ukti - railway sector in turkey, 2011 (eng)

This is a uk trade and investment document

HELPING YOUR BUSINESS GROW INTERNATIONALLY

RAILWAY SECTORFACT-FINDING MISSION TO TURKEY

MAY 2011

© Crown Copyright 2011

You may re-use this information (not including logos, images and case studies) free of charge in any format or medium, under the terms of the Open Government Licence. To view this licence visit www.nationalarchives.gov.uk/doc/open-government-licence/ or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: [email protected]

Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.

Any enquiries regarding this document should be sent to us at: [email protected] or telephone: +44 (0)20 7215 8000 (Monday – Friday 09.00-17.00)

This document is also available from our website at www.ukti.gov.uk

Produced by: Bob Docherty, International Business Adviser, Railway Sector, UKTI,No 1 Victoria StreetLondon, SW1H 0ET

CONTENTS

1 Purpose and Methodology 2

2 Executive Summary 3-5

3 Brief History and Milestones 5-7

4 Ministry of Transport and Communications 8-13 Rail Structure and Organisation

5 TCDD – the State-owned Mainline Rail Company 14-24

6 Urban Railways 24-33

7 The Turkish Contracting Sector 34-35

8 Rail Associations and Academia in Turkey 35-37

9 Privatisation and Inward Investment into Turkey 37-38

10 Eurasia Rail Exhibition 39

11 Doing Business in Turkey 40-41

Appendices

I Case Study – The Marmary Crossing 42-45

II Case Study – High-Speed Rail Project 46

III TCDD Subsidiaries 47-51

IV UK and Turkish Business Sectors in Detail 51-52

V Overview of Turkey 52-57 ISPAT – the Turkish Inward Investment Agency

VI Organisations Visited 58-59

2 RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011

PURPOSE AND METHODOLOGYThis report has been created to provide UK companies with an introduction to the rail sector in Turkey. It explores the expansion of both urban and high-speed rail, and recognises the desire to improve freight distribution, both across the country and cross-border as a land-bridge. Prior to the fact-finding mission, preparation included desk studies and research. This was followed by a series of meetings in the market to examine the sector at first hand, interviewing officials and reviewing and assessing opportunities. This report has been prepared by Bob Docherty at UK Trade & Investment (UKTI), with the assistance of Mr Tim Gray from the Railway Industry Association and UKTI colleagues in Turkey.

1.1 Acknowledgements and Delegation

1.3 Organisations Visited The full list of companies and organisations visited in the course of the research are listed in the Appendix to this report.

1.4 UKTI Railway Sector Contacts

1.2 UKTI Turkey SupportRecognition must be given to the UKTI colleagues in Turkey, for their assistance in building the programme and developing contacts in the rail sector.

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Mr Derek GriffithsHead of Rail Sector Railways Sector, UKTI Tel: +44 20 7215 4773Email: [email protected]

Mr Mike CarrollHead of Mass Transport, UKTI Tel: +44 20 7215 4569

Mr Bob DochertyInternational Business Adviser Rail Sector, UKTI Tel: +44 7879 661 [email protected]

UKTI No 1 Victoria Street London SW1H OET www.ukti.gov.uk

Name Company Position

Bob Docherty UKTI International Business Adviser

Tim Gray RIA* International Business Development Director

Name Location

Asiye Yaman UKTI Ankara

Özge Dursun UKTI Istanbul

RAILWAY SECTOR FACT-FINDING MISSION TO TURKEY MAY 2011 3

2EXECUTIVE SUMMARYRailways are enjoying a period of significant and sustained investment in Turkey, with major investment in high-speed lines, rail-led solutions to freight and distribution, and urban transportation in major cities across the country. A commitment to invest US$45 bn has been made (US$23.5 bn before 2023), in a programme of expansion up until 2035. The detail of this expansion programme is:

� 2,622 km of high-speed track by 2013 � A further 6,792 km of high-speed track by 2023 � 4,707 km of new conventional track by 2023 � An additional 2,960 km of high-speed track and 956 km of conventional track in the period

from 2023 to 2035

The national economy has been growing and strengthening. Turkey is currently the 16th largest economy in the world and the sixth largest economy relative to the EU, according to GDP figures (at Purchasing Parity Power) in 2009. Growth is forecast at 6.7 per cent in the period 2011 to 2018; GDP is around US$618 bn, with inflation at around 6.5 per cent.

Turkey is being increasingly recognised as a country that is modernizing rapidly, growing a competitive economy that is moving up the skills chain, and with increasing capability. Market sectors that are expanding include electronics, white goods, automotive sectors, and defence and aerospace. Privatization has been underway since 2002. Indeed, there is a suggestion in the market that private capital will have a role to play in railways, certainly in the provision of a high-speed station in Ankara on a public private partnership (PPP) basis for which the tender has been published, on a build operate transfer (BOT) basis for high-speed lines, and possibly also in freight.

Regarding the rail infrastructure, the new high-speed lines will be double-track and electrified, and with line speeds of 250 kph. Rolling stock will be partially constructed or assembled within Turkey.

A number of major cities have urban rail systems, Light Rapid Transit systems (LRT), tram or metro of some kind. Extensions or new lines are much in demand and being planned. In Istanbul alone, there are plans to provide 118 km of new lines by 2018 and a further 276 km by 2023.

Rail is seen as the preferred solution for freight, with new freight hubs planned around the country that will use the high-speed lines and the Marmary Crossing to carry freight overnight. The environmental issues associated with freight are well recognised in Turkey. Road congestion is an issue, especially at border crossings, with as much as 95 per cent of freight currently on the roads. There is an interest in growing railway freight in the market for domestic and international routes. Turkey is keen to capitalise on its strategic geographical location.


2Turkey is developing rapidly and has become a manufacturing force in Europe. This will further drive the demand for rail freight between Asia and Europe. (Turkey has borders with eight countries). The future may, therefore, see an end to the monopoly of Turkish State Railways’ (TCDD) railway operations, with cross-border freight and passenger ‘open access’ operators being allowed access to track. To facilitate change and to comply with EU directorates, TCDD is undergoing reform, separating infrastructure, passenger and freight operations in a far-reaching programme of modernisation. TCDD is currently a vertically-integrated railway, also owning in-house manufacturing facilities for rolling stock and track materials, as well as maintenance units. Ports and a rail ferry have been part of the portfolio but the former are now being privatised, and the latter upgraded to include a ferry terminal with Russian gauge to accommodate cross-border traffic.

Historically, TCDD has owned a great deal of the maintenance and supply chain market. Many of these facilities have been acquired in partnership, with technology transferred in-house, for example, for track components, locomotives, wagons and passenger cars and their components. UK companies may see this as an opportunity.

In a meeting with Academia regarding the rail sector, UKTI formed the impression that a step change is happening in the Turkish market and that this should be accompanied by a step change in technology, particularly with the demand for high-speed rail, and the drive to grow the freight market. There is an opportunity for companies to introduce services and technology into the market.

The market is ready to work with international partners and there is desire to diversify these links. In the wider (political) picture, Turkey is a member of NATO and wishes to join the European Union (EU). Currently, both France and Germany appear to be resistant to Turkish accession (to the EU), but despite this, both have traditionally strong positions in the Turkish rail market, with more recent involvement from the Chinese, Japanese and Koreans.

2.1 Opportunities for UK Companies With the growing rail market and high levels of investment, there are likely to be opportunities for UK companies in Turkey. The Government is investing in the rail sector. There is investment in high-speed and urban rail which may make these areas a particular focus for UK companies, but freight and distribution are expanding too, and the drive for cross-border traffic may attract companies with skills in inter-operability and logistics. UK skills in PPP and (real estate) development may also contribute, as the market is changing and privatisation is progressing, creating a growing desire to maximise use of assets, and return on investments. Professional Services are likely to find opportunities in most of the previous areas. All new lines will be electrified, so capacity for electrification may be an opportunity dependent on project phasing.

In supply chain rail areas, there has been extensive collaboration with overseas companies, so the sector has a great deal of experience in technology transfer. The desire for local content, if not production, remains strong. Performance will be admired, particularly for products or services that can facilitate reductions in costs and energy consumption. European standards are widely-recognised. Technology areas of interest include signalling and control, and rolling stock systems.


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It is vital for UK companies to take care and pay close attention when approaching the market. Sensitivity to the progress already made by local participants in advancing the rail sector is considered essential, as is local partnership or a local market presence. A long-term approach is also required.

Turkey is also recognised as having a very strong construction sector, capable of working in third markets, and there may well be opportunities for UK companies here in support of the major Turkish players.

Generally, major project work is advertised and is open to international competition. International funders and Development Banks may also be a source of opportunity for feasibility work for new-build projects and upgrades.

The UKTI team locally has good contacts and a strong market presence, and remains an important resource to support UK industry in entering and developing the market.

BRIEF HISTORY AND MILESTONES3.1 Mainline 8RailwayThe first rail system in Turkey was constructed in 1856 by a UK company, connecting the port of Izmir with the Aydin. Railways were developed elsewhere around the country by other private companies, before being nationalised in 1927.

The evolution of the railway system in Turkey is shown in table in 3.2 (Milestones) shows.

The first urban rail service in Turkey dates back to 1875, when the “Tünel” opened. The Tünel is an underground funicular line of only 573 m that connects the Bosphorus. It rises 60 metres up to the busy Taksim square area, with trains operating every 3.5 minutes and the journey lasting about 1.5 minutes.

From Steam Trains to High Speed Service

1856 2010


3 3.2 Milestones

Turkey has grown its rail network to around 11,000 route km (as at March 2011), and has a programme of expansion currently underway and with more planned.

The intention is to extend the network by about 14,000 km by 2023, including 10,000 km of high-speed lines by 2023 and further track by 2035.

There is a strong suggestion that some of the future expansion may draw in private capital in the form of BOT (Build Operate Transfer) developments. Concession times of 30 to 35 years were mentioned, and this approach could also be adopted for high-speed lines.

Year Milestone Comment

1856 The first railway from Izmir to Aydin Developed by a UK company

1924 4,000 km of track in operation Nationalisation began

1927 Ports added to rail portfolio 5,500 route km of track in operation

1950 Route km reaches 9,204 km

1953 Railway becomes a State Enterprise and TCDD is formed

9,441 route km in operation

1984 TCDD becomes a State Economic Institution

10,263 route km in operation

2003 Rail transport is opened to include private sector participation

2004 Six ports are offered for privatization 10,991 km of track in operation

2008 First high-speed line is constructed

2009 High-speed operations begin

2010 2.85 million passengers carried on high-speed lines

Projected Milestones

2023 Network of 26,251 route km Adding 14,336 route km, of which 10,000 will be high-speed lines

2035 Further 1200 km of high speed lines


3Section 5 of this report covers mainline railways in detail.

3.4 Urban TransportationTurkey is creating or extending urban transport in most, if not all, of its major cities to meet growing demand, using a mix of modes, including road and rail. (It may properly be described as guided systems, as all forms of rail including monorail are under consideration). Buses and mini-bus services are usually private sector, whilst the metropolitan authorities are responsible for rail.

Section 6 of this report examines urban transport in detail.


4 4 MINISTRY OF TRANSPORT AND COMMUNICATIONRail Structure and Organisation

www.ubak.gov.tr/

This Ministry is responsible for all transport, air, roads, railways and ports in the structure shown below. Key elements of note in the rail sector are TCDD, the state rail organisation, and DLH, a turnkey contractor. TCDD is a vertically-integrated system, which also has extensive manufacturing and maintenance facilities. DLH can be considered a turnkey contractor that has evolved to include design, construction and project management capability, able to take on major projects such as the Marmary Crossing, a multi-billion dollar, complex project.

Priorities and Projects The Ministry has defined three main targets for the rail sector which are to:1. provide an attractive, substantial and affordable high-speed rail service2. enhance existing track to allow increased speed of operation3. streamline TCDD through restructuring and privatisation

Organisation The current structure of the Ministry is shown Opposite.


4


4 4.1 DLH General Directorate of Ports Railways and Airportswww.dlh.gov.tr

DLH was established in 1934, initially as a public works body. A series of re-organisations followed, with activity extending to include ports, airports civil defence and railways, it became a General Directorate for the Ministry of Transportation and Communications in 1986.

DLH is the state-owned entity whose role is to deliver major infrastructure projects, from planning and design through to project management and construction. It is involved in some of the biggest projects in Turkey. DLH is the responsible directorate for the implementation of projects and reports to the Ministry of Transportation.

4.2 Safety and RegulationCurrently, the railway is self-regulating in terms of safety. However, the proposed structure to be adopted soon will include “DEKAK” which will be a separate railway accident investigation board, reporting directly to the Ministry of Transport and Communication, rather than TCDD. The proposed structure, which will probably be adopted following the next general elections in Turkey (at time of writing, June 2011), is shown in Section 5.

4.2.1 Statistics and Safety Data TCDD publishes an annual statistical report, including data relating to accidents, numbers of casualties and much more (see link below). A snapshot of the number of accidents, followed by passenger-km and freight tonnes-km is shown below for interest.

www.tcdd.gov.tr/Upload/Files/ContentFiles/2010/istatistik/2004_2008.pdf

4.3 Projects A number of rail projects are in planning, but have not yet been released for construction. (Refer to the TCDD website for current information).

The aim is to extend the network to over 26,550 km of track by adding more than 14,000 route km, by 2023, the centenary of the Republic. Included in this is 10,000 km of high-speed track. New track will be double-track electrified and it will use modern signalling.


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4 4.4 Enhancing Logistics and Distribution CapabilityThe Ministry is aware of the need to improve the logistics capability of Turkey to maintain competiveness and support economic growth. There is a desire to exploit Turkey’s strategic location as a bridge between Europe and Asia. Rail freight currently has a very modest share of all freight carried, at around five per cent. The country is keen to increase this as the sheer volume of trucks on the road is causing significant delays at Turkey’s border crossings on a daily basis, with queues that regularly reach 15 km long.

Rail is seen as the desired solution for freight that wins on a number of fronts. It offers significant capacity, with a low carbon footprint. The potential to run freight services at night over the high-speed network and through the Marmary tunnel crossing are also desirable ways of adding capacity.

To support the growth in rail freight and assist in attracting international traffic to the rail sector, Turkey’s logistical capability is in need of improvement. As such, a range of 16 hubs and logistics centres are being developed, four of which are already complete. The map below shows the detail. These, too, may offer opportunities for UK Industry.

4.5 Privatisation and Private Capital in Railways

www.oib.gov.tr


4 Both mainline and urban railways remain in public ownership for now, despite a programme of privatisation that is underway in Turkey. This privatisation process is managed by OIB, the Turkish Government agency, and is covered in this report in Section 9. Currently, the impact of privatisation in the rail sector is limited to the privatisation of some ports under TCDD control.

In future, there is a possibility of opening up the market to private capital and private operators in several ways:

1. The new high-speed station planned for Ankara will be delivered on a PPP basis. After several delays, a tender was issued, before being later withdrawn. At the time of writing, the timetable for the process has still not been finalised. If the PPP model is successful, the same approach may be used for further stations on new high-speed routes, so careful planning of this tender will bring benefits in future.

2. The plan to enhance international freight may provide opportunities for UK companies in operations.

3. Build Operate Transfer (BOT) appears to be the favoured option for attracting private capital into rail. Selected lines may be tendered on a BOT basis, with a proposed concession period of up to 30 or even 35 years. No process or policy has yet been adopted for such private sector engagement, but at the time of preparation of this report, BOT looks likely to be the preferred solution for the future.

.


5 TCDD - THE STATE-OWNED MAINLINE RAILWAY COMPANY www.tcdd.gov.tr

TCDD is the Turkish state-owned, vertically-integrated railway company. Headquartered in Ankara, it has seven regional directorates around the country and, in addition to the rail and maintenance operations, TCDD also has an extensive manufacturing capability in both rolling stock and track components. It is a part of the Ministry of Transport and Communications. In order to comply with European Legislation, a reorganisation of TCDD is imminent, most likely following the elections that are planned for June 2011. (chart as pubished including acronyms)


5 5.1 TCDD ActivitiesTCDD’s current activities are extensive and diverse, going beyond rail operations and maintenance to include:

� train operations � rail infrastructure � ownership and management of all stations � track construction � track maintenance � rolling stock maintenance � manufacturing units for rolling stock

- locomotives - passenger cars - freight wagons

� factories - ADF ve Ray - Kaynak - Afyon ve Siva Beton Travers - Çamaf

� four ports – (a further three have already been privatised) � shared ownership of manufacturing units

- Eurotem - Izban - Vademsa

Detail on most of these facilities can be found on the TCDD website. TCDD has or has had in the past joint ventures or collaboration with Austrian, French, German and Korean partners.

5.2 Physical Data A detailed report on physical conditions, including bridges, track curvature, tunnels, wagon resource, plant and equipment, as well as statistics covering TCDD operations can be found at: http://www.tcdd.gov.tr/Upload/Files/ContentFiles/2010/istatistik/2004_2008.pdf


5 5.2.1 Route Km and Detail

5.2.2 Existing and Planned Route Map

Route km (2011) Volume / units

Conventional 11,048 km

Electrified 2,305 km

Signalled 2,665 km

Dual Track 403 km

Triple Track 28 km

Quadruple Track 9 km

High-Speed Lines 867 km

Total 11,915 km


5 5.2.3 Rolling Stock

5.2.5 Market Share At the peak of its powers in the 1950’s, TCDD had significant market share, which has fallen considerably in modern times, following decades of relative under-investment compared to the road sector.

5.2.4 Employment

Type Active units

High-Speed Train Sets 12

Diesel Locos 470

Electric Locos 52

DMUs 46

EMUs 91

Passenger Car 46

Freight Wagon (TCDD) 16,189

Freight Wagon (3rd party) 2,486

Category Personnel Interpretation

Civil Servants Including Contracted Staff 16,089 White Collar

Permanent and Temporary Staff 15,590 Blue Collar

Total 31,679


5 5.2.6 Proposed OrganisationThe new organisation, expected to come into force later this year, will look as follows:

This new structure will comply with European legislation regarding rail operations.

5.2.7 Lake Van – Rail Ferry OperationsPorts Van Gölü Feribot Isletmeciligi Establishment is the part of TCDD that operates the train ferry service at Lake Van. Plans include investment in modern ferries to support freight distribution across and through Turkey.


5 Lake Van Operations

5.3 Budget Allocation and Priority Projects Railway in general and TCDD in particular, are enjoying an upturn in investment, following decades of under investment, certainly in comparison to roads. The investment is aimed at recovering market share by providing much-improved services. In the passenger sector, growth is planned in the high-speed and urban sector, whilst in freight Turkey is keen to support economic growth by improving rail and multi-modal freight services, logistics and distribution capability. This will extend to include the creation of an international, trans continental land-bridge for freight, linking Europe to the Middle East and Asia to Europe.

5.3.1 TCDD Annual Budget Evolution


5 5.3.2 Key Projects Railways are expanding in Turkey. The following projects are underway, with the extensions of the high-speed network constituting a key area:

� expansion of high-speed rail � Marmaray project � rehabilitation of existing railway lines � modernisation of rolling stock and infrastructure � improved logistics and distribution, including multi-modal options � improvement of block train management � establishment of rail R&D facilities.

5.4 High-Speed OperationsThe high-speed (HS) lines between Ankara and Eskeşhir commenced revenue operations on 13 March 2009. Around 2.85 million passengers used the service from its launch until end of December 2010.

Since July 2010, the lines have operated 22 trips per day, carrying around 6,000 passengers every weekday and 8,000 at weekends.

The tender for a new high-speed station required for Ankara has been issued on a PPP basis and this may well be a model for future high-speed stations, encouraging private capital into the sector. The tender process experienced some delays and had been re-issued without a specific time frame for closure at the time of preparing this report. This process may be a useful case study to determine how the market adopts the PPP process for future use.

Siemens has stated that it would consider producing a “Velaro” type train in Turkey, adapted for local use, and capable of running at 400 kph. During the Eurasia Rail exhibition, there were reports that the technology transfer could open with 20 per cent local content, rising to 50 per cent or more in future. There may be other suitors seeking an investment in Turkey in this area.


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5.5 TCDD Port OperationsTCDD has responsibility for four ports, with three (Mersin, Samsun and Bandirma) already having been privatised. The privatisation process will continue, so the number of ports under TCDD control will diminish.

The volumes passing through the TCDD ports are shown below for information.


5 5.5.1 Freight Transportation PotentialTCDD is confident that the traditional and historic trade route between Asia and Europe can be revived and expanded using rail to exploit Turkey’s strategic location.

It has analysed the market and believes there is a potential US$75 bn trade flow pa. The organisation wishes to offer a route to market for companies wishing to obtain a share of this.

Existing Rail Border Crossings

The intention is to improve the network and entice operators to use rail to deliver into the heart of markets in Europe. A great deal of work is needed to deliver such a service, including access and interoperability agreements with neighbouring countries.

Access to CIS / Russian gauge (1,520 mm) is catered for by means of a Black Sea rail ferry, and gauge conversion facilities, where bogies can be changed. Investment to modernise and improve train ferry services is proposed.

Location Borders / Connects to

Kapikule Bulgaria and onward to Europe

Uzunköprü Greece and beyond

Kapıköy Iran and central Asian Markets

Islahiye Syria and Iraq

Nusaybin Syria and Iraq


5 Existing International Freight The charts below show the freight between Turkey and Europe, and Turkey and Asia. The proportion of international freight is modest, whilst imports into Turkey from the Middle East have largest share of cross-border freight. These charts suggest the extent of activity required to grow international freight.

International Freight Traffic Classification*


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A press announcement during April 2010 reflected the desire of TCDD to extend Turkey’s reach as an international freight destination:

“Turkey’s Independent Industrialists and Businessmen’s Association (MUSIAD) signed a co-operation agreement with the Lithuanian railways at the beginning of April 2010.

MUSIAD conducts initiatives for the realisation of the Viking Project to connect Turkey and Middle Eastern countries with the Baltic countries. The agreement was signed by the Foreign Relations Commission of MUSIAD and the General Manager of the Lithuania Railroad.

The Viking Project also involves the commercial connection between Lithuania-Belarus-Ukraine (Odessa) and Turkey (Samsun, Istanbul)-Syria-Iraq-Iran.”

URBAN RAILWAYSDemand for urban transport is growing in Turkey, with its increasingly-congested cities. Rail-based solutions are recognised as delivering solutions in an environmentally-friendly manner, and there is a belief that investment in rail (in its many forms, including light and heavy rail commuter systems), will continue, certainly in the major cities that have sufficient traffic density to meet the economic criteria for rail.

6.1 Urban Transportation – Metropolitan AuthorityUrban transportation is generally the responsibility of the metropolitan authorities, which own and manage rail operations. However, bus services are generally privately-owned and run, including the ubiquitous mini bus services which are found in most cities.


6 6.2 UITPwww.uitp.org/regions/europe/turkey.cfm

UITP, the International Association for Public Transport, has opened a liaison office in Turkey to better serve its members there and maintain current awareness of industry trends in important areas, such as finance.

Contacts are listed on the UITP website: Enis Hemedoglu, UITP Turkey Office Manager, [email protected] Bahtiyar, UITP Turkey Office Assistant, [email protected]

UITP Turkey Liaison Office Tel: +90 212 569 5786 Fax: +90 212 568 9956

Ferhatpasa Metro Facilities Esenler TR 34200 Istanbul TURKEY

6.3 Metro Systems in DetailWhen researching this report, there was insufficient time to visit all of the metropolitan authorities with planned or existing rail systems, though we did have very positive exchanges in both Ankara and Istanbul. Detailed information is included in this report. Additional information was kindly provided by Ms Sibel Gursoy at Ulasim, the Istanbul metropolitan authority, and a list of cities with transportation authorities is included below, which may be useful for companies addressing the market.

City System

Adana Heavy Rail

Ankara Heavy Rail MetroLight Rail

Antalya Tramway

Bursa Light Rail

Eskişehir 2 x Lines Light Rail

Istanbul Heavy RailLight RailTramwayFunicular

Izmir Heavy Rail

Konya Tramway

Kayseri Tramway

Samsun Light Rail


6 6.4 Adanahttp://www.adana.bel.tr

Situated in southern Turkey, Adana has a light metro line. Construction began in 1992, with the first, mostly surface section finally opened in March 2009. The second phase, around 6 km (Akincilar Station-Cukurova University), is currently under construction and due to be ope rational during 2011. This will raise the daily passenger carrying capacity to 660,000. The website has more detail, including the strategic plan for 2010 – 2014 (in Turkish).

www.adana.bel.tr/adanabeltr/data/pagetopic/63/stratejikplan-20102014.pdf

6.5 Ankarawww.ankara.bel.tr/TasarimOgeleri/defaultEn.aspx

The Turkish capital has some 3.5 million inhabitants in the metropolitan area, who are served by a mixture of rail systems: the commuter rail system delivered by TCDD, Ankaray a light railway system and the “Metro. Ankara is developing new projects and has a detailed masterplan called Urban Transportation Plan of Ankara for 2015.

The first “Metro”, the M1 (Kizilay-Batikent) metro line (14.6 km) started operation in December 1997 with 108 cars. Ankaray, became operational in 1996 serving Dikimevi-Asti (8.5 km).

Currently under construction, M2 Kizilay-Cayyolu will add 16.5 km to the metro system. M3 Batikent-Sincan to Torekent will be 15.3 km and M4 Tandogan-Kecioren will be 10.5 km.

6.5.1 Ankaraywww.ankaray.com

Built in 1996, this system runs mostly underground on an east to west axis and provides an interchange with bus services and the heavy metro in the city centre. An extension of around 12 km is planned. Full detail can be found on the website:

http://www.ankaray.com.tr/component/content/article/6-genel-tanitim.html

6.5.2 Ankara Metrowww.ankarametrosu.com.tr

Ankara metro system covers 14.6 route km. It is a double-track, heavy rail system serving 12 stations, supported by a depot. It travels from southeast to northwest through the city centre.

Ankara metro system operates with a 90 second headway, with maximum operating speeds of 80 kph. It has 108 cars (in 36 train sets), capable of carrying 70,000 passengers. This heavy rail system had significant UK input during construction. A link to an interactive map, with system detail and plans can be found here: www.ankarametrosu.com.tr/guzergahmap


6 6.6 Antalywww.antray.com (website under construction)

The Antray Light Rapid Transit (LRT) in Antaly opened in December 2009, with 11.1 km and 16 stations (between Kepez and Meydan).

6.7 Bursa www.burulas.com.tr

Bursa, with a population of around 1.3 million, is situated in north-western Turkey, about 150 km south of Istanbul and 400 km west of Ankara. Burulas is the Public Transport Authority and Operator. Bursa became famous as the first capital of the Ottoman Empire and the departure point for the Silk Road trading route.

Bursaray is the light metro system for the city and will be extended, in time, to 50 route km in total. The initial 17 km Y-shaped line opened in 2002, built by a Siemens-led consortium. It carries some 190,000 passengers daily. Burulas is the municipal company in charge of operation and maintenance of the system. Both branch lines are being extended

6.7.1 Bursa Light Rail Receives International FundingIn March 2011, The European Bank for Reconstruction & Development approved a 15-year loan worth €50m towards construction of the second phase of the light rail network in Bursa. The loan is part of a financing package that also includes €100m from the European Investment Bank. The funding will allow the operator to purchase 30 Flexity Swift cars from Bombardier to boost capacity on the expanding network.

6.8 Denizliwww.denizli.gov.tr

The municipality of Denizli is currently planning a railway system project to relieve congestion in the city. A rail transportation master plan has been produced, including some revisions to the route and further feasibility work. Approval to proceed is anticipated soon.

6.5.3 Ankara Suburban Railways – TCDDTCDD operate a network of around 37 km, covering 28 stations across Ankara;

Category Detail

Name TCDD www.tcdd.gov.tr

Description Suburban Heavy Rail

Route km and Stations 37 km with 28 Stations 25 kV Hz

Passengers 380 Million Passenger - km

Rolling Stock 96 Cars Emu Rotem / Mitsui 26 Train Sets


6 6.9 Eskişehirwww.estram.com.tr/eng/iletisim.php

There is an operational Light Rapid Transit (LRT) system in the industrial city of Eskişehir, which the regional authority plans to extend. An urban development plan has been written to create a modern transportation infrastructure that will harmonize the city’s development needs with quality of life and environmental concerns.

The LRT was built within 20 months by a Bombardier–Yapı Merkezi consortium in December 2004. It won the 2004 UITP Light Rail Award. Estram is the operator of the system, with a concession for 10 years. The current network covers 13.5 km, with two lines across the city, has a daily patronage of around 87,000 passengers. Feasibility studies have been completed to extend the system.

6.10 Gaziantepwww.gazi-antep.com/index.php?option=com_content&task=view&id=15&Itemid=

There is 9 km of Light Rapid Transit (LRT) in Gaziantep, with 13 stations under construction and plans for further extension by 2025.

6.11 IstanbulIn Istanbul, public transport extends to include: bus and minibus; rail; a funicular railway; a modern tram and a heritage tram. New capacity is currently being added, with one high profile project being the Marmary Crossing. New and extended rail lines will be added to extend the systems when the (Marmary Crossing) tunnels are completed. Even with these new systems, demand will continue to grow in this bustling metropolis of at least 12 million people.

Passenger Demand and Share in IstanbulRail carries about 9.5 per cent of passenger traffic in Istanbul, though road is the dominant mode. Demand has risen substantially in the past five years, and the forecast is for continued growth.


6 6.11.1 Metropolitan Transport Authority

IETT - İstanbul Elektrik Tramvay ve Tünel İşletmeleri Genel Müdürlüğü

http://www.iett.gov.tr

IETT is the General Directorate for the Electric Tramway and Tunnel for Istanbul. Whilst its key responsibility is for the bus services in Istanbul, it also operates the funicular Tünel systems and a tram, which runs over 1.6 km and carries around 1,500 passengers per day.

Transport and Affiliated Organisations The following table shows the transport structure within Istanbul:


66.11.2 Istanbul Metro - Ulasim www.istanbul-ulasim.com.tr

Ulasim is the operator of the Istanbul metro. It is a fully vertically-integrated rail system and covers all disciplines, from planning design and consultancy through to operations and maintenance. Indeed, Ulasim is also manufacturing passenger cars in-house.

OperationsUlasim was founded in 1988 to maintain and develop suburban rail systems under the metropolitan authority of Istanbul. Its activities include:

� operations - metro - light rail - tram - cable car

� maintenance & construction � measurement and training � engineering and consulting � research and development

Ulasim is building an in-house passenger tram car and has developed its own control systems, demonstrating the reach and capability of the organisation.

Systems in Use The following systems are in use in Istanbul, many of which will be extended:

Name System Vehicles Stations Route km Passengers ‘000

M1 Aksaray - Airport 84 18 20 200

T1 Şişhane - AOS 124 10 14.5 170

M2 Zeytinburnu - Kabataş 61 23 14 260

T2 Güngören - Bağcılar 16 9 5.2 50

T3 Kadıköy - Moda 4 10 2.6 2

T4 Habibler - Topkapı 62 22 15.4 100

F1 Taksim - Kabataş Funicular

4 2 0.59 28

Cable Eyüp -Maçka 8 4 0.71 5


6 Planned Extensions:System Evolution / Future DevelopmentPlans to develop the metro are shown in the map below. The city is seeking to complete these ahead of the centenary celebration of the republic in 2023:

The System at a Glance � Founded: 1988 � Seven lines � 73 km length � 98 stations � 815.000 passengers per day � 363 trains

Lines Length (km)

Existing Lines

Municipality-owned lines 72.8

Suburban lines (TCDD-owned lines) 72

Short–term Projects (under construction)

- Urban rail lines (to be finished in 2012) 54.5

- Marmaray Tunnel (to be finished in 2012) 89.5

Mid–term Projects

- (To be finished in 2018) 118.6

Long-term Projects

- (To be finished in 2023) 276.6

TOTAL 612


6

6.11.3 Marmaray CrossingThe Marmaray Crossing project a long-planned underwater Bosphorus rail crossing, begun in 1994. The project includes a 13.3 km Istanbul Strait crossing and the upgrade of 63 km of suburban lines to create a 76.3 km high-capacity line between Gebze and Halkali. The crossing is being constructed using a 1.8 km earthquake-proof immersed tube, assembled in 18 sections. This tube will be accessed by bored tunnels from Yenikapi on the European side and Sogutlucesme on the Asian side of Istanbul.

The project has been delayed by the discovery of important heritage sites and around US$60 million of additional cost has been incurred investigating these and recovering a huge the important relics and antiquities discovered on the site.

A case study is included in Appendix I at the end of this report

Plans for the Marmaray Crossing include interchange stations with Istanbul metro and light rail, whilst the upgrade of the suburban lines requires a third track to be laid along most of the route to increase the line capacity up to 75,000 passengers per hour in each direction. Signalling is being upgraded to provide a service with two minutes’ headway.

The 41 stations along the line will be refurbished and the platforms lengthened to 180 m. The rail tunnel will be used by both suburban and long-distance services, as well as freight. A decision on whether the line will be operated by TCDD or Ulasim is yet to be taken.

Manufacturing / R&D Capability The extent of the capability at Ulasim can be measured by the Domestic Tram Project, which was designed and produced by İstanbul Ulaşım in–house. The first prototype was produced in 1999, and to date, the vehicles produced have carried more than five million passengers. An updated version was produced in 2009.

New Rolling Stock Demand

Types of Cars Number of Cars

Through to 2018

Metro 1,105

Light Rail 186

Tram 30

Monorail 26

Suburban 440

Between 2018 and 2023

Metro 943

Monorail 46

Suburban 148

TOTAL 2,924


66.12 Izmirwww.izmirmetro.com.tr

Izmir is served by around 80 km of suburban rail, with 31 stations and operated by TCDD. There is also a metro, Izmir Metro AS, with 11.5 km of lines currently operational and further phases under construction:

� Phase 2 5.4 km � Phase 3 7.5 km � Phase 4 3 km � Phase 5 11 km

The metropolitan authority has a transportation master plan from 2010 that includes a further 50 route km of metro. The website contains detail information, a brochure and presentation with full technical detail and system description.

6.13 Kayseriwww.kayseri.bel.tr

The 17.5 km tramway Kayseray, became operational in August 2009, serving 28 stations with a further three phases now at the planning stage.

The General Manager of Kayseray is listed on the website above.

6.14 Konya www.konya.bel.tr

Operated by the municipality, the first tramline in this ancient city of the Central Anatolian Region opened in 1992, following lengthy delays in both planning and construction. A second line was added in 1995, with a third extension of 3.3 km completed in 2007. The system carries more than 30 million passengers each year.

6.15 Samsunwww.samsun.bel.tr/proje-detay.asp?SayfaId=15

Detailed information can be found on the website, covering the 17.2 km of the Light Rapid Transit (LRT) system which serves 21 stations.


7 THE TURKISH CONTRACTING SECTORTurkey has a very strong reputation and capability in the international construction and contracting sectors. Consequently, it may present opportunities to UK companies for co-operation and supply chain, both in Turkey and third markets. The chart below shows the evolution of the values accrued by Turkish contractors in overseas markets and the geographic spread.


7

8

Turkish Contractors Association

www.tmb.org.tr

There is a Turkish Contractors Association, which recently completed an inward mission to the UK arranged by UKTI. The website is a good source of information.

Secretary General Mr Haluk Bϋykϋbas Deputy Secretary General Ms Çiğdem Çinar

7.1 Yapiray Insight into the rail market in Turkey was provided for this report by Yapiray, the Turkish rail contractor. Yapiray has considerable experience both in Turkey and in international markets. It can list projects such as the high-speed rail line in Turkey and the Dubai Metro amongst its references.

RAIL ASSOCIATIONS AND ACADEMIA IN TURKEYTurkey has several rail organisations.

8.1 RAYDER (Association of Rail Transport Systems)http://www.rayder.org.tr

Rayder is the organisation founded for the development of the railway sector in Turkey. Its board is drawn from academia and industry.

The organisation’s aims include improving skills and knowledge locally, as well as monitoring the latest developments from around the world, with the intention of adopting these for use within Turkey.

The development of the railways has been adopted as the most significant transport policy of the new Turkish Government. Its intention is to grow the share of rail freight to 15 per cent by 2023. Plans are being laid to invest US$50 billion in high- speed lines, the Marmaray Crossing project, and metro and tramway projects across Turkey’s metropolitan cities. As such, Rayder sees itself as having an increasing important role.


8Key Points

� Rayder is an industry body. � It is preparing a railway industrial catalogue to promote the indigenous railway sector and

industry. � Rayder has been participating in INNOTRANS, Berlin, drawing in other Turkish companies

and raising the international profile of the sector. � The organisation works in collaboration with international organisations, such as UITP

(International Association of Public Transport) and UNIFE (The Association of the European Rail Industry).

� Rayder is seeking to create a General Directorate of Urban Rail Systems within the Ministry of Transportation and support research and development for the production of metro and tramway vehicles locally.

� Work to establish a research and development centre for rail systems, and a test line in Eskişehir, is underway.

� The creation of a Department of Rail Systems in Turkey’s universities is also underway. � Rayder supports rail system departments in some recently-opened Industrial Vocational High

Schools across Turkey. � It aims to encourage further investment and participation in the sector from local and

international players from the private sector, and is working to develop a new law that will extend the use of the private sector in rail.

Rayder recognises the need to develop railway infrastructure, the supply chain sector and rolling stock. The upturn in the market has already attracted the attention of a number of local and European companies in this field.

Rayder Contact Information Email: [email protected]

8.2 Railway Transport Association (DTD)www.dtd.org.tr/

DTD is the Railway Operators Association, established in June 2006. Its members carry over 3.5 million tonne of freight pa and are seeking to grow rail’s share of freight in Turkey.

DTD lobbies for improved railway transportation, railway infrastructure and the restructuring of the industry and law to align Turkey with European legislation. Therefore, the organisation is building international links to ensure that rail can take advantage of the growing freight market and potential for international traffic on rail.


8

9

8.3 AcademiaThere a number of universities and distinguished academics with links to the rail sector in Turkey, some of whom also hold positions in the rail associations and lend their expertise to bodies such as Tüvasas, the rolling stock constructor. Among the universities with links to the rail sector are:

� Işik University � Istanbul University (Faculty of Engineering) � Istanbul Technical University.

While researching this report, we had the opportunity to take soundings from several of these institutions who kindly offered their insights into the rail market.

The impression we formed was that a step change is happening in the market and, consequently, this needs to be accompanied by a step change in technology, particularly with the demand for high-speed rail, and the drive to grow the freight market. There is an opportunity for UK companies to introduce services and technology into the Turkish market.

PRIVATISATION AND INWARD INVESTMENT INTO TURKEYwww.oib.gov.tr

The Ministry responsible for privatisation, OIB, and the Ministry for Inward Investment into Turkey report to the office of the Turkish Prime Minister. It is widely anticipated that private capital will have a place in Turkish railways in the future. The most likely scenario is that Turkey will adopt public-private partnership (PPP) opportunities on a Build Operate Transfer (BOT) basis. PPP operations are probable, particularly on high-speed lines. PPP is already established and in use in Turkey, but not yet in the rail sector.

The diverse nature of rail operator TCDD, with its ports and production units for rolling stock and components, means that these two Ministries are worth including in this report.

9.1 Republic of Turkey Privatisation Administration 2011Further privatisation is underway in Turkey and may impact the railways in future, though no plans beyond privatisation of ports were discussed during this visit. Further privatisation of ports currently owned and operated by TCDD is possible.

The role for private capital is likely to be on BOT (Build Operate Transfer) projects, with 30-year concessions. These will probably include high-speed lines.


9 9.2 Republic of Turkey Prime Ministry Investment Support and Promotion Agency of Turkey (ISPAT)http://www.invest.gov.tr

Ispat provides a one–stop shop for inward investment into Turkey. It has a presence around the world, including offices in the UK. It also serves as a reference point for international investors and as a point of contact for all institutions engaged in promoting and attracting investments at national, regional and local levels.

Ispat operates like a private company. It works with its clients on a confidential basis and has the backing of all Turkish Governmental bodies. Its services, which are provided free-of-charge include:

� market information and analyses � industry overviews and comprehensive sector reports � assessing conditions for investment � site selection � finding companies for potential partnerships and joint ventures � negotiating with relevant Government institutions � facilitating legal procedures and legislation issues, such as:

- establishing business operations - incentive applications - getting licenses - work/residence permits.

Ispat’s UK representative is: Ahmet Iplikci Republic of Turkey Prime Ministry Investment Support and Promotion Agency of Turkey 2nd Floor Berkeley Square House Berkeley Square London W1J 6BD

Tel: 0 20 7887 1987Fax: 0 20 7887 6001Mob: 07540 359 215Email: [email protected]


1010 EURASIA RAIL EXHIBITION www.eurasiarail.com

The first ever exhibition focussing exclusively on rail was held in Ankara in March 2011. The next Eurasia Rail exhibition will be held on 8 – 12 March 2012, this time in Istanbul and Eurasia Rail is confident that it will be bigger and better than the launch event. Eurasia Rail reported that the 2011 show was a great success. It said:

� Approximately 117 companies participated, 60 per cent of which were international. � Its aim is for 250 companies in 2012 - 78 are already confirmed. � Turkey is enjoying US$25 bn of investment in rail, so there is already significant interest in

the show and the rail market. � The freight sector will benefit from being able to run through the Marmary tunnel at night.

Consequently, the next event will include a focus on infrastructure and logistics in order to develop this sector and international traffic.

10.1 Show Review UKTI East MidlandsUKTI East Midlands and UKTI West Midlands had joint stand space at the Eurasia Rail exhibition in 2011, taking 11 participating UK companies. UKTI delegates commented the exhibition was well-organised, and while the number of visitors was modest, their quality was encouraging, with key decision-makers in attendance and accessible to delegates. For example, there were senior officials from a variety of divisions of TCDD, contractors, and specialist suppliers to the industry. As well as gaining market intelligence, UK delegates identified a number of potential partners at the event and all of them achieved their objectives.

UKTI East Midlands and a significant proportion of the UK delegates are planning to return to Turkey for the next show in Istanbul in 2012.

UKTI East Midlands Contact is Mr Richard Burchell [email protected]


11 11 Doing Business in Turkey The UK has stated publically that Turkey is a market with significant potential for growth and is keen to develop mutual trading links. UKTI has a strong team in Turkey to support UK business, and can assist in areas such as market research and identifying key stakeholders, including partners, agents or distributors. UKTI has a number of reports available off-the-shelf, or you may be able to commission the Overseas Market Introduction Service (OMIS) to prepare a bespoke report specific for your needs. OMIS is a cost-effective means of obtaining credible information specific to your company.

The UKTI Trade team in Turkey presented the following summary of the market. An overview of Turkey presented by Ispat (The Turkish Inward Investment Agency) is also included in this report.

11.1 UKTI, Ankara – Market Overview, March 2011 � Turkey is world’s 15th, and Europe’s sixth largest economy. It is forecast to be in world’s

top 10 by 2050 � The FDI Global Rankings in 2008 (UNCTAD) placed Turkey 20th and the UK fourth in

the world � UK is Turkey’s second largest export market in Europe, after Germany. Turkey is UK’s eighth

largest export market in Europe. Turkey’s major import markets are Russia and Germany. The UK ranks 19th

Turkey Exports to UK2008 2009 Change 2010 Jan-Nov £5.32bn £3.86bn -27% +18%

UK Exports to Turkey2008 2009 Change £3.47bn £2.26bn -35% +35%

In the first 11 months of 2010, bilateral trade was £7.4bn, exceeding the total for the whole of 2009 by £1.25b

Main Exports(a) UK to Turkey - machinery and mechanical appliances; pharmaceuticals; vehicles; iron and

steel; plastic.

(b) Turkey to UK - clothing and textiles; electrical machinery and equipment; vehicles; footwear; machinery and mechanical appliances.

Turkey: A High-Growth Emerging Market (HGEM)Turkey is designated by HMG as one of the world’s High Growth Emerging Market of significant potential and strategic importance to the UK economy. It places Turkey alongside the BRIC countries (Brazil, Russia, India, China


11InvestmentUK investors in Turkey include: Tesco; Vodafone; British Foods; BP; Shell; Lloyds List; HSBC; International Power; and Mott MacDonald.

Inward Investment into the UK from TurkeyThe number of Turkish investors supported by UKTI increased from five in 2008/9 to 13 in 2009/10 (a 160 per cent increase). There are 70 Turkish-owned businesses in the UK registered at Companies House, with an annual turnover of £1.1 billion.

Turkey: Killer Facts

� Turkey has the youngest and fastest growing population in Europe (with 450,000 graduates a year).

� The Istanbul economy alone is larger than 12 EU countries. � Turkey will be second fastest-growing country in the world by 2018 (according to the OECD). � The Turkish economy will outstrip Canada, Spain and Italy by 2025. � Turkey has the world’s second largest construction and contracting sector. � It is Europe’s number one TV manufacturer. � It is Europe’s leading passenger coach manufacturer. � Turkey is the world’s third largest mega-yacht producer.

11.2 ECGD – Market Summarywww.ecgd.gov.uk

The Export Credits Guarantee Department (ECGD), the UK’s official export credit agency undertook a market review of Turkey in 2010. It offers a very positive view of the current market conditions (although, as market conditions are subject to change, please refer to ECGD for updates or any conditions that may apply to transactions).

ECGD can provide cover in Turkey (for political risk, insurance and finance guarantees) subject to its terms and conditions. The organisation can look at projects of around £50 million quite easily, but would be prepared to consider cases of a considerably higher value, subject to content. It will consider sovereign or corporate borrowers.


I APPENDIX I Case Study – The Marmaray Crossing The demand for travel across Istanbul, including the Bosphorus, is huge, with a population of at least 12 million to cater for and in excess of two million visitors at any one time. Whilst Istanbul has existing metro and rail systems, a new commuter rail system is being developed which will travel, via two immersed tunnels, under the Bosphorus Strait. It will connect the European side of the Strait to the Asian side, adding capacity of 75,000 people per hour in each direction. Much of the project has already been awarded, although a re-tender is underway for the railway systems segment following the late withdrawal of the party originally contracted. Five groups are contesting the re-run, with Bechtel representing the UK interest.

The broad details of the project are:

The contract provides for: � upgrade of existing track and stations to cater for enhanced passenger numbers

and freight services � New signalling and telecoms, including a new control centre � Automatic Fare Collection system upgrade that will allow integrated ticketing with all modes,

and provide an electronic wallet operation for modest value purchases � 44 train sets with five and 10-car configurations � seven transfer stations for intercity trains to enhance passenger service and mobility.

Category Volume

Commuter Rail System 77 km

At Grade European Side 19.6 km

At Grade Asian Side 43.4 km

Bored Tunnel 12.2 km

Immersed Tube Tunnel 1.4 km

Maximum Depth of Immersed Tunnel 56 m

New Stations 4

Total Stations 40

CapacityExisting RailNew Rail

10,000/hr75,000/hr

Design Speed 100 kph

Operational Speed 45 kph

Headway (Peak) 2 to 3 minutes

Reduction in Travel Time (Gebze to Halkali)

81 minutes


I Project Map

BenefitsThe project will help to relieve some of the pressure on Istanbul’s bridges and reduce car congestion in the city, with a reduction in carbon emissions as a result. However, there is some concern that, even with the rail system working at capacity, road traffic levels will not actually decline, as demand for transport remains high in and around Istanbul and new drivers will replace those who switch to trains. Istanbul has about 73 per cent employment on the European side and around 35 per cent of the population on the Asian side.

One key benefit is the considerable reduction in journey times for the estimated one million commuters who will use the lines.

The scheme is running behind schedule due to significant archaeological finds made during construction, including seven whole shipwrecks and numerous artefacts around the construction sites. Turkish heritage is protected in law by the Ministry for Culture. Further issues have been caused by a contractor dropping out of a contract for systems, necessitating a re-tender, which is now under evaluation (see below).

Funding The contract was originally split into three areas, with Japanese International Cooperation Agency (JICA) funding for the tunnel construction and European Investment Bank funding for the other two packages:

Ref Element Detail Funds

BC1 Bosphorus Crossing Immersed tube tunnels.Bored tunnels on both sides.Construction of four new stations.

JICA

CR1* Upgrade of Commuter Rail Improvement of existing track.Addition of a third track – for commuter and freight.Signalling and telecomscontrol centre.Fare collection systems.

EIB

CEB

CR2 New Rolling Stock 44 train sets (10-car and five-car) EIB


I*Due to the withdrawal of the contracted party, CR1 has been re-tendered and is now referred to as CR3. It is now funded by CEB, the Council of Europe Development Bank. The tender is due to be awarded mid-2011 and contenders include, Bechtel UK, two Italian consortia, one Chinese and one Spanish consortia. CR1 is now in litigation, the original winning bidder is being challenged on its withdrawal from the contract.

BC1 (the Bosphorus Crossing) is being undertaken by a Turkish / Japanese consortium, whilst Hyundai / Rotem of Korea have won CR2, with some technology transfer that will allow local content.

The Treasury of Turkey, under the Ministry of Finance, is responsible for arranging the financing of the Marmaray Crossing project. It also has responsibility for deciding the fare prices and the fare principles.

Construction TeamAvrasaya has been the consultant engineer to DLH since the beginning of the project. Avrasya consult is an international team of three partners from Turkey and Japan. The team is also assisted by local consultants from Turkey:

� Oriental Consultants is the lead partner from Japan � Yüksel Proje Uluslarası A.Ş. is the local partner from Turkey � JARTS is the specialist partner from Japan.

These three partners form the joint venture, which is in association with the following two Turkish companies:

� Terzibaşıoğlu Müşavir Mühendislik Ltd. Şti. (TMM) � Yerbilimleri Etüd ve Müşavirlik Ltd. Şti (SIAL)

Crossing ConstructionAn immersed tunnel was chosen to avoid the excessive gradient that a bored tunnel would require. One hundred and eleven segments, each weighing 20,000 tonnes, were constructed nearby and floated into position. Tight control was required for sinking them into position, given the water flows and traffic in the Bosphorus area.

Historical Discoveries and Impact on the ProjectThe first underwater link across the Marmary was proposed in 1860. Since then, a series of schemes have been put forward until the current project was finally agreed and executed. Indeed, a tunnel excavation was found during the construction works believed to be about 1,700 years old.

In addition, the artefacts found during excavation include important ancient ruins, burial grounds, an ancient harbour and seven ships that are virtually intact, including some laden with cargo, gold coins and numerous household items.

The consequences to the project of the historical findings are that: � one high-speed rail link and one intercity station have been cancelled � the cost of the archaeological excavations is US$35 million � the cost of prolonging the contract is US$60 million � the total time lost is around 4.5 years.


IFuture ConnectionsNew rail systems are planned to facilitate movement across the city on both European and Asian sides, with daily demand growing from around 1.1 m crossings in 2009 to 1.6 million.

Seismic Concerns Istanbul is in an earthquake zone, and measures have been taken to mitigate the impact of a major earthquake (we understand that the tunnel has been designed to withstand an earthquake of around 7.5 on the richter scale.

There is a major fault line 16 km from the project. The seismic history was profiled and a solution provided during the preparation phase:

Environmental MitigationA major effort was made to ensure that the project was delivered with minimal impact on the environment. This included provision for major fish migrations from the Black Sea to the Marmary and vice versa.


II APPENDIX IICase Study – High-Speed Rail Project The Ministry of Transport and Communications has pledged to construct a high-speed network around Turkey with the intention of reducing journey times, and creating an affordable and sustainable means of transport. The aim is to extend the network to 14,336 km of track, of which around 10,000 km will be high-speed, by 2023, the centenary of the Republic. All new high-speed lines will be double-track and electrified, and capable of running at 250 kph. Rolling stock will be part-supplied within Turkey.

One example is the Ankara to Istanbul line. At 533 km long, the line, which is a double-track, electrified, and signalled rail system, will be available for operation at 250 kph. This will reduce the journey time from the current 6 and a half hours to three hours between Ankara and Istanbul.

Growth in Market Share (Passenger)The busiest route in the country is the Ankara to Istanbul corridor. Rail’s share of passenger transport on this route is projected to increase from 10 per cent to 78 per cent on completion of the high-speed railway.

The journey time will be significantly reduced when the line from Esenkent to Eskişehir is fully-opened, with the benefits of travelling at high speed from city centre to city centre. The journey time will fall from over 6.5 hours to 4 / 4.5 hours, and as such, it will be equivalent to the air route.

When the project is connected to the Marmary Crossing, seamless passenger transportation will be provided between Europe and Asia, taking Turkey firmly into the modern age of the train, and enhancing the case for Turkey‘s accession to the EU. There will be social benefits, too, with positive impacts on economic, social and cultural life. Turkey will become the sixth country in Europe and eighth in the world to be operating high-speed trains.

High-Speed Routes


III APPENDIX III TCDD Subsidiaries TCDD, the state-owned mainline rail company is not only fully vertically-integrated, it also has a diversified range of activities that include: manufacturing rolling stock and track components, track and rolling stock maintenance, port operations, and more.

Wholly-owned Manufacturing Units

Map Showing TCDD Subsidiary Operations


III III.1 Tülom sas – Locomotives

www.tulomsas.com.tr

Tülomsas, a wholly-owned subsidiary of TCDD, is the only locomotive supplier in Turkey. It has a long history in manufacturing and maintenance, reaching back to 1894. To date, the company has produced over 700 locomotives and 7,500 freight cars. The facility has a history of working in joint venture partnerships with leading international companies. It has a wide range of capabilities, including engines for defence equipment, such as tanks and vessels.

In 2003, Tülomsaş made an agreement with USA-company General Motors (GM) for technology transfer. GM manufactured the first six of 89 units of DE 33,000 diesel electric mainline locomotives for TCDD. Forty-two of the remaining 89 locomotives were built by 2006, whilst the remaining 47 locomotives will be manufactured with 51 per cent local content.

More recently, a joint venture with General Electric (GE Transportation) has allowed the local production and introduction of GE’s most technically-advanced engine, Powerhaul, a series of locomotives that are also aimed at export from Turkey to markets in Northern Africa and the Middle East. The new engine claims to save up to 9 per cent of fuel compared to other models.

Locomotive FactoryThe locomotive factory is the largest plant in Tülomsas. It has extensive manufacturing capabilities for a number of types of rolling stock, ranging from 360 to 4,300 HP, with all the workshops and facilities required for loco manufacture.

Capacity

Category Capacity Units pa

Locomotives 60

Railway Maintenance Cars 100

Bogie Freight Cars 500

Diesel Engines 100

Alternators 100

Traction Motors 400

Steel and Iron Castings 2,500 mt


IIIExportsAs well as an extensive domestic pedigree, Tülomsas has experience of exporting to the following markets:

1. Syria2. Turkmenistan3. France4. Switzerland5. Cyprus6. Italy7. Iran8. Austria9. Iraq10. USA11. Thailand

III.2 TüvasaşPassenger Coach Manufacturer

www.tuvasas.com.tr

Tüvasaş was established in 1951 for the repair and maintenance of wagons, and began production of passenger coaches in 1961. It has since exported coaches to Bangladesh, Pakistan and Iraq. The company has collaborated with Alstom, Siemens and latterly Rotem.

However the facility was damaged beyond repair by the Marmara earthquake on 17th, August 1999, Tüvasaş experienced huge material damage. A repair and maintenance facility was re-established in April 2000. Over the next few years, reconstruction work took place to allow joint venture with Rotem to develop in 2008.

Tüvasaş has capacity to manufacture 65 coaches and repair a further 500 coaches per annum. It has a facility spread over 359,073 m2, of which 79,197 m2 is covered.

A brochure describing the company’s activity and capability can be found at:

www.tuvasas.com.tr/pdf/tuvasas2.pdf

By 1995, vehicles for light rail were added to the list of products available. Facilities and capability have been upgraded in collaboration with Tübitak, the Turkish Government Scientific and Technological Research Council. This has enabled the company to ensure that car production complies with modern demands for comfort and quality, including crash-worthiness. Cars incorporate a UIC voltage convertor to ensure compatibility with European standards.

Tüvasaş constructed a Climatic Test Tunnel where the air conditioning systems of rail vehicles will be tested in collaboration with Sakarya University and Uludağ University. DMU production began in 2010, for the delivery of 84 cars to TCDD by 2012.


III Joint Venture Manufacturing

AlstomIn 1976, a licensing agreement with Alstom enabled the production and delivery of 225 EMU coaches for TCDD.

Siemens 38 light rail vehicles were assembled and commissioned for Bursa Metropolitan Authority, under a framework agreement with Siemens in 2001.

Rotem In 2008/09, 28 train sets of 84 cars and 75 cars of electrically-powered suburban vehicles were manufactured in a joint agreement with Rotem. The train sets were for operation between Taksim and Yenikapı by İstanbul Metropolitan Municipality.

Production of a further 275 vehicles began in 2010 for the Marmaray Crossing project under an agreement with Hyundai-Rotem.

III.3 Tüdemsaşwww.tudemsas.gov.tr

Tüdemsaş is the freight car manufacturing facility established in Turkey in 1939. It has been upgrade progressively to include the production of parts and components. Productivity has increased by over 400 per cent in the past five or six years.

The manufacturing site extends over 418,626 m2 of which 100,000 m2 is indoor.

Tüdemsaş employs approximately 1,500 people and has capacity for 1,500 wagons and to repair a further 7,600 pa.

III.4 Manufacturing (Supply Chain)TCDD has a number of manufacturing facilities, some of which are involved in joint ventures. They include:

1. Ankara Railroad Factory2. Ankara Long Rail Source and Road Maintenance Mechanical Tools 3. Sivas Sleeper Factory Building4. Afyon Concrete Sleeper Factory5. Çankırı Switch & Crossings Factory (JV with Voest)


III

IV

III.5 Tübitakwww.tubitak.gov.tr

Tübitak is The Scientific and Technological Research Council of Turkey. It is the leading agency for managing, funding and conducting scientific research in Turkey. It is not a subsidiary of TCDD It was established in 1963, with a mission to advance science and technology, conduct research and support Turkish researchers. The council is an autonomous institution and is governed by a scientific board, with members selected from universities, industry and research institutions. More than 1,500 researchers work in 15 different research institutes for Tübitak.

The organisation is responsible for promoting, developing, organising, conducting and co-ordinating research and development, in line with national targets and priorities.

Tübitak acts as an advisory agency to the Turkish Government on science and research issues, and is the secretariat of the Supreme Council for Science and Technology (SCST), the highest science and technology policy-making body in Turkey.

As noted above, this includes supporting the development of passenger cars and it could be extended to include other activities relating to the rail sector.

APPENDIX IV UK & Turkish Trade UKTI can provide a detailed statement of UK and Turkish Business Sectors in detail. A snapshot is enclosed here, for further information contact UKTI or visit the website.

� Turkey is the world’s 16th and Europe’s sixth largest economy. Goldman Sachs’ recent research predicts that Turkey’s economy will be the second biggest in Europe, after the UK, and ninth in the world by 2050. Turkey aims to be the world’s 10th largest economy by 2023, on the 100th anniversary of the foundation of the Republic. The OECD estimates that Turkey will be the third highest growing country, after China and India by 2017 and it will overtake India after 2017 to become number two.

� According to The Turkish Statistics Institute, GDP grew by 11.7 per cent in the first quarter of 2011 and 10.3 per cent in the second quarter, respectively. With its 10.3 per cent second quarter growth rate, Turkey became the fastest growing economy in the G20 along with China, and the third-fastest growing economy in the world, after Singapore and Thailand, for the same period (second quarter of 2010). In September 2010, the FTSE Group upgraded Turkey from ‘secondary emerging’ status to ‘advanced emerging’ status.

� According to the OECD, Turkey is expected to be the fastest growing economy among OECD members during 2011-2017, with an annual average growth rate of 6.7 per cent.

� According to IMF data, Turkey’s Purchasing Power Parity adjusted GDP for the year 2009 was US$880 billion, up from US$305bn in 2003. - Istanbul and Ankara are among the biggest cities in the world in terms of GNP. (Istanbul is 34th

and Ankara 94th). At US$133 billion, Istanbul’s GNP surpasses that of many countries, such as Romania, Ukraine, Croatia and Luxembourg.


IV

V

- Two-thirds of Turkey’s overall FDI comes from the EU. Turkey has become an investment base for European businesses, with increasing integration into the EU’s supply and production chain.

- Turkey has been in the customs union with EU-27 countries since 1995 and has free trade agreements with 15 other countries, providing free trade opportunity with more than 40 countries.

- In 2010, S&P, Moody’s and Fitch – the top international credit rating agencies - upgraded Turkey’s credit rating. Turkey was one of the few countries whose credit rating was upgraded by two notches by Fitch during the global financial crisis.

- Turkey’s financials structure ensured its resilience to the global financial crisis and its on-going recovery. The Economist noted that not a single Turkish bank collapsed and this is partly due to the fact that, unlike many Western banks, they have few toxic assets and limited mortgage exposure. The recovery in Turkey was the strongest in the OECD area, as measured by the cumulative increase in GDP, from the trough until the first quarter of 2010, by over 10 per cent.

For detailed and current information covering UK investments in Turkey, please contact UKTI

October 2010 Economic Section Istanbul/Ankara

APPENDIX V Overview of TurkeyISPAT - The Turkish Investment Agency(The information in this section has been kindly supplied by Ispat. Whilst delighted to enclose this for information, UKTI cannot be responsible for information provided by third parties). http://www.invest.gov.tr

Ispat is the inward investment agency of Turkey and reports to the office of the Turkish Prime Minister. A short meeting was held to enhance knowledge of the market and obtain background information. The organisation is very professional and has an office in London for those who may wish to explore opportunities [email protected]

About Ispat Ispat serves as a reference point for international investors and as a point of contact for all institutions engaged in promoting and attracting investments at national, regional and local levels.

Active on a global scale, Ispat operates with a network of local representatives in: Belgium, Canada, China, France, Germany, India, Italy, Japan, Luxembourg, Saudi Arabia, Spain, the Gulf States (Bahrain, Kuwait, Oman, Qatar, and the United Arab Emirates), the Russian Federation, the UK, and the USA. It offers an extensive range of services to investors and assists them in achieving the best results in Turkey. Ispat team of professionals can assist investors in Arabic, Chinese, English, French, German, Italian, Japanese, Korean, Russian, or Spanish, as well as in Turkish.


V Ispat works confidentially. It combines a private sector approach with the backing of all Turkish Governmental bodies. Its services are free-of-charge services and include:

� market information and analyses � industry overviews and comprehensive sector reports � assessing conditions for investments � site selection � finding companies for potential partnerships and joint ventures � negotiating with relevant Turkish Governmental institutions � facilitating legal procedures and legislation issues, such as:

- establishing business operations - incentive applications - getting licenses - work/residence permits.

Turkey – A Brief Introduction by IspatConstitutionThe Republic of Turkey adopted its first constitution in 1924. It retained the basic principles of the 1921 Constitution, notably the principle of national sovereignty. As in the 1921 Constitution, the Turkish Grand National Assembly (TGNA, or Parliament) was deemed the “sole representative of the nation.” The second Constitution of the Republic of Turkey was adopted in 1961 and introduced a bicameral Parliament: the National Assembly with 450 deputies and the Senate of the Republic with 150 members.

The third Constitution of the Republic of Turkey was passed in 1982 by a national referendum and is still in effect today. Under the 1982 Constitution, sovereignty is vested fully and unconditionally in the nation.

The Constitution emphasises that the Turkish state, with its territory and nation, is an indivisible entity, and a secular, democratic, social state under the rule of law. All individuals are equal without any discrimination before the law, irrespective of language, race, skin colour, gender, political orientation, philosophical creed, religion and sect, or any such considerations. The 1982 Constitution recognises all basic human rights and freedoms, such as freedom of speech, freedom of the press, freedom of residence and movement, freedom of religion and conscience, freedom of thought and opinion, freedom of expression and dissemination of thought, freedom of association, freedom of communication, the right to privacy, right to property, right to hold meetings and demonstration marches, right to legal remedies, guarantee of lawful judgment and right to acquire information.

Parliament has passed many constitutional amendments to make the 1982 Constitution more democratic and to expand democratic rights and freedoms in the country. These efforts gained significant momentum after the EU recognised Turkey as a candidate country in 1999 and later agreed to start full membership talks with Turkey in 2005.


VExecutive The executive branch in Turkey has a dual-structure. It is composed of the President of the Republic and the Council of Ministers (Cabinet).

President The President of the Republic is the head of State and represents the Republic of Turkey and the unity of the Turkish nation. The President is elected by popular vote among the Turkish Grand National Assembly members, who are over 40 years of age and have completed higher education, or among ordinary Turkish citizens who fulfil these requirements and are eligible to be deputies. The President’s term of office is five years and one President can be elected for two terms at most.

The President of the Republic has duties and power related to the legislative, executive and judicial branches, and is responsible for ensuring the implementation of the Constitution, and the regular and harmonious functioning of the organs of state.

Prime Minister and Council of Ministers The Council of Ministers (Cabinet) consists of the Prime Minister, designated by the President of the Republic from members of the TGNA, and various ministers nominated by the Prime Minister and appointed by the President of the Republic. Ministers can be dismissed from their duties by the President or upon the proposal of the Prime Minister when deemed necessary.

The fundamental duty of the Council of Ministers is to formulate and implement the internal and foreign policies of the State. The Council of Ministers is accountable to the Parliament in the execution of this duty.

The Republic of Turkey Prime Ministry Investment Support and Promotion Agency (ISPAT) is the official organisation for promoting Turkey’s investment opportunities to the global business community and providing assistance to investors before, during and after their entry into Turkey.


V Economic and Physical data

Category Comment

Official Name of Country Republic of Turkey

Capital City Ankara

Government Parliamentary Democracy

Population 74 million (2010)

Labour Force (Population) 25.9 million (October 2010)

Median Age 29.2 (2010)

Official Language Turkish

President Abdullah Gul

Prime Minister Recep Tayyip Erdogan

Area 783,562.38 km²

Co-ordinates 35° 55’ North, 32° 50’ East

Time Zone GMT +2

Neighbouring Countries Bulgaria, Greece, Syria, Iraq, Iran, Azerbaijan, Armenia, Georgia

Major Cities (Population) Istanbul (13.3 million), Ankara (4.8 million), Izmir (3.9 million), Bursa (2.6 million), Adana (2.1 million)

Climate Temperate; hot, dry summers with mild, wet winters

Telephone Code +90

Country Code Top-Level Domain .tr

Electricity Voltage 220 V, 50 Hz

Currency Turkish Lira (TRY)

Financial Centre Istanbul

GDP US$ 618 billion (2009 - Current Prices)

GDP Per Capita US$ 8,590 (2009)

Exports Value US$ 114 billion (2010)

Imports Value US$ 185 billion (2010)

Tourism Revenue US$ 20.8 billion (2010)

Tourist Number 28.5 million people (2010)

Foreign Direct Investment US$ 8.9 billion (2010)

Number of Companies with Foreign Capital

25,500 (2010)

Inflation Rate 6.4% (CPI - 2010)

Major Exports Markets Germany (10.1%); UK (6.3%); Italy (5.7%); Iraq (5.3%); France (5.3%) (2010)

Major Imports Sources Russia (11.6%); Germany (9.5%); China (9.3%); USA (6.6%); Italy (5.5%) (2010)

Trade Agreements - Customs Union Agreement with the EU - Free Trade Agreements with Albania, Bosnia Herzegovina,

Croatia, EFTA member countries (Switzerland, Norway, Iceland and Liechtenstein), Egypt, Georgia, Israel, Macedonia, Montenegro, Morocco, Palestine, Serbia, Syria, Tunisia

Traffic Flow Right

Airports 45 (13 international)


VEconomic Outlook The Turkish economy has shown remarkable performance, with steady growth over the last six years. A sound macroeconomic strategy, in combination with prudent fiscal policies and major structural reforms in effect since 2002, has integrated the Turkish economy into the globalized world, while transforming the country into one of the major recipients of FDI in its region.

The structural reforms, hastened by Turkey’s EU accession process, have paved the way for comprehensive changes in a number of areas. The main objectives of these efforts are: to increase the role of the private sector in the Turkish economy, to enhance the efficiency and resiliency of the financial sector, and to place the social security system on a more solid foundation. As these reforms have strengthened the macroeconomic fundamentals of the country, inflation drastically decreased to 6.5 per cent by the end of 2009, down from 30 per cent in 2002, while the EU-defined general Government nominal debt stock fell to 45.5 per cent from 74 per cent in the period from 2002 to 2009. Hence, Turkey has been meeting the “60 per cent-EU Maastricht criteria” for the public debt stock since 2004.

As the GDP levels almost tripled to US$618 billion in 2009, up from US$231 billion in 2002, GDP per capita soared to US$8,590, up from US$3,500 in the given period.

The visible improvements in the Turkish economy have also boosted foreign trade, while exports reached US$102 billion by the end of 2009, up from US$36 billion in 2002. Similarly, tourism revenues, which were around US$8.5 billion in 2002, exceeded US$21 billion in 2009.

Significant improvements in such a short period of time have registered Turkey on the world economic scale as an exceptional emerging economy, the 16th largest economy in the world and the 6th largest economy when compared with the EU countries, according to GDP figures (at PPP) in 2009.

Prior to the recent global recession, which hit all economies throughout the world, the Turkish economy sustained strong economic growth for 27 quarters consecutively, making it one of the fastest growing economies in Europe. However, the global financial crisis has considerably challenged the macroeconomic and financial stability of many economies by adversely affecting financing facilities and external demand, thus causing a significant slowdown in all global economic activities.

While the financial markets in Turkey proved resilient to the crisis, the decrease in external demand and slowing international capital flows have had a negative impact on the economy, thus causing a 4.7 per cent economic contraction in 2009. However, the perceived positive developments in the economy showed signs of a fast recovery beginning as early as the last quarter of 2009, with an impressive 6 per cent economic growth rate, hence making Turkey one of the fastest recovering economies in the world. Its robust economic growth has continued in 2010 as well, having reached 11.8 per cent, 10.2 per cent and 5.5 per cent in the first, second and third quarters of 2010 respectively. Turkey’s very recent economic performance has created an optimistic environment, enabling international organisations to regard it as the fastest growing economy in Europe and among the OECD countries, too.

2010 Real GDP Growth Rate Estimates for Turkey (%)

OECD 8.2

IMF 7.8

Government’s official target 6.8

Sources: IMF World Economic Outlook April 2010; OECD Economic Outlook No: 88; Mid-Term Program 2011-2013


V Moreover, according to the OECD, Turkey is expected to be the fastest growing economy of the OECD members during 2011-2017, with an annual average growth rate of 6.7 per cent.

Annual Average Real GDP Growth (%) Forecast in OECD Countries 2011-2017


VI Source: OECD Economic Outlook No: 86 � Institutionalised economy, fuelled by US$83 billion of foreign direct investment (FDI)

in the past eight years and ranked the 15th most attractive FDI destination for 2008-2010 (UNCTAD).

� 16th largest economy in the world and sixth largest economy, compared with EU countries in 2009 (GDP at Purchasing Power Parity, IMF-WEO).

� Robust economic growth over the last seven years, with an average annual real GDP growth of approximately 4.3 per cent.

� GDP reached US$618 billion in 2009, up from US$231 billion in 2002. � Sound economic policies with tight fiscal discipline. � Strong financial structure resilient to the global financial crisis. � Rapid recovery from the global financial crisis.

Organisation Status

AE Arma Elektopanç Contractor

AvraConsult Consultants

De Leeuw / WYG Consultants

DLH Contractor

DTD Railway Transport Association

Esray Maintenance Support Company & wagon sub supplier

Işik University Academia

Ispat (Investment Support and Promotion Agency of Turkey)

Government Agency

Istanbul Technical University Academia

Istanbul University Academia

Marmaray Project Contractor JV

Ministry of Transport & Communications Turkish Government

OIB - Turkish Government Privatization Agency Government Agency

Őzkan Steel Company

Parsons Brinckerhoff Consultant

Rayder Railway Transport Association

RMT Limited Consultant

Savronik Signalling / Electrification & Systems Integrators, and Project Managers

Sky Boston Consultants Consultant

TCDD (Turkish State Railways) Rail Authority

Turkel Trade Fair Organisation

Tϋvasaş Passenger Car manufacturer

UKTI Ankara UK Government team supporting UK business

Ulasim – Istanbul Metro Operator

Yapiray Contractor


VI APPENDIX VI Organisations Visited

TCDD – High Speed Rail Project


NOTES

HELPING YOUR BUSINESS GROW INTERNATIONALLY

A range of UK Government support is available from a portfolio of initiatives called Solutions for Business (SfB). The “solutions” are available to qualifying businesses, and cover everything from investment and grants through to specialist advice, collaborations and partnerships.

UK Trade & Investment is the Government Department that helps UK-based companies succeed in the global economy, and is responsible for the delivery of the SfB product “Helping Your Business Grow Internationally”.

We also help overseas companies bring their high-quality investment to the UK’s dynamic economy – acknowledged as Europe’s best place from which to succeed in global business.

UK Trade & Investment offers expertise and contacts through its extensive network of specialists in the UK, and in British embassies and other diplomatic offices around the world. We provide companies with the tools they require to be competitive on the world stage.

For further information please visit www.ukti.gov.uk or telephone +44 (0)20 7215 8000.

Whereas every effort has been made to ensure that the information given in this document is accurate, neither UK Trade & Investment nor its parent Departments (the Department for Business, Innovation and Skills, and the Foreign and Commonwealth Office) accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned.

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Published 11/916 by UK Trade & Investment © Crown Copyright