presentation turkey

HEEPAREAVANNUALMEETINGSuceava,ROMANIA13/18062011

MOTORWAYDEVELOPMENTPROGRAMofTURKEY

1.

TurkishRoadNetwork

2.

GeneralOverviewofRoadInvestments

3.

TargetPPPMotorwayProjectsVision2023

4.

DecisionMakingProcedureofPPP

MotorwayProjects

inTurkey

5.

FinancialFeasibilityofPPPMotorwayProjects

6.

GebzezmirMotorwayProject

7.

NorthMarmaraMotorwayProject

8.

Conclusion


OUTLINE

1.

Turkish Road Network


ThelandsofTurkeyarelocatedatapointwherethethreecontinents;Asia,AfricaandEuropeareclosesttoeach

other,andstraddlethepointwhereEuropeandAsiameet.

BeinglocatedonapassingchannelofintercontinentallinksTurkeyhasalwaysbeenanimportantchannelof

internationaltradelinks

The public roads in Turkey classified in four-tier system: motorways (multi-lane access-controlled highways), state roads, provincial roads and rural roads.

General Directorate of Turkish Highways ( KGM) is responsible for the planning, maintenance, construction and operation of motorways, state and provincial roads.

Special Provincial Administration is in the charge of village and forest roads.

Urban roads are under the administration of municipal authorities.

The road network excluding urban roads is about 354000 km in length.

1. Turkish Road Network


Motorways are the divided state roads with full control of access and two or more lanes for the exclusive use of traffic in each direction to provide uninterrupted flow, on which opposing traffic is separated by a median and collection of tolls are performed at designated points.

State roads are highways of primary importance connecting provincial centers, sea, seaports, airports and railway stations to each other.

Provincial roads are highways of secondary importance linking districts within a province to each other , the provincial center, the districts in the neighboring provinces, the state roads, railway stations, seaports, and airports.

1. Turkish Road Network


31.453 km% 48.3

31.384 km% 48.3

2225 km% 3.4

ProvincialRoads

State Road

Motorway

The density of road network excluding urban roads is close to 50 km / 100 km2

Total asset value of Motorway, State & Provincial Roads is approxiamately 50 Billion

The density of motorways per 1000 km2 is approximately 2.5 compared to the EU 15 average of 17 and the new EU members average of 2.7.

ROAD NETWORK WITH DUAL CARRIAGEWAY (KM)

TOTAL 19 775

TOTAL NATIONAL ROAD NETWORK (KM): 65062

1.



5718 bridges with a length of 247 Km

160 single & double tube tunnels

Total length of tunnels 89.3 Km

1584 bridges and viaducts with a length of 159.8 km

2x3 lane 29 double tube tunnel with a length of 22.8 Km

STATE & PROVINCIAL ROADS MOTORWAYS


TurkishRoadNetworkunderthejurisdictionofGeneralDirectorateofTurkishHighways


1.


General Directorate of Highways started the implementation of a highway upgrading program in 2003 involving the upgrading of existing single carriageway into dual carriageway.

The primary objectives of dual carriageway road construction are to reduce traffic accident fatalities and serious injuries due to head-on collision, and to improve the level of service affected by inadequate capacity.

The length of dual carriageway roads opened to traffic has reached to 19775 km including motorways. The roads were planned to be paved with surface treatment at first in order to provide traffic safety urgently. Later on, considering heavy traffic volume and budget constraints, these sections have been repaved with bituminous hot mixed asphalt.

CONVERSION OF SINGLE CARRIAGEWAY ROADS INTO DUAL CARRIAGEWAY


RoadNetwork:63.143Km

RoadNetwork:65.062Km

ROAD NETWORK

WITH DUAL CARRIAGEWA

Y (2003)

ROAD NETWORK

WITH DUAL CARRIAGEWA

Y (June,2011)

In 2010, Total budget of Turkish Highway amounted to 6.3 Billion Euro. Out of total budget, 67 % has been allocated on state and provincial road construction, upgrading and 9 % on motorway construction, 2 % on road &motorway maintenance works, 6 % on personel expenditure, 3 % on expropriation and the remaining 13 % on other current expenditures. The share of road transport investments in the Gross Domestic Product (GDP) is close to % 1.

THE BREAKDOWN OF 2010 BUDGET


Efficientroadinfrastructureisakeyingredientfornationalandarea

development

Itsupportseconomicactivitieslike

industrial

activities,

agriculturalactivities,

nationalandinternationaltrade

Anefficientroadnetworkcreatesopportunitiesforaccessing

employment,

markets,

educationandhealthfacilities,aswellascontributingtonationalsecurity.


2. General Overview of Road Investments

The

main

objective

of

Road

projects

is

to

expand

and

improve

the

Turkish

Road

Networktomeetthedemandoftheeconomicgrowth.Thepublicfundingisnotable

toaffordhighwayinvestmentsadequately.

Expenditure

on

new

development

and

rehabilitation

of

roads

is

likely

to

be

a

major

componentofnationalbudgeting.

Due

to

high

cost

of

construction

and

budget

constraints

financing

new

motorway

projectsbynationalbudgetisdifficult.

Financing

mechanism

on

the

basis

of

PPP

is

one

of

the

most

effective

alternative

to

realizelargescalehighwayprojectswithoutcausingpublicburden.

The

Build

Transfer

Operate

model

brings

together

the

investment

dynamism

and

project

experience

of

the

private

sector

and

the

support

of

international

finance

institutions.


2. General Overview of Road Investments

General

Directorate

of

Highways

sees

PublicPrivate

Partnership

(PPP)

as

the

key

elementtoimplementlargescalemotorwayprojects.

The

objective

of

PPP

structure

is

to

obtain

necessary

funds

to

implement

these

projectstomeetthepassengerandfreighttransportdemandandthecompetitiveness

oftheeconomy.

Although

BuildOperateTransfer

(BOT)

model

has

been

applied

in

energy

,

airport

constructionandoperationsectorsinTurkeyfortwodecades,PPPingeneralisanew

financialmodelformotorways


3TargetPPPMotorwayProjectsVision2023



AccordingtotheOECD,Turkeyisexpectedtobethefastestgrowingeconomyofthe

OECDmembersduring20112017,withanannualaveragegrowthrateof6.7percent.

Turkeyaimstobetheworlds10thlargesteconomyby2023,onthe100thanniversary

ofthefoundationoftheRepublic.

Theofficialtargetistoincreaseexportsto$170bnin2015and$500bnby2023

GDPin2023isexpectedtoexceed2TrillionUS$with2010prices

TurkishHighwaysconsiderstherealizationofthesomemotorwayprojectsbyPPP

financingbytheendof2023tomeettheroadtransportdemandoftheoverall

economy.Thetotallengthoftheplanned11motorwayprojects

(+1tunnelproject)

is

approximately5250km.

GeneralDirectorate

ofTurkishHighwayshas11motorwayprojects(+1tunnelproject)

initsagendawhichwillbefinancedbyBOT.

TotalCostofProjects~47Billion$TotalMotorwayNetwork2023~7500km

Length (km)

1 4212 4143 342

112320175155

6 3707 48 5359 49010 20211 445

357908

5250

AnkaraSamsunMotorwayIAnkaraKrkkaleDeliceSectionAnkaraSamsunMotorwayIIDeliceSamsunSectionAydnDenizliBurdurMotorwayAydnDenizliSection

SabuncubeliTunnel

TARGET BOT MOTORWAY PROJECTS 2023

TOTAL

GeredeMerzifonGrbulakMotorwayIGeredeMerzifonSectionGeredeMerzifonGrbulakMotorwayIIMerzifonGrbulakSection

4

5

12

AydnDenizliBurdurMotorwayDenizliBurdurSectionKnalTekirdaanakkaleBalkesirMotorway

AnkarazmirMotorwayAfyonkarahisarAntalyaAlanyaMotorwaySivrihisarBursaMotorwayanlurfaHaburMotorway(IncludingDiyarbakrConnecting)

GebzeOrhangazizmirMotorwayNorthMarmaraMotorwayAnkaraNideMotorway



4

DecisionMakingProcedureofPPPinTURKEY


Infinancialanalysis,projectincomesarecomparedwiththeprojectexpenditures

incurredfromthecosts:ConstructioncostofmotorwayandbridgeMaintenanceandrepairmentcostofmotorwayandbridgeOperationcostofmotorwayandbridgeTaxesReimbursementofcreditprincipalandinterestAfterthecomparison,projectestimationisconductedonthebaseofoneoforseveral

assessmentparametersasInternalRateofReturnNetPresentValueBenefit/CostRatio.

5FinancialFeasibilityofPPPMotorwayProjects


Shareholders

E

q

u

i

t

y

D

i

v

i

d

e

n

d

Lender

L

o

a

n

P

r

i

n

c

i

p

l

e

P

a

y

m

e

n

t

I

n

t

e

r

e

s

t

P

a

y

m

e

n

t

Government Users

T

o

l

l

R

e

v

e

n

u

e

Infrastructure

O

p

e

r

a

t

i

n

g

,

M

a

i

n

t

e

n

a

n

c

e

C

o

s

t

Project Entity

(2) Shareholders View (3) Lenders View

(1) Overall Investment View

2

1

3

S

u

b

s

i

d

y

T

a

x

Contractor

C

o

n

s

t

r

u

c

t

i

o

n

C

o

s

t

S

h

a

d

o

w

T

o

l

l

FinancialAnalysisfromdifferentpointofviews

financialanalysiscanbe

assessedaccordingtooverall

investment,shareholdersand

lender

projectsareanalyzedonthe

baseofoverallinvestment(1)

andshareholders(2)


5FinancialFeasibilityofPPPMotorwayProjects

TwomostdevelopedregionsofTurkey,namely

MarmaraandAegeanRegions.

MARMARA

REGION

AEGEANREGION


Turkeyconsistof7regionsMarmaraAegeanMediterraneanBlackSeaCentralAnatoliaEasternAnatoliaSoutheasternAnatolia

CitiesofMarmara&AegeanRegions

6


About60%ofTurkeystotalGDPis

producedbythesetworegions.

About43%Turkeyspopulationlivesin

MarmaraandAegeanRegions


6


%38offreighttransportinTurkey

takes

placeinthesetwo

regions.

%41ofpassengertransportinTurkey

takes

placeinthesetwo

regions.


6


190 365

226 913

80 125

6



ThemotorwaycrosseszmitBaythorougha3000mlongsuspensionbridge.

Travel

time

for

car

users

who

use

peripheral

state

road

is

70

min,

60

minutes

with

ferrypassageandonly6minwithsuspensionbridge.

World

2nd

suspension

bridge

with

longest

main

span

(1700

m)

after

Akashi

Kaikyo

Bridgewhichhascentralspan

1991m


6


1.

LengthoftheroadbetweenGebzezmirwillbeshortenby140

km

(approximately

90kmzmitBay).Traveltimewilldecrease810hoursto

3,54hours.2.

EconomicIRRoftheprojectwillbeabout14%

ResultsofeconomicandfinancialfeasibilitystudiesofGebzezmir

Motorway

Projectaregivenbelow:


5


3.

FinancialimplementationmodelisBOT.4.

Consortiumthatwillconstructandoperatethemotorway,willcollecttollsfrom

theroadusersforspecificdurationtoreimbursetheprojectcosts.

5.

Tollpriceofpassengercaris0,05$/km+VATforhighway,35$+VATforzmitBay

Bridge

6.FinancialIRRoftheprojectwillabout8.8%fromtheProjectEntityspointof

view.

7.

Inordertodecreasetheoperationtime,trafficguarantees

whichvary17000

40000pcu/daily

fordifferentsectionsaregiven.8.

Asaresult,49yearsoperationtimedecreases22years4months

(including7

yearsconstructiontime)

9.

EstimatedcostofGebzezmirMotorwayProjectisabout$6

Billion.(including

taxesandexpropriation)


5


Length 299 km motorway (2x3/2x4 lanes)

115 km connecting road (2x2 lanes)

Suspension Bridge 1275 m mid-span 1875 m total lengthCosts (incl.TAX & Expropriation) $ 6.2 Billion

Technical & Financial Specifications of North Marmara Motorway

STAGE: Will be tendered in August 2011

7

NorthMarmara

MotorwayProject



7

NorthMarmara

MotorwayProject

North

Marmara

Motorway

Project

(Including

3rd

suspension

bridge

on

Istanbul

Strait)

is

consistof299kmmotorway,115kmconnectingroadsand1875msuspensionbridge.

Totallengthoftheprojectis414kmandtheprojectincludesnumerousviaductstunnels

andotherinfrastructures.

The

estimated

approximate

cost

of

the

project

is

$6.2

Billion

including

taxes

and

expropriation.

Theaimoftheprojectis: To

decrease

the

traffic

congestion

at

2

suspension

bridges

on

Istanbul

Strait

with

an

alternative

suspension

bridge

that

will

locate

on

the

north

of

Istanbul

close

to

Black

Sea

region


7

NorthMarmara

MotorwayProject

Average

Annual

Daily

Traffic

volume

of

existing

bridges

are

approximately

400

000

andthemobilitytendstoincreaseinthiscorridor.

Marmara

region

is

densely

populated

and

economically

developed.

As

a

result,

decreaseintheroadservicecapacityinheritstheeconomicalactivitiesandresultsin

lossoftime,workforceandmoney.

Theadditionaltrafficthatwasconstrainedby

road

capacity

will

also

increase

local,

nationalandinternationaltraffic.

FinancialimplementationmodelisBOT.

Economical

and

Financial

Analyses

of

this

project

were

finished

by

GDH

on

August

2010andtheprojectwillbetenderedinAugust2011.


7

NorthMarmara

MotorwayProject

MarmaraandAegeanRegionsaretwomostimportantregionsofTurkey.

Accordingtofeasibilitystudies,Gebzezmir&NorthMarmaraMotorway

Projectswillhavesocioeconomicbenefitsontheseregions.

These2projectsconstitutethemajorpartofVision2023

These2projectsarealsopartofTEMNetwork&ERoads

TheBuildTransferOperatemodelbringstogethertheinvestmentdynamism

andprojectexperienceoftheprivatesectorandthesupportofinternational

financeinstitutions.

GDHseesPPPasakeytofinancethemotorwayprojects.

8Conclusions:


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