SARIİBRAHİMOĞLU LAW OFFICE

PPP in General With PPP as an alternative form of procurement, the public sector will focus on acquiring services at the most cost-effective basis, rather than directly owning and operating assets. The public sector seeks to bring together the expertise and resources of the public and private sectors to provide services to the public at the best value for money. 2

Different Models of the PPP Projects There are many possible PPP models; Joint-ventures Strategic partnerships Design-Build-Operate Design-Build-Finance-Operate 3

PPP Model in Turkey Hydroelectric Power Plant

PPP is a New System for Turkey Having the PPP’s historical background based in Anglo-Saxon Legal System causes adaptation problems since our legal system is based on Continental Europe Legal System (as in Austria) and has administrative courts acting in accordance with the principles of French Administrative Law. PPP legislation commission is formed with the leadership of a civil ‘PPP Association’. Same in Austria, our legislation studies are still continuing by the PPP Legislation Commission, not completed yet. 5

Difficulties Faced in PPP Projects The primary problems faced in PPP co- operations realized with Municipal Incorporations are; Municipal Incorporations showing political tendency (such as employing officers that they know personally), therefore preventive measures have to be taken to eliminate such obstacles. The issues of professional management have to be added in the PPP agreements in order to not face any potential future distresses. 7

Healthy Cities Projects To name the difficulties that are faced in the development process of the PPP Projects the example of the “Healthy Cities Project”,which is being implemented together with WHO, will be explained. The said WHO project includes 24 cities in Turkey that will have health complexes with all necessary facilities. In this regard, the most important problem at this stage is regarding property issues. (ex; expropriation) 8

The New Regulation Regarding the PPP Projects The regulation has taken place in the Official Gazette dated February 9th, 2009 regarding PPP, “Regulation towards Allowing the Public Institutions to Obtain (Not Donation) Foreign Credit without Treasury Guarantee and the Tracking of this Foreign Credit” The municipalities will have to be examined in greater detail and terms of agreements will be developed (ex: insurance claim). Foreign capital companies will expand their business areas thanks to the new regulation (as contrary to the old system, of "Treasury Guarantee + Treasury Permit“) 10

The scope of the regulation has expanded the authority of the institutions such as KIT’s (State Economic Enterprise) and BIT’s (Municipal Economic Enterprise). KIT’s (State Economic Enterprise) have more success in indicating the sources as their projects are registered and approved by the government budget. (Although they do not have a Treasury guarantee, being subject to the annual budget can be considered as a implicit guarantee). 11

Having Treasury Guarantee in PPP Projects? In the old system, "Permission" was given together with the Treasury guarantee, In the new system "Permission" is not given as the Treasury guarantee, but a basic source of control / supervision / management in the form of sustainability. The “Permission” is not required at one-year term loans in foreign credits, to not cause changes in the annual debt payment program. 12

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