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Turkey Infrastructure Report Q4 2009Published by: Business Monitor International Published: Sep. 2, 2009 - 65 Pages Table of Contents
AbstractDevelopments that started gathering momentum during the first and second quarters of 2009 showedsigns of tangible progress during the end of the second and beginning of the third quarters. This isparticularly in reference to the Izmir-Istanbul highway tender and the privatisation of three more powerdistribution networks. In addition, it was reported in late July that the tender for the third BosporousBridge will finally commence in September 2009. The challenges to all three ventures remain as pertinentas ever. However, the proliferation of activity in Turkey's infrastructure sector is a positive omen for thecoming months.In the utilities sector, from early indications of interest for the three distribution grids on offer, it seemsthat the worst-case scenario of no bids being submitted will not materialise. On the contrary, 52companies submitted applications for pre-qualification. Though not all companies will go through to thenext round, and pre-qualification will be followed by further eliminations and quite possibly withdrawals,the initial number is high enough to at least raise hopes - if not guarantee - that there will be interest in theassets. This development supports a more optimistic scenario that is more in line with our core view ofthe utilities sector being poised for growth, with domestic and foreign energy companies trying to takeadvantage of global trends of asset revaluations to attempt to acquire the grid networks at a better price. Indeed, this is an option that the government will be likely to accept. The key factor here in support ofthis view rests with positive long-term energy fundamentals (namely demographic increase and economicexpansion) that will sustain growth in Turkey's overall electricity demand. Moreover, the government hasover the past year has taken steps to assuage private sector concerns over the low electricity tariffs bypassing several price increases. In the transport sector, after 15 years of planning the concession for the construction and operation of theIzmit Bay Crossing bridge and the highway between Istanbul and Izmir was awarded to an Astaldi-ledconsortium, following the international tender that took place in April 2009. The consortium now has todesign, finance, build and operate the two assets, which have an estimated cost of EUR6bn (US$8.2bn). This is the largest transport concession to be awarded in Turkey since the Marmaray crossing. It isestimated that the consortium could make a very lucrative return on the project, but it should also benoted that the challenges are formidable, starting with finding local and international financiers able andwilling to finance the project. No discussion of Turkey's infrastructure this quarter would be complete without mention of the intergovernmentalagreement on the Nabucco natural gas pipeline. The agreement was signed with muchfanfare on July 13, but the optimism came only from the political quarters, while industry figures pointedout the lack of gas purchase agreements with any of the potential suppliers. Mid-stream energyinfrastructure is definitely a sector to watch in Turkey, as the country positions itself to become a keytransit country in the region. We maintain the same forecasts this quarter, but note that risks are to the upside. The full-year figure for2008 came in worse than expected at YTL44.8bn; we were forecasting YTL46bn. The real growth rateaccording to the statistics institute was -7.6% for 2008 (probably due to the very high raw-material pricesthat eroded industry real value). In BMI's Q409 Turkey Infrastructure Report we maintain our forecast ofindustry value of YTL44bn for 2009; this represents a real growth decline of -9.4%. Our confidence aboutthe viability of new investments in infrastructure, however, is evident from the anticipated robustrecovery of the industry in 2010, when we forecast that the construction industry value will reachYTL47.6bn, or a real growth increase of 3.6%. BMI's Project Finance Rating for Turkey is 37.8, which places it in last place in the Middle East regionand third from last place in Europe. Notwithstanding a low position on both tables, mainly due tosignificant currency volatility risks, the presence of several international majors in the country's transportand utilities sector coupled with the government's willingness to create an environment conducive for theprivatisation of transport and utilities assets are factors that are significantly in favour of the viability forproject finance to develop in the country. Get Full Details About This Report >> |
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