PUBLC-PRVATE SECTOR

PARTNERSHP PRACTCES
N TURKEY
OKTAY VARLER Ph.D.
LEGAL BACKGROUND
n Turkey, there is no specific or central PPP unit.
Public infrastracture investments are planned and
reviewed by the State Planning Organization (SPO).
Undersecretariat of Treasury's role in PPPs arises from
its authorization in issuing Treasury Guaranties for
PPPs.
There are six main laws on PPPs that are:
1) Law No. 3096 dated 1984 on Granting Authorization to
nstitutions Other Than The Turkish Electricity Authority for
Generation, Transmission, Distribution and Trade of Electricity
This law enables private sector to engage in electricity generation,
distribution and trade and forms the legal basis for electricity
generating plants (except nuclear plants) to be built and operated
with the Build-Operate-Transfer (BOT) model and to be operated
with the Transfer of Operation Rights (TOR) model.
There are 25 generation plant projects subject to this Law. 24 of
them under operation. Treasury nvestment Guaranty has been
provided for 10 BOT and 1 TOR projects.
Projects under this law are not subject to tendering process. Past
projects had been assigned to specific investors by the Ministry of
Energy and Natural Resources without open tenders.
Currently, Electricity Market Law No. 4628 avoids granting the
Treasury nvestment Guaranty in the electricity sector for new
projects
2) Law No. 3465 dated 1988 on Granting Authorization to nstitutions
Other Than The General Directorate of Highways for
Construction, Maintenance and Operation of Highways
This law forms the legal basis for highways and related roadside
facilities to be built and operated under the Build-Operate-
Transfer (BOT) model and to be operated under the Transfer of
Operation Rights (TOR) model.
There are 1 tunnel and 35 roadside facilitiy projects under the
BOT model subject to this Law. 25 of roadside facilities built are
under operation. No Treasury nvestment Guaranty has been
provided for these projects.
Projects under this law are subject to tendering process.
3.) Law No. 3996 dated 1994 on Realization Of Certain nvestments
And Services n The Build-Operate-Transfer Model
This law forms the legal basis for numerous categories of
infrastructure investments to be built under the Build-Operate-
Transfer (BOT) model named as bridges, tunnels, dams, irrigation,
drinking and tap water, treatment plants, sewage, communications,
generation, transmission, distribution and trade of electricity, mines
and mining operations, factories and similar facilities, investments
for preventing environmental pollution, highways, railways,
underground and ground auto parks, sea and airports for civil use,
and other similar investments and services.
There are numerous projects subject to this Law. Key projects are of
airport terminals. The Treasury nvestment Guaranty has been
provided only for one project in water sector which is under
operation.
Projects under this law are subject to tendering process.
Law No. 4283 dated 1997 on Construction and Operation of
Electrical Energy Generation Facilities and Energy Sales n The
Build-Operate Model.
This law forms the legal basis only for thermal power plants to be
built under the Build-Operate (BO) Model.
There are 5 projects subject to this Law. All of them are under
operation and Treasury nvestment Guarantee has been provided
for them by the Undersecretariat of Treasury.
Projects under this law are subject to tendering process.
Like Law No. 3096, currently Electricity Market Law No. 4628 avoids
granting the Treasury nvestment Guaranty in the electricity sector
for new projects.
5) Law No dated 199 on Privatisation AppIications
In fact, this Iaw forms the IegaI basis for privatisation However, it
aIso incIudes a chapter on "Privatisation of PubIic Services" in
Transfer of Operation Rights, Lease and Profit Sharing modeIs
The Treasury Investment Guaranty is not granted for projects
performed according to this Law No
) SuppIementary CIause No (Law No 539 dated 25) to the Law
No 3359 on HeaIth Services
This Iatest Iaw authorizes Ministry of HeaIth to contract with private
sector for Iong durations up to 9 years for buiIding heaIth units
and providing non-cIinicaI support services in return for yearIy
rentaIs to be paid to private sector
) Law No 5335 aIIows transfer of operating rights (TOR) of existing
airport terminaIs to private sector
PPP Projects are not included in the Yearly nvestment Programs
prepared by the SPO. However, according to the general PPP Law
No. 3996 High Planning Council approves both the PPP projects
and contracts between public and private sectors .
Most of the PPP projects are in energy sector. n energy sector,
between 1995 and 2001 thirty (30) power plants with a total capacity
of 8500 MegaWatts equaling one fourth of Turkey's power
production capacity have been completed under Build-Operate-
Transfer (BOT), Build-Operate (BO) or (TOR) models. Total
investment cost of these projects are approximately 7 billion US
Dollars.
n airport terminal building and operating projects Turkey has
significant success stories. 6 civil airport terminals of Turkey
including stanbul, Antalya and and Ankara Airport Terminals with
a total investment cost of 1 billion US Dollars has been constructed
and/or renovated by BOT model and they are under operation at the
moment.
After those examples in the past 20 years in public-
private sector partnerships, the Turkish private sector
has got an important experience in infrastructure
services. Nevertheless there were problems mainly
deriving from the lack of legal framework and risk
distribution between public and private sectors. Although
first regulations were made in 1984, the contracts of the
first big energy projects were signed in 1993 and
completed between 1999-2001. This delay decreased
the interest of local and foreign investors or made them
foresee high risk premiums.
Another negative result of the insufficient legal
framework was that arguments focused on legal aspects
so that technical and economical feasibility of projects
and the risk distribution between both sides were not
given so much importance.
A CASE STUDY : BELEK TOURISM
INFRASTRUCTURE PROJECT
As a successful example for public-private sector partnership will
introduce the Belek Tourism Center which is shown as a good
model of governance in tourism by international institutions.
The Belek region on the Mediterranean coast is located 30 km. on
the east side of the city center of Antalya. Belek has 80-150 m. wide
sandy beach and 300 days of sunshine. n neighbouring regions
there is the Hellenistic/Roman city of Perge which is rated second
after Ephesus and the great amphitheater of Aspendos that still
today can hold nearly 15 thousand viewers.
Belek was proclaimed tourism center by the Ministry of Tourism in
1984. First investors in Belek faced big problems about
infrastructure and decided to form a dynamic structure to overcome
the infrastructure problems with the cooperation of the public sector
institutions. With this aim the Belek Tourism nvestors Union
(BETUYAB) was established in 1989.
Investments completed
With the leadership and coordination of BETUYAB following
infrastructure investments were completed in the 1990s:
Drinking water: very good quality drinking water from five wells is
transported to the facilities.
Waste water treatment plants: there are two waste water treatment
plants for 70 thousand person capacity.
Road: the roads of total 45 km. long were constructed in the region.
Electrification: 55 thousand kW/hour capacity power was
established for the requirements of facilities and road illuminations.
Telecommunication: fiber optic lines were laid down and 25 lines
were given to each facility.
ntervention to forest fire Wireless radio network: as the Belek
region is surrounded by forest fire hydrants were placed inside the
forest , a fire intervention vehicle was put into service, all tourism
facilities joined a wireless radio network system in connection with
Forest Area Directorate, Gendarme and BETUYAB and the forest
was surrounded with wire fences of 35 km. long.
Presently, there are 35 tourism facilites in Belek with 35.000 beds. 6 new
hotels are on costruction, further 5 are at the project stage. When these 11
facilites are completed, the total bed capacity in Belek will rise to 46.000.
Tourism facilities in Belek are eighter 5 star hotels or 1st class holiday
villages. All the facilities offer tennis courts, indoor and outdoor swimming
pools, completely equipped health and fitness centers, play areas and many
more possibilities.
The availability of large spaces suitable for golf and the temperate climate of
Belek create a great potential for golf tourism. Presently there are five golf
courses in Belek. Five others are on construction. Belek is a candidate to be
an important golf center at international standards.
Superstructure investments in the Belek region amount to 2 billion US$
totally realized by the private sector. Total expenditures for infrastructure
are estimated to be 350-400 million $, 1/3 met by tourism investors, 1/3 by
the Ministry of Tourism and 1/3 by other public institutions like
municipalities, Ministry of Energy, Ministry of Public Works, etc.