Gulf Construction Online - Road to recovery

Turkey Review

Road to recovery

Turkey’s government leads the way forward in reviving its economy and attracting investments by putting in place a strong primary infrastructure.

01 September 2005

Recovering from a period of low public investment spending, limited greenfield private investment and a hesitant housing market, Turkey has initiated a slew of major investments in its infrastructure, spurring rapid economical growth.

Aware that much development can be brought about through the proper harnessing of its water and soil resources Turkey embarked – as early as in 1977 – on the ambitious Southern Anatolia Project (GAP), which is regarded as one of the largest development projects of its kind in the world.
Scheduled for completion in 2010 – provided current financial difficulties and inflation do not further delay the project – GAP aims to bring under control 28.5 per cent of the total water potential of the area through facilities along the Euphrates and the Tigris rivers and will irrigate nearly 1.7 million hectares of land, or 20 per cent of Turkey’s total irrigable land.
In addition, the project – with an installed energy capacity of 7,476 MW – is expected to meet the energy needs for 22 per cent of Turkey’s production. As an integrated $32 billion project, GAP entails the construction of a series of 21 dams on the Tigris and Euphrates rivers.
The country, which is on road to recovery from the devastating earthquakes that rocked the nation in 1999 and the recession that followed in its wake, has had to turn to international borrowing to press ahead with the many other projects that it is currently pursuing.
This year alone, Turkey’s borrowings include $3.3 billion in loans to finance its urgent public sector projects – a bulk of which is being spent on energy projects to meet the country’s soaring demand. Apart from these projects, there are a number of ongoing mega developments as regards highway, tunnel, pipeline and power and water that Turkey is pursuing with foreign help. Plans are also on the cards to build a new international airport in Istanbul’s European side as the Ataturk International Airport is currently working at overcapacity.
Given the relatively dull domestic market, Turkish contractors have ventured into the contracting sector abroad more aggressively over the past few years (See separate report Page 46).

Power & water
Work has been ongoing for the past five years on the $1.2 billion Greater Melen System, which will pump water 200 km from near the mouth of the Melen River in northwest Anatolia to Istanbul and meet the city’s long-term water needs. An international consortium led by Japan’s Nippon Koe is undertaking the project, which will include dams, pipelines as well as a four-km water tunnel under the Bosphorus. The project is being financed by Japanese credits.
Other major projects in this sector are the $2.2 billion Deriner and the $1 billion Ermenek hydroelectric dam. The Deriner project, located on Coruh River in Artvin province in northwest Turkey, should be ready for commissioning in 2008, while the 309 MW Ermenek dam, under construction on the Goksu River in Karaman province in southern Turkey, would be due for completion in 2007.
Meanwhile, the $240 million Yamula Dam, situated on the Kizilirmak river in the central Turkish province of Kayseri – officially opened at the end of July – will generate 424 million kWh of electricity annually.
Turkey’s industrial major Hema Group plans to build a $800 million thermal power plant and has applied with the Turkish Energy Market Regulatory Authority (EPDK) for a licence to operate it for a period of 20 years. Planned to have an installed capacity of 640 MW.

Roads & railways
Some of the major projects that have received funding this year include the ongoing $2.16 billion, 700 km Eastern Black Sea Coastal Highway, which will extend from Sinop in the north to Sarp on the border with Georgia. Work on a $447 million package of the project – carried out by Turkish contractors – has reached the half way mark.
Work on the $300 million Bolu Mountain Crossing – which ran into financing problems after being launched 12 years ago – is expected to be completed at the end of next year. The tunnel will have six lanes – one for pedestrians and five for vehicles.
Another major infrastructure project is the $4.1 billion Marmaray urban rail project, which was launched last year. The 76.3 km railway line will connect Halkali on the European side of the city with suburban Gebze on the Asian side. The rail system will carry 75,000 passengers an hour and link with the municipal light-rapid rail system and the Metro. Work on the project is earmarked for completion in 2009 and is being implemented by a consortium led by Taisei Corporation of Japan.
Japan has agreed to lend Turkey $941 million for the construction of an estimated $2.8 billion rail tunnel under the Bosphorous strait, which separates Europe and Asia and bisects Istanbul. Construction work on the project – which will run 1,600 m at 60 m below sea level – started last May and is led by a Turkish-Japanese consortium.
The loan by the Japan Bank for International Cooperation is the largest one-off credit extended by the Japanese government to a single project.
Officials say the tunnel, which will link surface railroads on the city’s European and Asian sides, will be able to resist an earthquake measuring up to nine on the Richter scale because it is being built into 2 m of rock.
Meanwhile, Malaysia’s Tan Sri Halim Saad’s private entity is re-evaluating the feasibility of the $1 billion bridge project that it had secured in Turkey, after Turkey gave the go-ahead for the tunnel project. The proposed bridge is supposed to be built over the Bosphorus Strait, which links the Black Sea and the Sea of Marmara.
Among other rail projects, bids for the construction of the Inonu-Kosekoy part of the Istanbul-Ankara high-speed train line were due last month.
Work has just been launched on the Gars-Tbilisi-Baku railway line connecting Turkey, Georgia and Azerbaijan and renovation of railway stations has started along the transport corridor. Azerbaijan will be funding part of the $500 million line, which will come into operation in 2008. A new rail line extending for 98 km will be built under the project

Pipelines
This July, Greece and Turkey have launched work on a project to build a natural gas pipeline connecting the two countries, and by extension, gas-producing regions in the near east with west European markets. Initial construction work on the 11 billion cu m per year capacity gas pipeline will be limited to the two on-land sections running between Karacabey in west Turkey and Komitini in Greece. The line is expected to begin operations before the end of 2006 with initial exports limited to 750-million cu m per year and rising to 3 billion cu m per year as per the 15-year supply agreement signed in 2003 between the two national gas supply companies Depa and Botas. The gas is to be supplied by Botas from volumes of gas it imports from Russia and Iran.
Eight companies have submitted bids for the construction of a 17 km sub-sea section of a pipeline running across the Sea of Marmara which forms part of the estimated $303 million Turkey-Greece natural gas pipeline project. The natural gas from the Caspian region will be transferred to Europe via Turkey and Greece with 285 km long pipeline, of which 209 km is within Turkish territory. The construction of the pipeline is expected to end in 2007.
The Turkish government is also backing a project to construct an oil pipeline that would carry crude from the Turkish Black Sea port of Samsum to its Mediterranean terminal at Ceyhan, thus bypassing tanker deliveries through the oft-congested Bosphorus and Dardanelles straits. The project is reported to be at an advanced stage.
The pipeline would also spell good news for Turkey’s plans to turn Ceyhan into a major energy hub, with Russian and Kazakh crude being made available via the new line in addition to Iraqi crude via the Kirkuk-Ceyhan line and Azeri crude due to begin arriving in Ceyhan in September via the Baku-Tiblisi-Ceyhan line.
The long-awaited $3.6 billion oil pipeline linking the Caspian Sea to the Mediterranean took its first flow of crude from Azerbaijan early this year opening a conduit that may help reduce Western dependence on Middle East oil.
The pipeline, first planned in 1994, will carry crude from fields in the Caspian Sea off the Azeri capital of Baku, to Tbilisi in the Republic of Georgia, and on to the Mediterranean terminal at Ceyhan in Turkey. The fields are estimated to hold 4.6 billion barrels of crude oil and 3.5 trillion cu ft of natural gas. The pipeline has a capacity of 10 million barrels. The fields are expected initially to produce more than 400,000 barrels a day.

Tourism
Turkey has granted 107 investment incentive certificates for tourism projects worth $895.7 million in the first half of 2005, with most of the projects envisaging the construction of five-star hotels. At least three of these five-star properties are being developed by construction companies.
In addition, Turkish construction company Akfen Holding will build 60 hotels, investing a total $400 million. The hotels, which will form the Acchotel chain, will have between 100 and 200 beds and most of them will be opened in the Anatolian part of Turkey. The construction of the 60 hotels is to be completed within 12 years, with five hotels opened each year.
Luxurious hotel chain company Kempinski and Astas Real Estate have joined forces to build two 27-storey ‘smart’ towers composed of luxurious residences and offices in Istanbul. The $100 million project, currently under way, is expected to be completed in the first half of 2007 and will include 128 luxurious residences, 40 luxurious apartments (for rent), 40 luxurious offices, a mall having 120 shops and a parking lot for 1,000 cars.

Housing
The Turkish Mass Housing Administration (Toki), which intends to build some 40,000 units in Ankara, has launched projects along the Ankara- Eskisehir road in a bid to meet the strong demand for dwellings in the Turkish capital. Toki has carried out various construction, infrastructure and improvement projects in 68 Turkish provinces involving a total 109,805 dwellings.
Meanwhile, Malaysia’s Tan Sri Halim Saad is expected to start work shortly on a $2.5 billion job to construct 100,000 low-cost houses.

Airports
The second international terminal at the Antalya airport – built by Turkish airport ground-services provider Celebi Hava and Kazakh ATMA-Atyrau Airport – was opened early this year.
The partnership won the build-operate-transfer tender in early November 2003.
The terminal, covering an area of 91,454 sq m, has 12 passenger bridges, 60 check-in counters, 60 passport counters, six baggage carousels and four customs checkpoints.
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