Tender process for Çeşmeli-Taşucu Motorway Project, which will be a 91 km-long motorway project in Mersin, Turkey, has been launched by the General Directorate of Highways (“KGM”) upon publication of the tender announcement in the Official Gazette on April 20, 2018.

Project Model and Contractual Structure

The project model will be build-operate-transfer (BOT). The concession agreement will be the Implementation Contract (“IC”) to be signed between KGM and the project company to be established by the successful bidder. In addition to the IC, a separate agreement, namely Implementation Contract Direct Agreement, will be signed between KGM, the project company and the lenders to regulate the rights of lenders vis-à-vis KGM, such as step-in, substitution, KGM’s representations and undertakings, and the mechanisms for lenders to trigger termination of the IC.

Debt Assumption by Treasury

As per Law No. 4749 on Public Financing and Debt Management, debt assumption is to be made by the Treasury for projects with a total investment amount of more than TL 1 billion. The total investment amount of this project is expectd to be higher than this threshold, and thus the Treasury is expected to be the counterparty to the debt assumption agreement to be signed with the lenders and the project company.

Traffic Guarantee 

The project will benefit from a traffic guarantee to be provided by KGM as well as guaranteed minimum tolls for different types of vehicles. Details of the traffic guarantee and minimum tolls will be stated in the tender documentation, which has not yet been made available to the public. Potential bidders will be entitled to review the tender documentation by visiting KGM’s offices in Ankara starting from May 21, 2018.

Next Steps

The deadline for submission of the bids is 10:00 a.m. on August 14, 2018, and the tender will be conducted at 10:30 a.m. on the same day. In the first phase the bidders which fulfill the required qualifications will be selected. In the second phase, the prequalified bidders are expected to compete based on the proposed duration of the operation term. Other details of the project, such as the construction term, land expropriation and site visit date, will be provided in the tender documentation, which will be made available to the public starting from May 21, 2018 at KGM’s offices as stated above.

^{This information is provided for your convenience and does not constitute legal advice. It is prepared for the general information of our clients and other interested persons. This should not be acted upon in any specific situation without appropriate legal advice. This information is protected by copyright and may not be reproduced or translated without the prior written permission of Ergün Avukatlık Bürosu.}