Road privatizations should be carried out in a single tender
Posted by meb at March 31st, 2007
While big players in the highway-related industries gear up for the forthcoming privatizations of Turkey’s highways, the president of the Turkish Contractors Association (TMB) is urging the government to offer the operating rights and tenders for new toll roads together to avoid future financial problems for the winning bidder. TMB president Erdal Eren warned on Thursday, speaking to an Anka news agency reporter, that “otherwise, the financing of new toll roads will be impossible.” He added, “No governments operate toll roads anywhere in the world.” Eren advised the General Directorate of Highways (KGM) and the Privatization Administration (ÖİB) to work jointly on the issue.
The tenders for constructing the Ankara, İzmir and Bursa toll roads should be added to privatization package of existing toll roads, he counseled. “So the contractors can show the revenues from existing toll roads as an assurance to the bank while getting loans for new road construction,” he explained.
However Eren warned that tenders for new roads on a build-operate-transfer (BOT) basis could cause difficulties in terms of financing. He underlined that toll road revenues have 30 or 40 years’ amortization time and that, in Turkey’s current economic environment, it was very hard to borrow with that long a repayment date.
Eren added that he thought it was a mistake for the privatization process to be carried out by two separate bodies — referring to the KGM and the ÖİB. He pointed out that the KGM could not get sufficient funds from the Treasury to maintain existing roads and build new ones. “The expected lifetime of roads has declined because of the lack of necessary maintenance,” he noted.
He also said that Turkey needed new roads, for example between Gebze and İzmit. The existing road between these transit provinces cannot meet the demands of traffic, particularly that going to the south from Europe. He added that the TMB had been very excited when it heard of plans for a 1,000-kilometer toll road.
On the government agenda
Eren said he was not alone in his concerns about the operation and toll road tenders being separate. “The government is also discussing this. We think they should be done in a single package. The practice of that will be easier.” The TMB president noted that there was also anxiety over the tenders being won by a single firm but said such concerns were unwarranted because “the government will certainly take precautions, so it will be the company [which wins the tender] that assumes the risk.”
source: Today’s Zaman
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