Public Private Partnership in Turkey

Size: px

Start display at page:

Download "Public Private Partnership in Turkey"

Roger Norman
6 years ago
Views:

1 T.R. MINISTRY OF DEVELOPMENT Public Private Partnership in Turkey SEDEF YAVUZ NOYAN Head of Public Private Partnership Department

2 Outline What is PPP, Rationale for PPP in Turkey The Methods Turkey s PPP Experience Problems of PPP Process The Policy Conclusion

3 Outline What is PPP, Rationale for PPP in Turkey The Methods Turkey s PPP Experience Problems of PPP Process The Policy Conclusion

4 What is PPP? PPP is a financing method which allocates risks and gainings of infrastructure assets and services, between public and private sector within specific model frameworks. A cooperative venture between the public and private sectors

5 Why PPP? A quick and simple answer: Needs are endless, sources are limited

6 Rationale for PPPs in Turkey Budget constraints & the need for additional finance Faster implementation of projects Reduced construction and operation costs Transfer of managerial skills of private sector to infrastructure management and public service provision

7 Outline What is PPP, Rationale for PPP in Turkey The Methods Turkey s PPP Experience Problems of PPP Process The Policy Conclusion

8 PPP Models and Legislation in Turkey Models & Legal Framework & Sectors Build-Operate-Transfer Law No 3996, 3465 and 3096 Build-Operate Law No 4283 Build-Lease-Transfer Law No 5396,652,6428 and 351 Transfer of Operating Rights Law No 4046,5335,3465,3096 Motorway Port Airport Marina Border Gate Power Plant Thermal Power Plant Hospital College Dormitory School Airport Port Power Plant Electricity distribution 8

9 PPPs in Turkey: Existing Legal Framework

10 How PPP projects are submitted: 1) Preparation Stage Strategy Papers Development Plan Medium Term Program NEEDS ANALYSIS Feasibility Analysis Financial Analysis Yearly Program Investment Program Sectoral Strategies APPLIANCE FOR AUTHORIZATION Economic Analysis Social Analysis Public Sector Comparator

11 How PPP projects are submitted: 2) Authorization Stage PUBLIC INSTITUTIONS & SEE s MINISTRY HIGH PLANNING COUNCIL MINISTRY OF DEVELOPMENT MUNICIPALITIES MINISTRY OF INTERIOR MINISTRY OF FINANCE TREASURY

12 How PPP projects are submitted: 3) Tendering and Approval Stage TENDERING PERIOD SELECTION OF PRIVATE PARTNER SIGN THE DRAFT CONTRACT DRAFT CONTRACT TECHNICAL SPECIFICATIONS INSTITUTIONAL SPECIFICATIONS APPROVAL OF THE RELATED MINISTER

How PPP projects are submitted: 4) Models Without High Planning Council Authorization Requirement (Ministry of National Education / Build Lease) MINISTRY OF NATIONAL EDUCATION

13 How PPP projects are submitted: 4) Models Without High Planning Council Authorization Requirement (Ministry of National Education / Build Lease) MINISTRY OF NATIONAL EDUCATION AUTHORIZATION TENDERING PROCESS SELECTION OF PRIVATE PARTNER APPROVAL OF THE MINISTER DRAFT CONTRACT TECHNICAL SPECIFICATIONS INSTITUTIONAL SPECIFICATIONS SIGN THE CONTRACT TENDERING AND APPROVAL

14 Outline What is PPP, Rationale for PPP in Turkey The Methods Turkey s PPP Experience Problems of PPP Process The Policy Conclusion

15 Turkey s PPP Market in 2014 Turkey ranks second in European PPP market according to EPEC (European PPP Expertise Center European Investment Bank & Turkey ranks second across 139 countries according to World Bank 15

16 PPP Investment/Public Investment Ratio 90.00% 80.00% PPP Investment Costs / Public Investments* 85.38% 70.00% 60.00% 50.00% 40.00% 37.05% 30.00% 20.00% 10.00% 0.00% 12.78% 0.52% 0.29% 5.18% 11.18% 4.28% 3.22% 0.29% 0.89% 11.32% 1.48% *Excluding local governments public investments 16

17 Turkey s Experiences Project in Operation Project in Financial Close/Construction Total Project Number Project Contract Value 42,7 billion $ 72,3 billion $ 115 billion $* * In 2015 prices 17

18 Turkey s Experiences Distribution of Project Numbers by Models Build-Operate- Transfer; 100 Build-Operate ; 5 Build-Lease-Transfer; 17 Transfer of Operating Rights; 72 18

19 Turkey s Experiences Health Facility Projects 17 Motorway Projects 29* Airport Projects 19 Border Gate Projects 13 Energy Production Facilities 76 Railway Projects 1 Marina Projects 15 Harbor Projects 21 Culture and Tourism Projects 1 Industrial Inf. Projects 2 * 24 of 29 motorway projects are motorway service facilities. 19

20 Large Scale Projects

21 Avrasya (Eurasia) Tunnel BOT model 3,4 km tunnel (~%80 completed) + connection roads Two storey tunnel for light vehicles (excl. trucks, motorbikes, pedestrians) * In 2015 prices 21

22 North Marmara Motorway Project(3rd Bosphorus Bridge) BOT model 95 km motorway by its completion, will include Bosphorus Bridge (2,16 km) 3rd Planned to be opened in 2017 * In 2015 prices 22

23 İstanbul New Airport BOT model 4 phases Finally, 150 million capacity 4 terminal building 6 runway 16 taxiway * In 2015 prices 23

Council by 2015 The 17 of 27 projects contracts are

24 Large Scale Projects Health Campuses There are totally 27 PPP projects which are authorized by High Planning Council by 2015 The 17 of 27 projects contracts are signed. Total bed capacity is for authorized 27 PPP project 24

25 Succesfully Completed Projects Göcek Tunnel BOT model 860 m tunnel The one and the only toll tunnel in Turkey Operation period: (26 years) 25

26 Succesfully Completed Projects Airports 11 BOT projects 8 Transfer of Operating Rights (TOR) projects 26

27 Succesfully Completed Projects Border Gates Marinas 13 BOT projects are contracted by BOT Operation period: between 7-20 years 14 BOT projects 1 TOR project Operation period: between years 27

28 Incentive Mechanisms o Debt Assumption (Law No. 4749) o Build-Lease Transfer projects (Ministry of National Education, Ministry of Health) 500 Million TL o Build-Operate-Transfer projects 1 Billion TL o Traffic guarantee (motorway projects), passenger guarantee (highway projects) etc. (Law No. 3996) 28

29 Outline What is PPP, Rationale for PPP in Turkey The Methods Turkey s PPP Experience Problems of PPP Process The Policy Conclusion

30 Problems in Planning and Programming Stage o Misperception of carrying out projects free of charge with PPP method o Misperception of realizing projects immediately o Unplanned bidding process 30

31 Problems in Project Designing Stage o Inadequacy of technical, financial and judicial analysis of feasibility reports o Lack of value for money analysis in feasibility reports o Lack of projection of liabilities (debt assumption, revenue and demand guarantees etc.) 31

32 Problems in Financing Stage o Need of project prioritization in the means of project value and sectoral importance o Artificial bottleneck in financing market caused by excessive number of projects 32

33 Problems in Operation Stage o Lack of coordination among public institutions o Need of technical consultancy o Partnership perception between public and private side. o Requirement of transparency performans evaluation and inspection 33

34 Problems in Monitoring and Evaluation Stage o Need of reinforcement on project monitoring and evaluation structure. o Lack of any auditing mechanism on PPP projects except line institutions. 34

35 Outline What is PPP, Rationale for PPP in Turkey The Methods Turkey s PPP Experience Problems of PPP Process The Policy Conclusion

36 PPP in 10 th Development Plan The planned PPP projects have to comply with sectoral priorities mentioned in Development Plan, Medium Term Program and Annual Program. 36

PPP Adhoc Committe During the preparation of 10 th

Turkey has arranged with more than 100 participants

Participant Distribution 21% 2% 16% 2% 8% 51%

37 PPP Adhoc Committe During the preparation of 10 th Development Plan, the first PPP AdHoc Committee of Turkey has arranged with more than 100 participants both from public and private sectors. Participant Distribution 21% 2% 16% 2% 8% 51% UNIVERSITY CONSULTANT FINANCIAL INST. PUBLIC SECTOR NGO CONTRACTOR 37

In order to compile the scattered PPP legislation, a framework law will be prepared.

38 Policies in 10 th Development Plan Publics need to improve the institutional capacity is still of importance. A strategy paper, which will act as a road map, will be prepared. In order to compile the scattered PPP legislation, a framework law will be prepared. The coordination of PPP policies and practices will be strengthened. An effective monitoring and evaluation system, which is able to measure PPP projects risks and effects on budget, will be established. 38

39 Outline What is PPP, Rationale for PPP in Turkey The Methods Turkey s PPP Experience Problems of PPP Process The Policy Conclusion

40 Conclusion: The Way to Success PPP provides additional investment and enhances management for specific projects. Project pipeline must be organized carefully. A sound feasibility study must be prepared. Value for money should be ensured. Coordination, planning and contract management are key points along with the risk allocation. Importance of partnership with ALL partners.

41 Thank You Thank you

Public Private Partnership in Turkey

www.kalkinma.gov.tr T.R. MINISTRY OF DEVELOPMENT Public Private Partnership in Turkey SEDEF YAVUZ NOYAN Head of Public Private Partnership Department Outline Investment Prospects Turkey s PPP Experience