A Turkish-Italian consortium has secured the backing of some of Turkey’s leading banks to help finance the first portion of an ambitious, $6.5 billion motorway project connecting Gebze, near Istanbul, to Izmir, on the Aegean coast.
The consortium – led by Italian concessionaire Astaldi – has signed a limited-recourse $1.4 billion loan with eight banks including Akbank, Finansbank, T.C. Ziraat Bankasi, Turkiye Garanti Bankasi, Turkiye Halk Bankasi, Turkiye Is Bankasi, Turkiye Vakiflar Bankasi T.A.O and Yapi ve Kredi Bankasi.
Each of the banks provided 12.5 percent of the credit facility, Clifford Chance, advisor to the lenders, disclosed in a statement.
“We believe that achieving the signing of phase I (which is the most difficult part of the project in terms of technical difficulty), in an economically difficult environment, is a real success,” the lenders commented, via Clifford Chance.
Phase I of the Gebze-Izmir project, which is set to cost a total of $2.8 billion, includes the building, maintenance and operation of a 3-kilometre suspension bridge as part of the development of the route’s initial 53 kilometres. Astaldi said in a separate statement it expects this first phase to be completed in three-and-a-half years.
The overall project will total 421 kilometres, including the construction of 377 kilometres of new motorway in addition to the widening and refurbishment of certain sections. It will be developed in segments and is expected to reach completion in seven years.
Astaldi said it expects to gross some $24 billion from toll revenues along the route, including $11 billion from Phase I, over the lifetime of the build-operate-transfer contract, which will last for 22 years and four months.
Turkey hit the headlines earlier this year after the government decided to cancel a $5.7 billion roads privatisation package, comprising Istanbul’s two suspension bridges and over 2,000 kilometres of roads.
A Turkish-Malaysian consortium had been named preferred bidder for what would have been Turkey’s second-largest privatisation late last year. But earlier this year, Turkish Prime Minister Recep Tayyip Erdogan voiced his opposition to the sell-off deeming the offered price “too low”.