So-called “investments preventing environmental pollution” are defined under the Additional Article 3 as purification, recycling, processing and disposal of sludge; within the scope of zero waste management, waste collection and transportation services, waste processing, recycling and disposal facilities; etc.. In addition:

• investments to prevent environmental pollution can be realised under the built-operate-transfer model by local administrations together with the private sector under a private contractual arrangement not to exceed 10 years; and

• any additional investments for management, maintenance and repair, renewal, capacity increase and modernisation of existing public investments and facilities are also included within the scope.

Key Issues Addressed

Key issues are addressed as follows:

• Projects of local administrations which involve investments for preventing environmental pollution with a total investment amount and/or total operational service cost of less than TL 100 million are not subject to the Presidency’s authorisation decision (Article 4 of the Law). Such projects may henceforth be tendered following an authorisation of the Ministry of Environment, Urbanisation and Climate Change.

• The successful bidder may also perform commercial services and additional investments on the conditions that (i) these are included in the tender documentation; (ii) an approval is obtained from the relevant administration; and (iii) any income received from such services and investments are shared in accordance with a pre-agreed ratio. The revenue sharing mechanism is supported by an account (i.e. a blocked project account) as indicated in the implementation agreement to be signed with the administration. Hence, if the administration fails to make payments, the amounts to be paid will be transferred (except for 10%) to such blocked account by the Ministry of Treasury and Finance and İller Bankası (a Turkish Bank) upon request by the successful bidder.

• A right of construction (i.e. a proprietary right the successful bidder obtains in respect of the facilities to be constructed) with a term of less than 30 years for any facilities to be established is stated to be still an independent and permanent right, thereby allowing these types of investments to become more bankable. In other words, such right of construction can be registered with the land registry as an independent proprietary right and a mortgage may be granted to potential financiers in respect of such right (which was not possible previously for a right of construction with a term of less than 30 years).

A secondary legislation to be prepared jointly by the Ministry of Environment, Urbanisation and Climate Change, the Ministry of Treasury and Finance and the Strategy and Budget Department is now expected.

Conclusion

Henceforth, local administrations and the private sector may team up to carry out projects under the build-operate-transfer model for the prevention of environmental pollution. Certain issues which are key for making these types of projects bankable are dealt with by Additional Article 3, such as an easier procurement method and security rights.