1 GAIT Turkish-EU Partnership for Sustainable Transportation Massimo d’Eufemia EIB Group Representative in Turkey Grand Cevahir Hotel and Convention Centre Istanbul, 9 October 2015 European Investment Bank Group

2 The European Investment Bank (EIB) Long-term finance promoting European objectives European Union’s long-term lending bank set up in 1958 by the Treaty of Rome. Shareholders: 28 EU Member States Governance Board of Governors – EU Finance Ministers Board of Directors – Member States & European Commission Management Committee – EIB’s executive body Audit Committee – independent, non-resident European Investment Bank Group

3 EIB’s contribution to further EU policy goals Within the Union and Pre-accession countries, the Bank has following Public Policy goals: Increase in Growth and Employment Potential * Knowledge Economy *Trans-European Networks (TENs) *Competitive and secure energy *Urban renewal and regeneration * Small and medium-sized enterprises (SMEs) and mid-cap enterprises Environmental Sustainability * Environmental protection *Renewable energy and energy efficiency *Sustainable transport Economic and Social Cohesion Climate Action European Investment Bank Group

Key figures European Union:EUR69 bn Partner countries:EUR8 bn Total lending:EUR77 bn European Investment Bank Group

5 EIB in Turkey: a long-standing partnership EIB has been lending to Turkey since the mid 1960s; with an overall lending volume of close to EUR 21bn over the last decade. Step change in lending activity since 2005, given the status of Turkey as Candidate Country for EU Accession. Turkey ranks first among EIB recipient countries outside EU, with a lending volume of some EUR 2bn annually over the last years. EIB’s role is to support the country’s economic development and assist the country in its pre-accession phase to the EU. EIB stands for tangible contribution to priority projects that make a difference to the population of Turkey. Lending priorities are set in consultation with the EU and the Turkish Authorities. European Investment Bank Group

6 Financing Infrastructure in Turkey Investing in infrastructure is one of the key priorities for Turkey to underpin its economic growth potential. Transport sector is the main focus in terms of budgetary allocations and investment priorities. Further key priorities include energy, earthquake risk mitigation and the environment. Over the last decade, EIB has financed some EUR 4.6bn in the transport sector, both for flagship national projects but also local authority investments in Light Rail. Most infrastructure financing is with the sovereign, or with dedicated financial intermediaries. EIB also made a major contribution to the financing of the Eurasia Tunnel PPP projects. European Investment Bank Group

7 Financing Infrastructure in Turkey 2005 – 2014 EUR 5.5bn EIB can finance up to 50% of Project Costs and provide very long tenors, typically required for infrastructure and of particular importance in the Turkish market - Transport Istanbul – Ankara HSL EUR 1,450m Bosphorus Railway TunnelEUR 1,050m Eurasia Tunnel EUR 270m Rail rehabilitation (freight) EUR 145m Light rail, urban transport (Antalya, Samsun, Izmir, Istanbul and through ILBank)EUR 1,316m - Environment Wastewater, water (Bursa, Samsun and through ILBank) EUR 255m Flood Prevention and Protection EUR 100m Earthquake Risk Mitigation EUR 500m Afforestation & Erosion ControlEUR 420m European Investment Bank Group

8 EIB Transport Lending Policy Consistency with EU Policy The EIB is the EU bank – The EIB Lending Policy reflects EU policy and EU Directives For the rail sector, aspects of particular relevance include resource efficiency, sustainability and rail interoperability The EIB Transport Lending policy is established, following a close consultation with numerous contributions from several EC Services European Investment Bank Group

9 EIB Transport Lending Policy Relevant Aspects – Rail Funding railways will continue to be a priority, as these are intrinsically the most promising in terms of reducing greenhouse gas emissions per transport unit. Lending to sound projects in rail will be prioritised, even when they are neither TENs nor located in assisted areas. Efforts will be made to enhance lending to these sectors. Eligibility categories: TEN-T, economic and social cohesion; external mandates; and environment, i.e. supporting sustainable transport solutions is always applicable for rail projects. Urban rail: same eligibility and policy as above European Investment Bank Group

10 EIB Transport Lending Policy Requirements for Eligible Projects Projects to be designed in accordance with relevant standards as applicable, e.g.: Agreement on Main International Railway Lines (AGC,1985) Agreement on Important International Combined Transport Lines and Related Installations (AGTC, 1991) Technical Specifications for Interoperability, TSIs – both for Infrastructure and Rolling Stock Projects to be technically, economically, environmentally and socially sound. Financial Sustainability of Rail Sector. European Investment Bank Group

11 EIB Transport Lending Policy Some Additional Comments EIB Cost Benefit Analysis (CBA) takes account of environmental externalities CO2 emissions are systematically computed into the CBA For certain projects, other external environmental costs and benefits are also internalised in the CBA analysis, e.g. noise, congestion, overcrowding Railway projects can take a variety of forms: Rehabilitation or upgrading of existing rail infrastructure including stations, possibly including electrification, re-signalling… Freight facilities, including intermodal terminals New lines, including High-Speed Rail Rolling Stock – both conventional and High-Speed, both freight and passengers, both for incumbent operators and new entrants European Investment Bank Group

12 EIB Financing Instruments EIB has at its disposal a wide and flexible portfolio of financing instruments to support TEN projects Direct Loans Project SPV (PPP) Project finance with direct project risk Equity through Funds Standard Loans “Traditional” EIB lending instrument Guaranteed basis Represents the bulk of EIB’s lending volumes Intermediated Loans Banks Structured Finance Facility (SFF) Established in 2001 Expands the ability of EIB to provide financing Allows lending to projects with higher risk (PPP’s) Allows for more flexible financing solutions Public or Private Sector European Investment Bank Group

EIB Public Transport Lending 13 European Investment Bank Group

What’s next? 14 We are looking at some rehabilitation railway projects (double track, electrification). We are working with the EUD and the Ministry of Transport on the strategic Halkali-Kapikule line, freight corridor connecting Istanbul with the EU border in Bulgaria. We continue our support to Istanbul metro project: 4.Levent - Haciosman extension (completed) and Uskudar - Cekmekoy metro (under construction, due for completion in 2H2016). We just signed on October 6 th our second loan to ILBank: 250 m EUR encompassing for the first time urban transport. We look forward to engaging with the Ministry of Transport and KGM on achieving Turkey’s road safety target in 2023 to reduce Fatality Rate below 1/100MillionVehiclexKm. European Investment Bank Group

Conclusions 15 EIB has a long a very successful track record of lending to Turkey, particularly also in the transport sector. EIB transport policy is driven by EU policy, including for rail. EIB lending for high speed and mainline rail projects represents roughly one third of the total EIB lending in the last ten years. Rail financing has been and will continue to be a priority – but projects must be sound. EIB is closely involved in the project’s EIAs and procurement (EIB Guide to Procurement). There are several EIB financing options, but solid financing structure is required to provide the much needed long tenors. European Investment Bank Group

16 Thanks for Your Attention Istanbul office Ankara Office Buyukdere Cad. Levent 199 Ugur Mumcu Cad. No: 88 Istanbul MNG Building Phone: Phone: Fax: Fax: web site: eib.com/eif.com European Investment Bank Group