The Law, which has been enacted by the Turkish Grand National Assembly on 11 March 2021, aims for the Ministry to become a party to debt assumption agreements of certain projects implemented by way of the build-operate-transfer model. Projects implemented by way of the build-operate-transfer model are in industry sectors that have been considerably adversely affected by the COVID-19 pandemic. Administrative precautions taken to prevent the spread of the virus together with the current global economic climate complicated the financing of various projects which were tendered and awarded but which have not led to the execution of the respective implementation agreement. The Law includes Provisional Article 4 into the BOT Law[1] and aims to enable foreign financing of these types of projects by offering a more solid and bankable structure.

The Scope of Provisional Article 4 of the BOT Law

Provisional Article 4 of the BOT Law will cover projects based on the build-operate-transfer model which:

• have been tendered after 15 March 2020;


• have not led to the execution of  the relevant implementation agreement by the date on which the Law is published in the Official Gazette;


• are planned to be financed from foreign sources;  and


• are to be implemented by State entities with a special budget (özel bütçeli kuruluş) that the Ministry supervises.

According to such newly adopted Provisional Article 4 of the BOT Law, the Ministry will become a party to debt assumption agreements for build-operate-transfer projects that would satisfy the above-listed criteria to guarantee the financial obligations of the tendering State entity. Therefore, Article 4 or Article 8/A of the Law numbered 4749[2], which requires the approval of the Ministry of Treasury and Finance or the President to enter into such agreements and determine the terms and conditions of such financings, will no longer apply.

Conclusion

The Law has been enacted by the Turkish Grand National Assembly on 11 March 2021 and will enter into force following its publication in the Official Gazette. The Nakkaş-Başakşehir section of the Kuzey Marmara Highway project, the Mersin-Adana-Osmaniye-Gaziantep Railway project, the Ankara-İzmir High-Speed Railway project and the Bandırma-Bursa-Yenişehir-Osmaneli Railway project are expected to benefit from this mechanism. The enactment of the Law is expected to expedite the financing of large projects and assist in implementing various projects that have been affected by the ongoing pandemic.