Turkey is one of the first jurisdictions in the world to
have adopted a set of laws falling under the general umbrella
of public-private partnership (PPP) legislation. However,
Turkey has neither PPP-specific laws nor a central PPP
governmental authority. During the 1980s and 1990s, new methods
of delegation – such as build-operate-transfer (BOT),
build-operate (BO) and transfer of operating rights (TOR)
– emerged as alternatives to the inflexible concession
method, marking a distinct shift to the use of private-law
contracts under which both parties enjoy equal status.
Today, the BOT model is used for many greenfield
infrastructure projects in different sectors, while the
concession method is still in use for the transfer of operating
rights over existing publicly-owned infrastructure facilities.
In the energy sector, over 30 power plants with a total
established capacity of approximately 10,000MW – more
than 20% of Turkey's power production capacity – have
been completed under BOT and BO schemes.
Key projects in other sectors involving construction,
renovation and current operation by the private sector include
all of the six main airports of Turkey, numerous leading
industrial ports, yachting ports, main customs service
stations, highway roadside facilities and a road tunnel.
On paper, a number of sector-specific PPP laws have been
available to facilitate such schemes, including the Law on
Granting Authorisation to Institutions Other than the General
Directorate of Highways for Construction, Maintenance and
Operation of Highways (Law No 3465) and Law No 5335, among
others, regarding the transfer of operation rights of airports
and passenger terminals by the State Airport Authority for the
transportation (roads and airports) sector, and Supplemental
Clause No 7 of the Law on Health Services (Law No 3359) for the
However, application of these laws has remained limited
until now, and efforts are underway to effectively regulate all
PPP model projects under the all-encompassing Draft PPP Law by
repealing the current scattered legislation.
Despite the existence of successful BOT projects in
operation – particularly airport projects and large
power plants – there are weaknesses in the legal and
institutional framework of Turkey's PPP model that may
discourage stakeholders and thwart the categorical success of
the PPP model in line with international best practices. Such
hurdles facing the PPP model's comprehensive success have led
the government to prepare a new PPP framework law (Draft PPP
Although predicting the precise timing of its enactment is
not possible, the Draft PPP Law is expected to be included on
the parliamentary agenda in the current legislative year. The
draft law indicates that its secondary regulation setting forth
detailed provisions for implementation will be drafted by an
inter-ministerial commission within six months following the
release of the law.
The most recently-published version of the Draft PPP Law
introduces the following key provisions:
- PPP is defined by law for the first time. It is defined
as a general model covering all sub-models, such as BOT, BO,
TOR and unnamed hybrid models.
- All laws currently in force regulating different PPP
sub-models are to be revoked.
- Provisions of Law No 4046 on Privatisation
Implementations regulating the TOR method are to be deleted,
thereby removing the current link between privatisation and
- Standard provisions and procedures will be applicable to
all sub-models, for example the rules for starting a project,
tendering, risk sharing, project assessments and dispute
- The General Directorate of Public-Private Cooperation, a
new PPP unit, is to be established within the central
government. In addition to supervising public entities, the
authority will assume an implementing role in the PPP project
cycle. The new unit will also approve feasibility reports and
- The availability of the Treasury guaranty instrument for
payment obligations of non-central-government contracting
authorities, such as municipalities or state economic
enterprises, is to continue. Although details are expected to
be revealed in the secondary regulation, a new guaranty form
for central government entities that is not now available is
proposed in the draft.
- The PPP model has been expanded to cover all sectors, in
addition to the classic investment sectors listed in Law No
3996 on the Realisation of Certain Investments and Services
within the Build-Operate-Transfer Framework, such as
transportation and energy. The new PPP model is designed to
cover any kind of government facility, including prisons,
state hospitals and state schools.
- Parallel to European Union legislation, competitive
dialogue and negotiation methods are provided for tenders of
complex PPP projects or in the event that completion of other
tender methods fails.
- Sharing project risks between public and private parties
and allocating risks to the best-equipped party are
established as key goals.
The new legal regime for PPPs will usher in eagerly awaited,
highly useful changes to the present state of affairs. The
Draft PPP Law aims to introduce a unified regulation covering
all PPP model projects, which are currently regulated by
disjointed pieces of legislation. The new definition of PPP
will provide a more flexible approach that permits hybrid
models, increasing adaptability for project-specific needs.
The new Treasury guaranty will provide a privileged payment
mechanism avoiding delays for payments to be made to PPP
companies by central government agencies outside the
traditional payment mechanism. These and other advantages in
the Draft PPP Law's key provisions will mark the dawn of a new
era for the delegation of public services to the private sector
Kemal Mamak and Mert Oguzülgen