures and supporting Bureaucracy; Bidding processes; Technical Consultancy; Project Financing; and Insurance and Insurance Systems. A target date has been set for the end of 2015 for the creation of a draft text for the PPP Framework Law.
I would like to personally congratulate Dr. Eyüp Vural Aydin – the Chairman of the DEIK PPP Committee for his stated effort “to make Turkey and effective base for PPPs.” The Istanbul PPP Week and the 1st Istanbul Summit promise to be interested forums where PPPs in Turkey will be explored and discussed with great enthusiasm by PPP visionaries.
The presence of President Recep Tayyip Erdoğan at the 1st Istanbul Summit is and indication that PPPs are being discussed at by the top decision makers in Turkey. This is in itself a promising development.
Should you need to know more about PPPs, please visit www.ip3.org
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