This document discusses Turkey's approach to public-private partnerships (PPPs). It outlines the Turkish Treasury's role in reviewing PPP projects, providing debt guarantees and investment guarantees, and partially assuming debt in some cases. It provides examples of large transportation PPP projects in Turkey that have received debt assumption commitments from the Treasury. The document also reviews the legal framework for PPPs in Turkey across sectors like energy, highways, and health.

1. Hulya PASAOGULLARI
Head of Department, PPP
Undersecretariat of Turkish Treasury
March 24th, 2015 Paris
OECD 8th Annual Meeting of Senior PPP & Infrastructure Officers

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MINISTRY
OF
HEALTH
MINISTRY OF
CUSTOMS
AND TRADE
MINISTRY OF
TRANSPORT
IMPLEMENTING
INSTITUTIONS
TRANSPORT EDUCATIONENERGYCUSTOMSHEALTH
MINISTRY OF
ENERGY
MINISTRY OF
EDUCATION
TREASURY
MINISTRY OF
DEVELOPMENT
MINISTRY OF
FINANCE
AUTHORISING
BODY
RELATED
INSTITUTIONS
HIGH PLANNING COUNCIL (HPC)

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Commercial risks
Supply risk
Construction risk
Operational risk
Financial risk
Demand risk
Legal framework
Regulatory framework
Dispute resolution
Government policy, taxation
Expropriation & nationalisation
Legal & Political risks
Authority
default
SPV
default
Force
majeure
PPP Contracts

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Compensation payment methodology
Book value compensation
Market value approach
Financing-based compensation
Debt approach
Net present value approach
Main principals
fairness
incentive for the SPV and its lenders
bankability

5. ◦ Revieving PPP prefeasibility studies by
 Turkish Treasury
 Ministry of Finance
 Ministry of Development
◦ Providing debt assumption commitments and
investment sovereign guarantees
◦ Monitoring PPP related contingent liabilities
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Treasury’s role in PPP

6.  Revenue Guarantees by procuring institutions
 Traffic guarantee
 Lease payment
 Conditional specific compensations
 Treasury Investment Guarantees
 Guarantee for payment obligations of input purchasing
commitments and non-performance of its supply
commitments
 Guarantee for repayment obligations of the public
institutions or the appointed company assuming the foreign
debt or bridge loans in case of contract termination
 Debt Assumption Commitment
 Exemption from VAT, Stamp taxes and duties

7. Debt Assumption Investment Guarantee
Applicable for the projects
undertaken by general budget
institutions and special budget
institutions
In case of termination of IC and
transfer of the Facility to the
Implementing Public Authority,
Treasury assumes foreign debt
Treasury will be the primary obligor
of foreign debt
Used to enhance the loan quality
Applicable for sub-sovereign
institutions (i.e. SOEs, municipalities
and special budget institutions)
In case of non-payment/ default of
the guaranteed public institution,
Treasury will pay the defaulted
amount on behalf of that institution.
Public institution will be the primary
obligor of foreign debt
Used to enhance the creditworthiness
of non-central government institutions

8.  Parallel to international applications: debt approach in case of
early termination of the contract
 Debt assumption commitments in case of an early termination
provided that the project assets are taken over by the public
administration
 By authority default & force majeure: % 100 of outstanding
debt is assumed with the financing costs
 By company default: % 85 of outstanding debt is assumed
with the financing costs
 Recent Legistlation: Regulation Regarding Debt Assumption to
be Realized by the Undersecretariat of Treasury (April 2014)*
*:Press Release: http://www.treasury.gov.tr/default.aspx?nsw=iqmgQocZByo=-
SgKWD+pQItw=&id=5&nm=731#
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• Only for foreign financing
• Partial debt assumption option
• Only for PPPs implemented with
• BOT model by general budget and special budget
administrations (transportation, highway, customs)
• BLT model for health and education
• A threshold for the investment amount
• for BOT projects > 1 billion TL
• for BLT projects > 500 million TL
• Subject to a budgetary limit – annual 3 billion $ (@ 2015)
• Hedging cost limit of debt assumption: up to 10% of senior loan

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Before the tender stage
• Public Administrations are liable to send their draft IC to
Treasury with a written request for debt assumption before
publishing the procurement notice
• Treasury assesses the draft IC clauses which are directly related
with debt assumption and gives its affirmative opinion if it
deems appropriate
• Issuance of Council of Minister’s decision determining Treasury
as the authorized institution to negotiate scope, elements and
payment conditions of debt assumption
• Public Administration calls for tender after the Council of
Ministers’ decision

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After the tender is finalized
• Treasury assesses the draft IC clauses which are directly related
with debt assumption and gives its affirmative opinion if it
deems appropriate
• Treasury, SPV and lenders negotiate the project documents
including debt assumption agreement (DAA)
• Treasury submits the agreed terms of debt assumption to
Council of Ministers
• After the issuance of Council of Minister’s decision, DAA is
executed along with the other agreements of the financial
package (IC Direct Agreement, Facility Agreement, etc.)

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(*) For the 1st and 2nd phase of project
Project Name Total Project
Cost
Loan Amount
Eurasia Tunnel USD 1,2 Billion USD 960 Million
Gebze-İzmir Motorway* USD 6,3 Billion USD 2 Billion
3rd Bosphorus Bridge USD 2,9 Billion USD 2,3 Billion

13. • A long standing experience in PPP Model
• Sector and model specific laws for PPP models implemented
Build-Own-Operate
• (Law No. 3096 dated 1984; energy sector)
• (Law No. 3465 dated 1988; highways and roadside fac. )
• (Law No 3996 and Council of Ministers Decree dated
26.04.2011; various sectors)
Transfer of Operating Rights
• (Law No. 4046 dated 1994; various sectors)
Build-Own
• (Law No. 4283 dated 1997; energy sector)
Build- Lease- Transfer
• (Law No. 6428 dated 09.03.2013; health sector)
• (Decree Law No. 652 dated 25.08.2011; education sector)
• (By-Law dated 08.09.2012; education sector)

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Thank you
Hulya PASAOGULLARI
Head of Department, PPP
Turkish Treasury
hulya.pasaogullari@hazine.gov.tr
+90 312 204 73 63