A green financing deal worth 1.24 billion euros ($1.40 billion) for the Turkish Finance Ministry has been signed to fund the development of a new high-speed railway line in northwest Turkey, Standard Chartered Bank said Thursday.

The 200-kilometer (125-mile) railway track being developed by Turkey's Ministry of Transport and Infrastructure via the General Directorate of the Infrastructural Investment (AYGM) is part of Turkey’s strategic vision to improve national transport infrastructure and connect businesses and local communities. The signing ceremony of the financing took place on Nov. 8.

The railway line will link the cities of Bandırma and Osmaneli in the northwest of the country, passing through Bursa province. Bursa is one of Turkey’s most industrialized cities and is not connected to the country’s railway network. Therefore, this project is crucial for the economic integration of the inland industry and the population of Bilecik’s Osmaneli district with the Ankara-Istanbul high-speed railway line.

This historic transaction marks the first green Export Credit Agency (ECA)-supported financing undertaken by the Ministry of Treasury and Finance. The transaction entails 100% financing of the AYGM’s commercial contract for the project’s development with Kalyon, a market-leading Turkish engineering, procurement and construction (EPC) contractor.

Through its well-established ECA relationships and by capitalizing on Kalyon’s expertise in structuring procurement, the bank developed a fit-for-purpose, multi-reinsurance structure to maximize the ECA-supported facilities. This helped achieve long-tenor financing at competitive blended pricing levels all within an expedited end-to-end execution timeline of nine months, achieved through close collaboration with Kalyon and the ECAs.

As the Green Loan Coordinator, Standard Chartered supported the Ministry of Treasury and Finance to identify and confirm the project’s eligibility, as a clean transportation project, for green loan financing and to meet the Green Loan Principles. The bank also structured the financing to meet internationally recognized sustainability standards, including the Equator Principles, International Finance Corporation Performance Standards and the bank’s own Green and Sustainable Product Framework 2021. The project provides clear environmental benefits given the lower greenhouse gas emissions associated with rail transport vis-a-vis road transportation.

Furthermore, the project will help reduce the pressure on developing road infrastructure, while offering better mobility for workers and greater employment opportunities, and an increased flow of business, goods and trade. It will also contribute to the Turkish government’s alignment with the United Nations’ Sustainable Development Goal concerning industry, innovation and infrastructure.