Over the last decade, a large portion of the most well-known megaprojects, including the Yavuz Sultan Selim Bridge, the Eurasian Tunnel, the Istanbul New Airport (also known as the Third Airport), the Osmangazi Bridge, city hospitals in Yozgat and Mersin, and the Istanbul-Ankara High Speed Railway, were completed with the successful and efficient implementation of the public-private partnership (PPP) model. A total of $60 billion has been invested in Turkey's 221 construction projects so far since 1986, when the first PPP projects were launched. While 187 of these projects are operational, 34 projects are still under construction.
According to information compiled from the 2018 Year Program, Turkey is implementing four basic PPP models of build-operate-transfer, build-operate, build-lease-transfer and the transfer of operational rights. With these models, projects in various sectors such as tourism, customs, health and energy facilities, urban infrastructure, highways, airports and ports are being carried out across the country.
Due to the potential of PPP projects to create a major financial burden which could last for many years, project procedures are being assessed with a strategic approach amid aims to utilize public resources effectively and efficiently. Within this framework, the PPP Capacity Building Project has been initiated in an attempt to improve all public-private partnership processes including planning, surveying, tenders and contracts, by taking into consideration international examples.
Since the early 1980s, Turkey has been implementing numerous PPP projects in building highways, airports, railways, hospitals, energy facilities and ports. The contracts for a total of 221 PPP projects had been signed by September. Considering project distribution by sector, energy ranks first with 83 projects, followed by 41 projects in highways, 22 in ports, 21 in health facilities, 18 in airports, 17 in marinas and 15 in customs facilities.
While 187 projects have been made operational, 34 projects are still underway. With the exception of those carried out with the transfer of operational rights' model,the total investment in projects on which implementation contracts were signed reached $60 billion in 2017.
According to information compiled from the Ministry of Development reports, with a contract value of $67.5 billion, airport projects that were completed via the PPP model rank first in sectoral terms, compared to energy projects which have a contract value of $25.3 billion, coming in second on the PPP market. Energy projects are followed by highway projects and health facilities, which are valued at $13.6 billion and $10.6 billion, respectively.
The aim is to develop and expand the use of the model in the context of existing experiences and practices in the world.
Having been initiated within this framework, the PPP Capacity Building Project aims to improve all PPP processes, including planning, surveying, tender and contracting, taking into account examples of international practices.
Projects that are financed through PPP's, including the build-operate-transfer (BOT) model and build-own-operate model-based projects, are generally seen in developing countries like Brazil, Russia, India and Turkey. One of the reasons for adopting this financing model for large investments is that it does not levy the burden on budget, while also enabling countries to benefit from the global money flow and ensure a shorter period of delivery of services.
Moreover, PPP-model financing also allows for a wider time frame through concessions. For instance, the $35.6-billion airport project that resulted in the Istanbul New Airport, which included $6.5 billion in investments in physical assets and $29.1 billion in expected concession fees to be paid over the life of the concession, offers long-term benefits for paying investment costs.
According to information compiled from World Bank data, from 1990 to 2016 the total value of 7,132 PPP model projects worldwide totaled $2.6 trillion. Among the top 10 countries with the largest number of PPP projects from 1990 to 2015, Turkey ranks third with a total value of $165 billion, following Brazil and India with $517 billion and $343 billion, respectively.
Across Europe, the value of PPP projects totaled 12 billion euros in 2016. While the U.K. ranks first with 3.8 billion euros in Europe's PPP market, Turkey comes third after France.
