2017/2018 Review: TURKEY

Overall rating

0 Bankability (%)
 Red Flags


1. Compliance
2. Effectiveness

Compliance / Effectiveness

≥ 90% Very high
70 - 89% High
50 - 69% Medium
30 - 49% Low

< 30% Very low


Concession/PPP Legislative Framework Assessment (LFA)

Concession/PPP Legal Framework
Selection of a Project
Selection of the Private Party
Project Agreement
Security and support issues


Legal Indicators Survey (LIS)
on Effectiveness

Policy Framework
Institutional framework
Award Statistics
PPP Business Environment

Summary Report



PPPs and concessions are governed by quite a few sector-specific laws.

Sector specific laws include:

• the Law No. 3996 (OJ 13 June 1994, no 21959) regarding the implementation of certain infrastructure and public services under the BOT model (the “BOT Law”);

• the Law No. 3096 for the generation, transmission, distribution and sale of electricity by private undertakings (the “Electricity Law“);

• the Law No. 3465 on the building, maintenance and operation of the highways (the “Highways Law”);

• the Law No. 4283 on the erection and operation of thermal power plants under the BO model (the “BO Law”);

• the Law No. 5396 regarding Build Lease of Healthcare Institutions (the “BL Law”);

• the Regulation on Building Healthcare Institutions in Exchange of Lease (the “BL Regulation”);

• the Law No. 5335 amending certain laws including provisions related to the lease and/or transfer of operating rights to airports and the privatisation (including transfer of operation rights) of assets owned by Turkish Railroads (including ports); and

• the Privatisation Law No. 4046.

The list of sector specific laws is not exhaustive because there are more laws that directly or indirectly regulate these fields.

There are three public procurement laws whose scope of application is generally clear.

Having extensive legislation on this matter certainly has some benefits. Laws are rarely silent on any particular question which contributes to legal certainty. The downside is the complexity of the system, which makes it hard to navigate.

Possible project models

There is a variety and flexibility of BOT models/concessions. Under the BOT Law and BLT an economic evaluation/pre-feasibility study is required. The laws require that the private parties be selected in a competitive selection process. Foreign and domestic investors are treated equally.

The use of international arbitration is permitted, while the use of foreign law in agreements seems to be indirectly allowed. Turkey is a signatory to the New York Convention on the recognition of enforcement of foreign arbitral awards (1958).

The framework is somewhat lacking a sense of uniformity, which should be given by the new PPP Law. Another possible shortfall is the fact that there is no variety or flexibility in non-concession PPPs/PFIs and a high degree of stability for the project arrangement provisions is not guaranteed.

Grounds for termination vary between the laws: some laws do not regulate this matter at all, some list the termination grounds in an exhaustive manner, while others set out an open list. The list of grounds for termination may in some cases adversely affect the contractual balance between the parties in favour of the contracting authority. Compensation for termination is neither prohibited nor explicitly regulated by laws, so it is commonly left to be regulated by a project agreement; otherwise the general rules of the Civil Code apply.


Tariffs are solely determined by a government authority. A one stop shop process is not permitted. The Law generally does not explicitly provide for security over concessionaire’s rights or for the creation of security interests over the immovable assets. A private party may assign the project rights upon approval of the relevant ministry. The Law is silent regarding the possibility of a direct agreement. In general, the Law does not provide step-in rights, but there is an exception relating to the energy market.

PPP Policy

The policy framework shows that Turkey has development plans as part of the national public investment system as well as sector-specific strategies. There are some social and political obstacles, as well as an issue concerning the efficiency of internal communication between the public authorities.

The Ministry of Development publishes administrative guides, statistics, analysis and web links that investors find helpful.

Institutional Framework

There is no specialised agency for concessions which would take the role of policy maker.

Contracting authorities are required to seek the opinion of the state Council on the concession agreement. This is not in the form of consent, but, the draft PPP Law introduces changes in this respect by requiring authorisation of the High Planning Council if the concession project exceeds a certain threshold.

There is currently a PPP department in the Ministry of Development, which has an administrative role and also assists in the development of projects in general, the promotion of PPPs/concessions, etc., but is not on a policy maker.

The country has a PPP policy but it seems to be mainly limited to the healthcare sector. The Ministry of Health is perceived as knowledgeable and has substantial experience in healthcare PPP projects. Other sectors have potential but lack capacities so it is crucial to dedicate resources to the training and education of public officials.

This is particularly important as currently there is no central PPP unit (or a central entity in charge of PPP) acting as a “task force” in charge of assisting the contracting authorities in their PPP projects. Instead, each contracting authority (sector-specific ministries and their directorates) acts independently with no sector- or project-specific coordination.

Very favourable business environment

The PPP business environment shows the existence of a capital/bond market, which is present on the PPP/concession field and is involved in debt and equity financing. The same applies to commercial banks, project funds and to a smaller extent to insurance.

There are no major concerns that would put transparency at risk. Private initiatives, such as unsolicited proposals, are welcome. PPPs have a good reputation and the public seems receptive to the benefits associated with them.

Investors’ rights under a project agreement are protected either in judicial procedures that seem to guarantee an adequate protection or in arbitration.

Although project agreements are subject to a private civil law, any action carried out by public officers is governed by administrative law. This often results in bureaucratic difficulties such as lack of proactivity, overdue decision making and no solution-oriented approach.


Award statistics show that a total of 217 PPP projects have been implemented since 1985. Between 2012 and 2017, 8 out of 43 projects have been awarded. According to the 10th Development Plan (for 2014-2018), in addition to the ongoing projects, more will be implemented in the education, health, water, science and technology, transportation and infrastructure sectors.

Currently, the most significant projects are:

• Ankara - Nigde Motorway PPP project in the transport sector, which is in tender and whose value is approx. € 1.6 billion;

• Yozgat Education and Research Hospital PPP project, in the social and health sector, which is in operation and whose value is approx. € 114 million;

• Kinali-Tekirdag-Canakkale-Savastepe Highway on BOT, in the transport sector, which has been awarded and whose value is approx. € 3.4 million; and

• Sancaktepe hospital PPP Project, in the social and health sector, which is in planning and whose value is approx. € 2 billion.

The highest project value was the Istanbul third airport BOT project, of approx. € 6.4 billion.


All sectors have good prospects to develop PPP projects in the next 10 years. This is particularly true for the healthcare sector, which seems to have progressed significantly with the Build-Lease-Transfer Model. There are three healthcare projects that started to operate in the beginning of 2017, 18 healthcare projects have been signed and in the construction phase, two healthcare projects are in the final bid process, five healthcare projects are in the tender preparation process, two healthcare projects are waiting for the approval of the High Planning Council, and one healthcare project is in the pre-feasibility study phase. The total investment sum of these projects is estimated to be approximately 30 billion TL.

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