February 8 2010-BOTAŞ’s Central European Gas Ring (Nabucco) Project

Nabucco company, stationed in Vienna, has made an international consultancy services tender announcement for Environmental Impact Assessment (EIA) services.

Companies can obtain the prequalification documents by February 10, 2010 and make their application by the evening of February 25, 2010

NABUCCO Gas Pipeline company, stationed in Vienna, has made an international consultancy services tender announcement in connection with Environmental Impact Assessment (EIA) services for the Nabucco Natural Gas Pipeline Central Europe Gas Ring Project of Austria, Hungary, Romania, Bulgaria, Germany and Turkey through which natural gas will be supplied to Eastern Europe.

According to TEBA information, those international engineering services companies are to apply to Nabucco Natural Gas Pipeline company to get the prequalification documents, fill them out and make their prequalification applications. Prequalified companies will be invited by Nabucco company to submit their bids in March.

Work subject to this tender is related to select an independent environmental social services consultant. Main items of the contract are expressed as production of natural gas, its transmission and distribution.

The address of the Nabucco company and application points:

Nabucco Gas Pipeline International GmbH, Floridotower, Floridsdorfeer Hauptstrasse 1, Contact: Commercial Department, Attn: Orsolya Nitsch, 1210 Vienna, AUSTRIA. Tel: +43 1270037129102. E-mail: orsolya nitsch@nabucco-pipeline com. Fax +43 12700371629102.

The cost of the subject work is about Euro 500-600 thousand

According to the information obtained by TEBA, the estimated cost of the consultancy services work subject to the tender amounts nearly to Euro 500-600 thousand, VAT included. It is reported that Nabucco company will make cash payments gradually when the items of work are carried out and completed. The subject services will have been completed in 14 months’ time, as planned. Bidders are required to deposit a performance bond corresponding to 10% of the contract value.

Bidder companies are to apply, together with their prequalification documents, no later than the evening of February 25, 2010

Companies to participate in this international tender can obtain the prequalification documents from the address given above by 16.00 hours on February 10, 2010 and return them no later than 16.00 hours on February 25, 2010 to the same address to make their application.

It is a must to have carried out works valued min. at Euro 300 million within the last 7-year period

In order to participate in this tender, a number of economic, technical and administrative criteria are to be met. The most important criterion to be sought for technical capacity is to have undertaken and conducted a similar project in Energy Sector valued at Euro 300

million between the years 2003-2009. Such a project should include consultancy services focused on socio-economic and environmental conditions.

Another criterion in this scope is to have carried out similar consultancy services, appearing in their contracts, amounting min. to Euro 5 million within the last 3-year period (2007-2009).

Detailed information is posted in the e-mail address of Nabucco company in connection with the construction of 3300 km long Natural Gas Pipeline.

February 8 2010-State Minister and Deputy Prime Minister Babacan

“We estimate positive growth to start in the last quarter of 2009. In the new established financial, economic order, Turkey was registered as relatively more

reliable, stable country with future prospects compared to many other countries.”

STATE MINISTER and Deputy Prime Minister Ali Babacan said in his statement made on the basis of export figures, production indicators, capacity usage figures pertinent to last quarter of 2009, “We estimate positive growth to start in the last quarter of 2009”.

Upon the indicators came out to be positive in the last quarter of 2009, the last quarter was considered as a period when strong recovery signals were started to be taken in Turkey, said State Minister and Deputy Prime Minister Babacan and added,

“Initial indicators will show the first period when the positive growth started in the last quarter of 2009. We receive the signals of recovery in the Real Sector Reel in the statistics. But, there is a ratio which I closely follow. Every night, an exchange process is done by the Central Bank, the Checks in the market are exchanged. If they are collected through exchange which in most of the cases is done in Turkey, the return ratio of the checks involved in this transaction in last March has reached 10.2%. Since November we observe the subject ratio to be around 5%”.

In the new established financial, economic order, Turkey is relatively more reliable than many other countries

Having noted 2009 was considered as a lost year in the world economy history, the agencies such as World Bank and IMF assumed new duties and missions and world economy started to give revitalizing signals as the result of the extraordinary precautions taken, Deputy Prime Minister Babacan has made the following comment on the economy of Turkey.

“The relative improvement is generally believed to continue in 2010 as well. However, the revitalization has started as the result of the extraordinary precautions and all of the external interventions. When we ask whether the subject extraordinary measures can be withdrawn, we see the answer is absolutely ‘No’. In return, if the extraordinary precautions maintained for a longer time, there will be side effects such as extraordinary increase of the Public deficits”.

Our Government accomplished what others cannot, by yielding primary surplus of 6.5% in consecutive 4 years and budget deficit below of 3% in 5 years

Noting a serious fiscal harmony was realized, Babacan reminded that a primary surplus of 6.5% was yielded in consecutive 4 years and budget deficit below of 3% in consecutive 5 years.

As is known, one of the most important indicator monitored in the IMF agreement had been the primary surplus to be yielded as 6.5% and budget deficit below of 3% to be attained by increasing the revenues and cutting the expenditures. Government had succeeded to maintain both indicators as long as the IMF agreement. Government, which maintained such conditions better than any other country, praised itself with reducing the public debts down to Maastrich criteria.

State Minister Babacan stressed that after Turkey economy experienced such a difficult 5 years has started to collect the consequences in the global crisis environments and said,

“It was difficult indeed, but we succeeded. Thus, in the course of global crisis, we were at a very strong position and we had room for movements. If Turkey was caught with high debt stock and higher deficit, we were still planning how the recovery would be managed in the crisis”.

Worst is left behind

Minister Babacan noted that in Turkey “the worst is left behind” was started to be talked about in the last quarter of 2009 and added,

“We saw the deepest point as from last quarter of 2009 and we started to talk about relative improvement to be started from now on. Our export started to increase. Actually we also saw the bottom in the export however, we started to see some improvements in recent months. Turkey started to be shown as the country with most rapidly growing economy in Europe in 2010. Look at the figures of OECD, World Bank, IMF. EU Commission published a report as well. In the Report, Turkey is at the top of the list. At a period when the crisis was experienced and grade decreases were experienced more than 100 around the world, Turkey is a country with increased credit grade”.

Babacan also stated that Turkey was registered as relatively more reliable, stable and strong country with future prospects in the newly established financial, economic order.

February 8 2010-TCK’s Çanakkale Strait Bridge and Tekirdağ-Çanakkale-Balıkesir Motorway Project

TCK Director General Turhan, “The first route we set for the bridge to be constructed in Çanakkale is Sarıçay-Kilitbahir, however, the bridge route can be slightly changed. The length of the bridge of 2x3 lanes will be 1,450 m. Together with 433 km Motorway,

the total investment cost of the Project is USD 4.5 billion.”

STATE Highways Administration (TCK) Director General Cahit Turhan has made a detailed explanation on Çanakkale Strait Bridge and Tekirdağ-Çanakkale-Balıkesir Motorway Project, the preliminary designs of which are under preparation for some time, and furnished preliminary information on the feasibility report.

Communicating the initial route set for the bridge to be constructed on Çanakkale Strait is Sarıçay-Kilitbahir, TCK Director General Turhan said that however, the route of the Bridge could slightly be changed and added, “Protection of cultural and natural assets involved, for this reason we can move the route of the Bridge slightly to Right or Left ”.

Project’s total investment cost is USD 4.5 billion

TCK Director General Cahit Turhan further noted that the total investment cost of the project together with Tekirdağ-Çanakkale-Balıkesir Motorway was USD4.5 billion and Çanakkale Bridge would be of about 1.5 km and Motorway of 433 km.

Having noted the Project will maintain highway transportation connection incessantly particularly of Aegean, Mediterranean, Marmara and Northern Marmara and European countries, Turhan stated that transportation in the West of İstanbul, the settlements in the Thrace to the central regions was planned to be made along this route. Thus, the intensive traffic over other bridges in İstanbul will be regulated, said Director General Turhan, application will be made soon for inclusion of Çanakkale Strait Bridge Project in 2010 Investment Program.

Minister of Transportation Yıldırım communicated Çanakkale Bridge to be constructed on BOT Model

As it might be recalled, in the “2023 Turkey Transportation Council“ meeting held in October 2009, Minister of Transportation Binali Yıldırım said, “We started works in the Ministry for realizing this project. We engaged in feasibility works of the subject investment planned to be made on Build-Operate-Transfer (BOT) Model. There are Environmental Impact Assessment (EIA) Reports, Municipality Reconstruction Plans, route issue that would be handled step by step” (TEBA Web Site/October 12, 2009).

Preliminary developments in Çanakkale Strait Bridge Project

As is known, TCK General Directorate had asked 19 local contractor companies to submit their bids on BOT Model for Çanakkale Bridge on April 25, 1995 upon the decision of the Supreme Planning Council (SPC) to this effect reached on November 11, 1994 (TEBANEWS#690/April 3, 1995). In the news story we furnished on the subject as TEBA, we had reported that firms were not interested in the tender because of the fact that in the specifications the financing of the connection roads and the expropriation costs were left to be assumed by the firms (TEBANEWS#691/April 10, 1995). We also reported that even Alsim Alarko Consortium which was interested in the project right from the very beginning had reservations on bidding. Then, on April 25, 1995, TCK General Directorate could collect no bids at all from 19 firms because of the difficult conditions involved in the specification of BOT Model investment (TEBANEWS#698/May 29, 1995).

We further reported that Alsim Alarko Group, one of the firms forwarded letter of thanks was actually ready to construct the bridge on the condition of discussing the bidding under new conditions along with Krupp, Tekser and Fabrikasyuanes Militares.

As it might be recalled, upon the resignation of DYP-CHP Coalition Government at that time, the application failed (TEBANEWS#715/September 25, 1995). We earlier reported that discussions re-started with local and foreign groups towards the construction of the bridge envisaged to be constructed on Çanakkale Strait would be on BOT Model as the third Bridge over Bosphorus (TEBA Web Site/January 31, 2000).

February 8 2010-Treasury Signed Credit Agreements of USD 7 Billion in 2009 within the

Context of Central Administration Budget

Of this amount, USD 3 billion 750 million corresponds to the Bond export and USD 3 billion 350 million to the Project Credit Agreements. In the Transportation Sector

where biggest project credit inflow existed, the credit agreements of USD 806 million for TCDD’s Ankara-İstanbul High Speed Train, Electrical Locomotives and Rail Import

projects, USD 776.4 million for TCK’s Motorway and Eastern Black Sea Coastal Highway Projects and USD 254.3 million for DLH’s Marmaray Project, in the Energy

Sector, credit agreement of USD 84.2 million for Ermenek HEPP, in the Health Sector USD 78.7 million and in the Education Sector USD 475.4 million have been signed

THE TOTAL COST of the credits signed in 2009 by the Treasury Undersecretariat within the context of its tasks to create financing for Central Budget deficit and providing foreign financing for the international projects of the Public institutions under credit agreements with the international credit agencies, has reached USD 7 billion 4 million 64 thousand 401.

Having signed 24 Credit Agreements with various international agencies under Turkish Banks syndication in 2009, 19 of which were of Project and 5 were of Program, Treasury Undersecretariat has created a financing of about USD 5 billion for the Central Budget and USD 2 billion for the Public Projects.

As is known, under 2009 Central Budget Law, Treasury Undersecretariat has been assigned to create financing of USD 2 billion for Public Projects, and to make foreign borrowing of about USD 5 billion.

When we compared the credit agreements signed by the Treasury Undersecretariat in 2009 to 2008, we see that the share of Project Credit Agreements which was 31% in the last period, has receded to 25% in 2009, in return, the share of Program Credit Agreements has increased to 75% from 69%.

Program credits were taken of about USD 5 billion, USD 3,750 million of which was Bonds

Treasury Undersecretariat has received program credit of about USD 5 billion for financing the Central Budget through 3 individual international agreements signed towards the bond export in 2009 in the amount of USD 3 billion 750 million. Other two Program Credit agreements signed by the Treasury Undersecretariat were for YÖK in the amount of USD 475 million and for financing the balance of payments of USD 768 million as the Electricity Sector development policy credit agreement.

Project Credit Agreements signed in the Transportation Sector totaled to USD 1.8 billion

Among the Project Credit Agreements signed in 2009 by the Treasury in the amount of USD 2 billion, the share of the projects in the Transportation Sector ranked first with 26%. In the Transportation Sector, the total credit amount obtained through 16 credit agreements signed, 4 of which for TCDD, 11 for TCK, 1 for DLH has reached USD 1 billion 836.7 million.

In the period under review, the highest cost credit agreements signed in the Transportation Sector have been for the projects of the TCDD General Directorate in the amount of USD 806 million. Agreements have been signed with European Investment Bank (EIB) for TCDD’s Ankara-İstanbul High Speed Train Project of USD 147.5 million as the first tranche and USD 284.9 million as the second tranche, with the Islamic Development Bank (IDB) for rail procurement of USD 153.6 million as the first tranche and for Electrical Locomotives of USD 220 million.

Other major credit agreements signed in the Transportation Sector were for TCK’s Motorway Projects and Eastern Black Sea Coastal Highway Project. The amount of credits obtained by TCK through 16 individual project credit agreements signed with various international agencies under the syndication of T.C. Ziraat Bank, Türkiye İş Bank and Türkiye Halkbank has reached USD 776.4 million.

Meanwhile, another Project Credit Agreement signed in the Transportation Sector was the one signed with the European Council Development Bank (ECDB) for financing the railway vehicles of DLH’s Marmaray Project in the amount of USD 254 million.

Agreements of USD 84 million for Energy and USD 79 million for Health were signed

Although the largest share in the Project Credit Agreements signed by the Treasury Undersecretariat in 2009 was of Transportation Sector, Project Credit agreements were signed towards Environment, Energy and Health Sectors as well.

In the Environment Sector, an agreement of USD 10.7 million was signed for Wastewater Treatment Facility project of Zonguldak Municipality, in the Health Sector, agreement of USD 78.7 million with the World Bank for Transformation in Health Project and in the Energy Sector, an agreement of USD 84 million with T.C. Ziraat Bank for DSİ’s Ermenek HEPP Project.

You may find the distribution of Project and Program Credit Agreements signed by the Treasury Undersecretariat in 2009 within the context of Central Administration Budget in the Table below.

Credits Signed by the Treasury in 2009 within the Context of Central Administration Budget

 

Name of Credit

Program Credit/

Project CreditCreditor (1) User Establishment Date of Agreement

(2)USD Corresponding

to Agreement

Bond Export Program Citigroup HSBC Treasury Undersecretariat

January 14, 09 1,000,000,000

Zonguldak Wastewater Treatment Facility Project

Program Credit ICO Zonguldak Municipality January 30, 09 10,773,315

125,000 Ton Rail Procurement Project Project Credit İKB TCDD March 19, 09 153,640,000

Bursa Beltway Project, Yalova Junction Turanköy Bridge Junction II. Section

Project Credit West B AG London Branch

KGM April 22, 09 30,000,000

Gaziantep-Şanlıurfa Motorway (Gaziantep Beltway Included) Project Gaziantep-Birecik Section

Project Credit West B AG London Branch

KGM April 22, 09 40,000,000

Bond Export Program JP Morgan, Bank of America-Merill Lynch

Treasury Undersecretariat

May 7, 09 1,500,000,000

80 ea. Electrical Mainline Locomotives Procurement and Manufacturing Project

Project Credit IDB TCDD June 2, 09 220,000,000

YÖK R&D Program Credit Program EIB Treasury Undersecretariat Müst.

June 8, 09 475,398,500

Electricity Sector Development Policy Credit of Program Nature

Program International Reconstruc-tion and Development Bank

Treasury Undersecretariat

June 12, 09 767,979,360

Eastern Black Sea Coastal Highway Project Bolaman-Perşembe, Araklı-İyidere, Giresun-Espiye and Çarşıbaşı-Trabzon-Araklı sections Sinop-Boyabat Raliway Project and Kemerhisar-Pozantı Motorway Project, Çiftehan-Pozantı Section

Project Credit T.C. Ziraat Bank London Branch

KGM June 19, 09 155,000,000

Eastern Black Sea Coastal Highway Project İyidere-Çayeli, Espiye-Çarşıbaşı (Completion), Espiye-Çarşıbaşı and Piraziz-Giresun Sections

Project Credit T. Halkbank Bahrain Branch

KGM June 25, 09 177,000,000

Gümüşova-Gerede Motorway Project Bolu Mountain Crossing II. Section and İzmir-Afyon Motorway (İzmir-beltway included) Project

Project Credit T.C. Ziraat Bank London Branch

KGM June 29, 09 71,000,000

Transformation in Health and Social Security Reform Project

Project Credit International Reconstruc-tion and Development Bank

Health Ministry +Social Security Ins.

June 30, 09 78,713,910

Samsun-Bafra-Sinop State Highway Project Gerze-Sinop Section (Sinop Crossing Included)

Project Credit T.C. Ziraat Bank London Branch

KGM July 1, 09 30,000,000

Samsun-Bafra-Sinop State Highway Project. Yakakent-Gerze Section and Eastern Black Sea Coastal Highway Project, Çayeli-Ardeşen-Hopa Section

Project Credit T. Halkbank Bahrain Branch

KGM July2, 09 126,000,000

Bond Export Program Barclays Capital, Deutsch Bank Goldman Sachs

Treasury Undersecretariat

July 31, 09 1,250,000,000

Gaziantep-Şanlıurfa Motorway Project (Gaziantep Beltway included) Gaziantep Beltway section, Ankara-Pozantı Motorway Project, Gölcük-Kemerhisar Section (Kemerhisar-Niğde Connection road included) Eastern Black Sea Coastal Highway Project, Trabzon Coastal Highway Crossing section

Project Credit T. Halkbank Bahrain Branch

KGM September 8, 09 77,400,000

Ermenek Dam and HEPP Project Additional Financing

Project Credit Ziraat Bank International AG

DSİ October 23, 09 84,186,000

Marmaray Project Project Credit ECDB DLH November 13, 09 254,299,500

Ankara-İstanbul High Speed Train Project EIB Track renewals

Project Credit EIB TCDD December 10, 09 147,480,000

Ankara-İstanbul High Speed Train Project EIB Track renewals

Project Credit EIB TCDD December 10, 09 284,893,816

Gaziantep-Şanlıurfa Motorway Project, (Gaziantep Beltway included) Suruç-Şanlıurfa Section

Project Credit T. İş Bank Bahrain Branch

KGM November 20, 09 35,000,000

Bursa Beltway Project, Yalova Junction Karacabey Bridge Junction Section

Project Credit T. Halkbank Bahrain Branch

KGM December 2, 09 20,300,000

Ankara-Pozantı Motorway Project, Eminlik-Çiftehan Junction

Project Credit T. Halkbank Bahrain Branch

KGM December 31, 09 15,000,000

 TOTAL 7,004,064,401

(1) For Bond Exports, the intermediary banks are used.

(2) For Bond Exports, export dates are taken as the basis instead of agreement dates

February 8 2010-Preparations on Bill Consisting of Modifications in the Energy Sector

Amendments made to Electricity Market Law no. 4628 have been submitted to the Minister and Undersecretary Offices. MENR which will have meetings with Energy SOEs towards the amendments in the forthcoming days, will ask official opinion

towards the modification of Law in mid-February from the institutions

MINISTRY of Energy and Natural Resources (MENR) has completed the work towards the modification of Electricity Market Law no. 4628 on the basis of the opinions of the relevant institutions and establishments.

According to information obtained by TEBA, the modifications made on Electricity Market Law no. 4628 which was prepared on the basis of comments of EMRA and Energy SOEs and targeted to be submitted to the Parliament within the context of Blanket Law, have been submitted to the Minister for approval. Relevant sources report that the modification proposals are under scrutiny of the Minister and Undersecretary, and the subject modifications will be dwelt upon in the meeting to be held on February 8, 2010 with the senior officials of Energy SOEs.

As it might be recalled, in the most recent news story on the subject we reported that the scrutiny of the MENR was about to be finalized on the modification proposal made by EMRA as to cover almost all of the articles of Electricity Market Law no. 4628. In the same news story we further reported that within the context of the regulation modification works towards Energy Sector, submitting the amendment to Law no. 4628 to the Parliament was targeted first to be fulfilled (TEBANEWS#1437/November 30, 2009).

Official opinions are awaited to be asked from the institutions in mid-February towards amendments to the Law

According to information furnished by the sources close to the subject, subsequent to the approval of the Minister and Undersecretary granted towards the modification of Law, the opinions of the relevant entities will be asked officially by MENR Legal Office. The same sources further report that required modifications will be made in line with the comments of

the entities such as SPO, EMRA, Ministry of Finance and Treasury and then the modifications will be submitted to the Parliament.

Subsequent to the approval granted by the Parliamentary commissions on the modifications which are awaited to be considered by Parliamentary Energy Commission, the modification of Law will be submitted to the Parliamentary General Assembly. The modification of law is targeted to be debated over in the Parliamentary General Assembly this year.

Autonomy of the MFSM to be the mostly debated issue

Relevant sources report that separation of Market Financial Settlement Mechanism (MFSM) from Turkish Electricity Transmission Corporation (TEİAŞ) as an autonomous entity which is among the modification proposals, is awaited to be topic to be discussed most. However, TEİAŞ and Treasury Undersecretariat reportedly may have some reservations.

As is known, the regulations were awaited to be made as soon as possible in the transition period agreements towards the privatized distribution companies within the context of modification works. The portfolio groups would be regulated in line with the privatization process (TEBANEWS#1437/November 30, 2009).

Amendments to Nuclear Power Plants Law and to BO Law are awaited to be submitted to the Parliament

The relevant sources report that the amendments to be made to Nuclear Power Plant Installation Law will be decided on the basis of the new procedures to be followed towards the installation of the Nuclear Power Plant. The same sources further note that in case changes are decided to be made, the subject changes will be submitted to the Parliament as well. The modification to be made towards the prolongation of the Public Purchase Guarantee which is important for EÜAŞ’s Afşin Elbistan C and D Tender is noted to be made as soon as possible. Furthermore, the modifications to be made in Build-Operate (BO) Law planned to be included in the Law envisaging the modifications to be made in Renewable Energy Sources (RES) Law are awaited to be submitted to the Parliament within this coverage.

February 8 2010-SDE’s Meeting on Turkey’s Energy Problems at National and International Level

WEC-TNC Chairman Yücel Özden: “It is not enough to issue laws; the applications are important. The market has reservations and problems due to such reasons as

obtaining a license taking too long a time and vague legal arrangements. The public could not be informed for years on the subject of nuclear power plant.”

MENR Deputy Undersecretary Selahattin Çimen: “One should examine how disruptions will be caused to future supply-demand balance by the restriction of

investments due to the crisis.”

THE STRATEGIC Research Institute (SDE) organized a meeting titled “Turkey’s Energy Problems at National and International Level” on February 4, 2010 at the head office of the Institute in Ankara, considering the problems experienced at national and international level in Turkey’s energy sector and the solution proposals.

Delivering a speech at the meeting, World Energy Council Turkish National Committee (WEC-TNC) Chairman Süreyya Yücel Özden said problems were being experienced in the

process of Turkey’s energy sector switching from a structure dominated by the public agencies to one of private sector. Pointing to the Law no. 4628 issued in 2001, he said: “You cannot say you have privatized the energy sector by issuing a law overnight”, noting that the failure to foresee a transitional period in the process of liberalization has dragged the sector into various problems.

It is not enough to issue laws; the applications are important. The market has reservations and problems due to such reasons as obtaining a license taking too long a time and vague legal arrangements, he said.

WEC-TNC Chairman Özden: “Utilization of local and renewable energy has been late”

Noting that utilization of local and renewable energy has been late, Mr. Özden pointed to the example of wind power plant (WPP) applications which could not be concluded since 2007, and said that solutions have yet to be reached in practice. The public could not be informed for years on the subject of nuclear power plant. Nuclear energy is necessary from the standpoint of both climate change and reducing dependency on natural gas. There is the concern that the energy dependency on Russia will increase even more with nuclear energy, he said, criticizing the failure to provide the natural gas storage facilities with sufficient capacity until now.

Turkey should decide whether she will be an energy bridge or an energy terminal. In order for Ceyhan to become an energy terminal, related problems should be solved. The problems being experienced in the energy sector cannot be underestimated, and a good management is needed to solve the problems, he said.

MENR Deputy Undersecretary Selahattin Çimen: “We are trying to create a liberal, competitive energy sector”

Mr. Selahattin Çimen, Deputy Undersecretary of the Ministry of Energy and Natural Resources (MENR), said Turkey needed investments, projects and financing due to the rapid increase in demand. One should examine how disruptions will be caused to future supply-demand balance by the restriction of investments due to the crisis. Efforts are being made to create a liberal, competitive energy sector in Turkey which has undergone a significant structural transformation. A model based on competition, where risks are assumed by private sector has been foreseen for the power sector. The private sector accounted for 2,800 MW of 3,000 MW installed capacity that came on line in the year 2009, he said.

February 8 2010-Health Ministry’s Hospital Projects with Public-Private Sector Partnership (IV)

Technical specifications for Kayseri Health Complex, the first project to be realized on PPP model, are being notified to companies these days. The companies will have

1-month time to examine the technical specifications, and their questions will be answered at Information Room. Financial offers will be collected in March at the latest

TECHNICAL specifications for construction of Kayseri Health Complex, the first project to be realized on Public-Private Sector Partnership (PPP) model, are being notified by the Ministry of Health to 8 prequalified companies / joint ventures these days

According to TEBA information, the Ministry of Health completed the studies related with the specifications in January. Accordingly, the Ministry will make the technical specifications

available to 8 companies/joint ventures on its web page for examination for a period of 1 month.

As might be recalled, we presented the prequalified companies /joint ventures earlier, reporting that the specifications would be made available to the companies after the bairam (TEBANEWS#1437/December 1, 2009).

Questions of companies will be answered at Information Room

An Information Room will be used to answer the questions of the companies concerning the technical specifications, and their questions related with the project will be answered by the officials of the Public-Private Partnership Department of the Ministry of Health for a period of 1 month by admitting the representatives of each company separately into the Room. After this stage, the financial offers will be opened in April at the latest according to the timetable which remains unchanged.

Currency unit for guarantees will be TL

After identifying the prequalified companies, the Ministry of Health gave final shape to the technical specifications by considering the proposals of the companies. Accordingly, the currency unit will be TL for the guarantees to be given under the tender, USD and EUR for the other Health Complex projects to be put out to tender.

The project has been made more attractive through the final revisions made in the technical specifications to collect more suitable offers. If the amounts due to various work items included in the work scope of the contractor company turn out to be higher than the offer amount, this revenue will be shared with the Ministry of Health; if the amounts due to some items turn out to be lower than the figures indicated in the feasibility studies, the Ministry will pay the different in between to the contractor.

Following are the prequalified companies entitled to submit offers:

- Alsim Alarko

- Yıldızlar-Lend Lease Europe

- IC İçtaş-Tekno Medikal Sağlık

- YDA-Inso Sistem

- Güriş

- Astaldi SPA-Türkerler

- OHL

- Vamed-Türk Philips A.Ş. Ortak Girişimi

February 8 2010-PA’s Project for Privatization of Galataport

Four consortia apply to PA to serve as consultant for Galataport tender. Following the presentations to be made by the companies between 4-5 February 2010, PA will

select the consultant company

Four consortia have submitted offers for consulting services under the Privatization Administration’s (PA) privatization tender for İstanbul Salıpazarı- Karaköy Cruiser Port (Galataport) to be leased out for a period of 49 years.

According to TEBA information, the following consortia submitted offers under PA’s invitation to the companies included in its portfolio:

* Societe Generale-Artı Proje Danışmanlık- Özel&Özel Law Office

* Turkish Industrial Development Bank (TSKB) - Deloitte-Belde Proje Danışmanlık Hizmetleri- Esin Law Office

* EFG İstanbul Menkul Değerler AŞ-Mag Mühendislik Hizmetleri- İsmen Law Office

* İş Yatırım Menkul Değeler AŞ-2ER Müşavirlik-Yüksel Karkın Küçük Law Office

The consortia will make presentations to the Tender Committee between 4-5 February 2010. Following the presentations, the Committee will carry out evaluation studies to identify the most suitable offer. The Tender Committee will complete its evaluation studies by 12 February 2010, and inform the companies concerned of the outcome.

As might be recalled, we reported earlier that PA had invited 32 international consultant companies included in its portfolio to submit bids for consulting services by February 1, 2010 (TEBANEWS#1443/January 11, 2010).

Privatization tender expected to be launched in the second half of 2010

The consortium to be designated as the consultant will carry out studies on the current condition of Galataport and the model of the tender to be launched. After PA approves the studies, the tender will be launched.

Final stage has been reached in connection with the studies on the Development Plan Drafts for Protective Purposes to 1/5000 and 1/1000 scale, which were prepared by PA and for which opinions were obtained from the agencies concerned. Approval of the Privatization Supreme Council (PSC) is being awaited for the development plans and the designs to be contracted out under a competition. It is planned to collect bids in the second half of 2010 and to complete the contract award process within 2010, sources say.

As is known, the consortium led by Israeli Royal Caribbean Cruises Ltd. had won the BOT model contract of Turkish Maritime Administration (TDİ) by submitting the highest bid of € 3 billion 538 million. The Council of the State had issued a stay of execution decision, suspending execution of the procedure related with the approval by the Ministry of Culture and Tourism of the amendment to the development plan in favor of Galataport Project. Thereupon, the State Planning Organization (SPO) had returned the Galataport file under examination back to PA. Since the bids had been collected according to the previous plan, the bids had become null and void (TEBANEWS#1243/February 6, 2006).

February 8 2010-DSİ’s Multiple HEPP Projects

The Water Use Right meetings for 6 HEPPs included in the February 2010 package of Multiple HEPP projects will be held on 23, 24 and 25 February 2010

AUTHORITY clearance has been obtained to hold the Water Use Right meetings for 6 Hydroelectric Power Plants (HEPPs) of State Hydraulic Works (DSİ) in February 2010.

According to TEBA information, for the last time, DSİ held a Water Use Right meeting for Dadaş 05 Reg. and HEPP project on 14 January 2010 and now has decided to hold these meetings for 6 HEPPs included in the list of Multiple HEPP Projects on 23, 24 and 25 February 2010.

Installed power of these HEPP projects is 63.7 MW and in this scope, Turnasuyu Enerji Group and Yiğit HEPP projects attract attention with their installed power. Through these projects, 225 million kWh electricity will be generated.

More information is presented in the following, Hydroelectric Resource Contribution Share Meetings for which will be held for the subject 6 HEPP projects:

Name of the project Province Installed Power (MW)

Energy to be generated on the average (kWh)

Date of the meeting

Hour

Şehir Reg. and HEPP Erzurum 1.24 6,140,000 23.02.2010 09:30

Turnasuyu Enerji Group Ordu 18.55 79,930,000 23.02.2010 11:00

Kayalar HEPP Adana 12.00 30,000,000 24.02.2010 09:30

Şırnak Uludere HEPP Şırnak 10.00 38,000,000 24.02.2010 11:00

Doğan Reg. and HEPP Trabzon 4.70 17,000,000 25.02.2010 09:30

Yiğit HEPP Giresun 16.00 48,000,000 25.02.2010 11:00

As might be recalled, we informed you earlier that we had presented you 12 HEPPs for which in January, the Water Use Right meetings will be held on 5, 6, 7, 12, 13 and 14 (TEBA:1440/21 December 2009).

February 8 2010-TCK’s İzmit Bay Crossing and Bursa-Balıkesir-İzmir Motorway Project

TCK Director General Turhan: “Deep sea drillings, land geo-technical works and works for updating the geological reports are started in the location where bay bridge

will be constructed in Bay Crossing Project.”

DIRECTOR General of the State Highways Administration (TCK) Cahit Turhan has reported that the final stage was reached in the process of receiving the opinions of SPO, Treasury

Undersecretariat and Ministry of Finance for the revisions on the draft of BOT Model contract of the project in his announcement made towards İzmit Bay Crossing and Bursa-Balıkesir-İzmir Motorway Project.

Emphasizing the essence of the contract and the basics of the project should not be changed in the course of revisions on BOT model contract, Turhan said that the subject works were being conducted with the tender winning Joint Venture.

As it might be recalled, we earlier reported that Treasury Undersecretariat asked major changes to be made in the guarantees section of the agreement after SPO and the subject of dissolving the company was asked to be reworded (TEBANEWS#1443/Janaury 11, 2010).

Turhan: “ Our contractor conducts deep sea drillings and efforts for obtaining financing continue as well”

TCK Director General Cahit Turhan stated that subsequent to the approval of BOT Model application contract by the Supreme Planning Council (SPC), site delivery would be made to the Joint Venture and the works would be intensified.

Director General Turhan further noted that Joint Venture formed by 6 companies with equal shares has started to work on the project and works particularly on deep sea drillings at the location where bay bridge to be constructed and updating the geo-technical and geological reports on the land continued in full speed. Turhan further stated that Joint Venture engaged in efforts unofficially for obtaining financing as well.

Ministry of Transportation wants the revision works to be completed soon

According to TEBA’s inquiry, Ministry of Transportation wants the revision works towards the application contract of the project to be completed soon for bringing the project to SPC approval stage.

Reportedly, in the application contract to be scrutinized by SPC, the revisions will be studied as well within the context of the opinions extended by the relevant entities, for finalizing the approval process accordingly. For this reason, revision works to be dwelt upon are of importance at this stage.

It is required a joint opinion to be reached by the relevant institutions on the revisions made by TCK and Joint Venture, in the course of review. TCK officials note that revisions should be compatible with the essence of the contract because, the offers were made in line with the specifications.

In the previous news story on the subject we reported that Treasury Undersecretariat asked some revisions to be made on the guarantees section of the contract, and the investment responsibility was asked to be transferred to the Public if the company dissolved.

As a matter of fact, we earlier reported that a revision was asked to be made towards giving step in right to the credit agency in the investment in case the company bankrupted for some reason and if the responsibility of the investment was required to be maintained before the banks extended the credit (TEBANEWS#1443/Janaury 11, 2010).

February 8 2010-Minister of Energy and Natural Resources Yıldız Met with US Ambassador Jeffrey

Minister of Energy and Natural Resources Yıldız, “If US firms interest in Nuclear Power Plant, we can consider it. Turkey has the capacity to develop projects both

with her allies and neighbors particularly within the framework of model partnership.”

US Ambassador to Ankara Jeffrey, “It goes without saying that US companies will be interested in Nuclear Power Plant issue if Turkey wants to launch more tenders.”

MINISTER of Energy and Natural Resources Taner Yıldız has met with US Ambassador to Ankara James F. Jeffrey in his office in TEİAŞ on February 3, 2010 for discussing important energy projects on the agenda.

Minister Bakan Yıldız said in his announcement made after the meeting that recent developments occurred in the region were discussed with the ambassador from energy perspective and an organization was planned to be made in İstanbul on June 3-4, 2010 towards energy efficiency with the participation of Turkish, US and Western companies. Minister Yıldız further noted that they have also discussed the projects with Joint Work Group to be developed both in the USA and Turkey.

Minister Yıldız stated that in case US firms were interested in the nuclear power plant, this could be considered, Sinop field would be on the agenda that would be considered in the forthcoming period. Answering the questions asked to this effect, Ambassador Jeffrey said, ''If Turkey wants to make more tenders in respect of the Nuclear Power Plant, US companies will of course be interested in and US Government will support the companies for such model partnership''.

Minister Bakan Yıldız, “Turkey takes all of the projects into consideration from her benefit point”

Meanwhile, Minister Yıldız stated that agreements were reached with Iran and discussion were made with countries such as Azerbaijan, Iraq and Qatar for the future growth of Turkey and added that it would be discussed whether Turkey could extract Iranian gas in a feasible way. Upon to be reminded US disapproval of relations with Iran, Minister Yıldız said that Turkey was a country targeted relations with her neighbors with no problem involved and considered her own benefits in every projects conducted.

Noting the technical works towards Southern Persia continue, Yıldız said that the results to be attained from the feasibility works would be shared with the public opinion. Yıldız further noted that Turkey has the capacity to develop many projects with her allies and neighbors within the framework of model partnership, non of the projects would constitute obstacle on the way of other.

Ambassador Jeffrey said in response to a question on “How USA considers the Natural Gas investments made between Turkey and Iran” that ''American approach to this effect is quite clear. USA cannot take energy cooperation with Iran favorable as long as the nuclear problem prevails. It is not a surprise however, we also know that our many friends have differing approaches''. Jeffrey further noted that in Nabucco Projects, other countries such as Azerbaijan, Turkmenistan and Iraq could be source countries other than Iran.

Azerbaijan gas

Upon the questions asked towards the pricing of the transit passage in Shah Sea 1 and 2 Projects, Minister Yıldız said that the natural gas in Shah Sea 1 were bought on the agreed price even if the billing was made on USD 120 and said, “We know that there is no problem in respect of the price we proposed”. “In respect of pricing that transit passage in Shah Sea

2, we made a reasonable proposal” said Minister Yıldız and added, “I believe Socar will come to this acceptable point as well. I do know that the reason is not technical even if they do not agree now”.

February 8 2010-Obama Administration’s 2010-2011 Fiscal Year Budget Draft to be USD 3.8 Trillion

Defense expenditures in 2010-2011 Fiscal Year Budget proposal presented to the Congress by US President Obama is at record level by USD 708 billion. US

Government awaited to yield deficit of USD 1.6 trillion in 2009-2010 Fiscal Year, is envisaged to yield a deficit of USD 1.3 trillion in 2010-2011 Fiscal Year Budget

US GOVERNMENT has presented 2010-2011 Fiscal Year Budget Draft to US Congress as USD 3.8 trillion. In 2010-2011 Fiscal Year Budget proposal presented by US President Obama to the Congress, the defense expenditures were observed to increase by 3.4% compared to the previous period.

According to the Congress sources, the budget deficit in 2009-2010 Fiscal Year that will end on September 30, is estimated to reach USD 1.6 trillion and in 2010-2011 Fiscal Year to reach USD 1.3 trillion. The Budget that should be ratified by the Congress, consist of tax reduction of USD 400 per capita and USD 800 for couples of the Middle Class in 2011, tax exemptions for the establishments and a program of additional USD 100 billion for creating new employment and for assistance to be extended to States in cash difficulty.

2010-2011 Fiscal Year Budget covers the taxes to be applied over the big financing agencies for covering the losses estimated to emerge from Troubled Assets Relief Program (TARP). Obama Administration targets to attain a revenue of USD 90 billion at a period over 10 years.

US President Obama stated that more than USD 1 trillion of the budget deficit to be yielded in 2010-2011 Fiscal Year Budget was inherited from the former administration. President Obama stressed the decrease of unemployment ratio which was at its highest of recent 26 years by 10%, as their first priority.

President Obama, “Budget deficit issue should be solved for attaining sustainable growth”

In the statement made by US President Obama, when presenting the budget draft envisaging an expenditure of USD 3.83 trillion, to the Congress, it was communicated the country suffered from a debt burden of about USD 12 trillion because of the tax reductions applied to high income groups by the former US Government and because of the recession. Having taken the former US Government responsible of the budget deficit, Obama said,

“USA should solve the huge budget deficit issue for guaranteeing the sustainable economic growth in the long run. As long as we do not take Public Finance under control, we cannot attain sustainable growth and strong economic growth in the long run“.

Defense expenditures at record level by USD 708 billion

In 2010-2011 Fiscal Year Budget presented to US Congress by the Government, the defense expenditures are at record level by USD 708 billion. Accordingly, the Ministry of Defense envisaged to increase the defense budget by 3.4% to reach USD 594 billion. Meanwhile, an allocation of USD 159 billion is asked to be spared for the military missions

of USA in Iraq, Afghanistan and Pakistan and a budget of USD 33 billion is also asked for the troops in Afghanistan.

According to Budget draft, in 2009-2010 Fiscal Year that will end on September 30,the budget deficit is envisaged to be USD 1.56 trillion, in other word, to be 10.6% of the Gross Domestic Product (GDP). The deficit will reach USD 1.3 trillion in 2010-2011 Fiscal Year.

In the Budget draft, the economy is envisaged to grow by 2.7% in 2011 and in six consecutive years by 3.2 to 4.3%. Unemployment ratio estimated to be around 10% this year is awaited to recede to 9.2% in 2011 and below of 6% until 2015.

Inflation is awaited to be below of 2% this year and next year and at the level of 2 to 2.1% until 2020.

In the budget, a source of USD 100 million is planned to be spared for creating new jobs and tax applications are planned to be made on big financing agencies for covering the losses estimated to emerge in Troubled Assets Relief Program (TARP). Obama Administration targets these companies yield a revenue of USD 90 billion in a period over 10 years.

February 8 2010-DHMİ’s Project for Leasing Out Existing

Airports on TOR Model

A single tender package will be launched for Samsun, Sinop and Tokat airports on TOR model in 2010. Studies on specifications have reached final stage for the tender

to be launched in the first half of the year

Nevşehir Cappadocia Airport will be put out to tender as a separate package

THE GENERAL Directorate of State Airports Authority (DHMİ) will launch two tenders in the year 2010 under its activities aiming to lease out Turkey’s existing airports, excluding those airports being operated by the private sector, to the private sector within the framework of the principles and procedures stated in article 33 of the Law no. 5335.

Having realized the most recent airport leasing tenders for Zonguldak-Çaycuma and Antalya Gazipaşa Airports, DHMİ has completed negotiations for Nevşehir Cappadocia, Samsun, Sinop and Tokat Airports included in its 2010 tenders program. DHMİ has decided to launch 2 tender packages for the airports, one for Nevşehir Cappadocia Airport, the other for Samsun, Sinop and Tokat Airports.

As might be recalled, we reported earlier that DHMİ had prepared a list of the existing airports expected to be put out to tender on TOR model, identifying 4 ea airports to be put out to tender in 2010 with the approval of the Ministry, and that these projects were Nevşehir Kapadokya, Samsun, Sinop and Tokat airports (TEBANEWS#1434/November 9, 2009).

Tender for Samsun, Sinop and Tokat Airports will be launched in the first half of the year

The studies on the specifications for the tender covering leasing out of Samsun, Sinop and Tokat Airports started in December 2009 and have been completed to a great extent. After obtaining Board approval for the specifications, DHMİ will collect bids in the first half of the year. The tender announcement will be published in the Official Gazette and related bid bond amount will be approximately $ 100,000, as in the case of Zonguldak-Çaycuma Airport.

Sale of the specifications will start upon publication of the tender announcement. Approximately 1-month bid preparation period will be granted to interested companies.

Airports expected to be leased out for 25 years on average

Small and medium-size airports that are in idle condition will be leased out to the private sector under the tenders. Sources state that the operating periods of the airports have not been determined yet, but that a 20-year operating period has been foreseen under the tenders with fixed operating periods. The company that will offer the biggest share from its turnover will win the contract under the tender packages to be launched.

As is known, the airports being operated by DHMİ may be transferred for a period of maximum 49 years to the legal persons governed by private law through contract award by using the methods of leasing and/or granting operational right. DHMİ supervises the airport concerned throughout the period of use by the private sector.

DHMİ’s most recent leasing tender was held in 2007

DHMİ’s most recent leasing tender was related with Antalya Gazipaşa Airport, for which final bargaining negotiations were held on 31 August 2007 and for which the contract was awarded to TAV Havalimanları Holding A.Ş. which had offered 65% profit share to DHMİ (TEBANEWS#1323/September 3, 2007). Due to the intervening global crisis, DHMİ was looking for an appropriate time slice to realize its investments, abstaining from launching any airport leasing tenders for 2 years and 6 months.

February 8 2010-Current Status of Debt-Claim Settlement Among Energy SOEs

Treasury is receiving Debt-Claim amounts from Energy SOEs. BOTAŞ and EÜAŞ are emerging as claimants, with BOTAŞ having some outstanding tax liabilities. Residual

claim from Energy SOEs’ accounts, expected to be TL 9 billion at most, will be transferred to TEDAŞ’s balance sheet

It is reported that the Debt-Claim Settlement among the State Owned Enterprises (SOEs) operating in the energy sector (Energy SOEs), which aims to offset their debts towards each other retroactively is now reaching conclusion, and that the recent arrangements concerning a Bill prepared by the Undersecretariat of Treasury will be submitted to the Government in probably March.

When the Undersecretariat of Treasury started to receive the balance sheets dated 2009 December-end of the Energy SOEs, it requested the latest status of the Debt-Claim amounts included in their balance sheets. Thus, the Debt-Claim Settlement as of 2009-end is being worked out accordingly.

Since Turkish Electricity Distribution Co. (TEDAŞ) has many entities reporting to itself, it takes time to collect the figures form such entities. Therefore, submission of the accounts of TEDAş is being awaited, sources say.

As might be recalled, we reported earlier that the Treasury had transferred TL 500 million from its Budget as the street lighting costs to TEDAŞ, and provided a cash flow of TL 1.5 million to TEDAŞ from the fund accumulated in the Automatic Pricing Mechanism. Thus, TEDAŞ had paid its debt to TETAŞ, while TETAŞ had paid its debt to the contracted energy purchasing companies, and that TEDAŞ’s debt to the Market Financial Balancing & Settlement Center (PMUM) had amounted to approximately TL 1.5 billion (TEBANEWS#1441/December 28, 2009).

BOTAŞ and EÜAŞ expected to emerge as claimants

Petroleum Pipeline Corp. (BOTAŞ) and Electricity Generation Company (EÜAŞ) are expected to emerge as claimants as a result of the Debt-Claim Settlement to be made by the Undersecretariat of Treasury for Energy SOEs as of December 2009.

As is known, BOTAŞ has natural gas claims that it could not collect from the market, with the biggest claim being due from Ankara Metropolitan Municipality. BOTAŞ has some outstanding tax liabilities though. EÜAŞ’s claims seems to have increased as it could not collect some amounts due from Turkish Electricity Trade & Contracting Co. (TETAŞ) for the electricity sold to the latter. EÜAŞ has natural gas debt to BOTAŞ, and some payments due to Turkish Electricity Transmission Co. (TEİAŞ).

Energy SOEs’ accounts expected to yield a residual claim of at most TL 9 billion

The Debt-Claim Settlement among the Energy SOEs is expected to yield a residual claim of at most TL 9 billion. The residual claim to be found as a result of the settlement to be made according to the Law to be issued will be entered into TEDAŞ’s balance sheet.

As of 2008-end, the residual claim amount was around TL 7-8 billion. The debt accumulation is declining due to the price hikes effected through the Automatic Pricing Mechanism. However, some SOEs are continuing to operate with debts remaining from the former periods. The past-period debts among the Energy SOEs was around TL 20-22 billion as of 2008 December-end.

In February, Treasury will make payments belonging to last quarter of 2009

As a result of the settlement among the Energy SOEs as of the last quarter of 2009, the payment due to TEDAŞ is expected to be made by the Treasury in February from the share allocated from its budget under the Law. A quarterly payment of TL 280 million was made to TEDAŞ earlier.

Treasury expected to make final arrangements concerning Bill in March

Meanwhile, the Undersecretariat of Treasury is expected to make final arrangements in March in connection with the Bill submitted earlier to the Prime Ministry as a result of the settlement to be made after receiving the latest Debt-Claim figures as of 2009 December-end.

As is known, the Bill on Settlement Among Energy SOEs, prepared by the Treasury, requires that the debt and claims of the Energy SOEs be offset towards each other and

paid, that the eventual residual amount be entered into TEDAŞ’s balance sheet, and that the debt be liquidated by the Treasury in the long term.

February 8 2010-Health Ministry’s Hospital Projects with Public-Private Sector Partnership (III)

Many local and foreign companies are interested in Ankara Etlik Health Complex. 10 companies have obtained prequalification documents until 1 February 2010

Ten companies have obtained prequalification documents until 1 February 2010 following publication of a tender announcement by the Ministry of Health after obtaining approval of the Supreme Planning Council (SPC) for construction of Etlik Health Complex, one of the health facilities to be realized on Public-Private Sector Partnership (PPP) model.

According to TEBA information, many local and foreign companies are interested in the said project of the Ministry of Health which has started selling the prequalification documents from 14 January 2010. Among these companies are local companies experienced in international construction works, as well as international companies including those from Spain, Italy, Greece, China and Austria.

Following are the companies we could identify from among those that have obtained the prequalification documents as of 1 February 2010:

* Astaldi (Italy)

* Alarko

* Siemens

* YDA

* Obrascon (OHL) (Spain)

* IC İçtaş

* Güriş

* Türkerler

* Yenigün

There is sufficient interest in the tender

There is increasing interest in the Health Complex Project of the Health Ministry’s Public-Private Partnership Department which has undertaken the PPP-model construction projects and that has brought them to bid invitation stage, sources say.

The Health Complex Projects come to the fore among the investments put out to tender recently, and therefore the number of companies obtaining the prequalification documents are expected to increase in the coming days. All companies that were interested in the tender for construction of Kayseri Health Complex which was put out to tender as a model

project and which is foreseen to be brought to financial offer stage are expected to be interested in Etlik Health Complex Project as well.

All questions of the companies in connection with the project are answered by the Public-Private Partnership Department of the Ministry of Health, enabling them to complete their pre-bid preparations.

As might be recalled, we reported earlier that a prequalification invitation announcement had been issued for Etlik Health Complex, and that closing date for prequalification applications was February 24, 2010 (TEBANEWS#1444/January 18, 2010).

The contractor will operate the Complex for 25 years

According to TEBA inquiry at this stage, the contract winner will complete the construction in 3 years and 6 months after signing of the construction contract, and operate the Complex for 25 years, and will then transfer it to the Ministry of Health.

The Complex covers the investment for an integrated health facility with 3056 beds in total, which consists of the following: 504-bed general branches, 344-bed women’s diseases & neonatal, 496-bed pediatric, 328-bed KVC, 328-bed oncology & pediatric oncology, 456-bed orthopedic, 300-bed physical therapy & rehabilitation, 200-bed mental & neurological disorders, and 100-bed high-security forensic psychiatry hospital.

February 8 2010-TCDD’s Track Mechanization (IV) Project

Bid deadline expected to be set as 14 April 2010 under the tender to be launched for procurement of 7 items of 22 ea machines. Bids are to be collected from international companies under the tender to be announced in Official Gazette on 8 February 2010

Bid deadline is expected to be set as 14 April 2010 under the international tender to be launched for procurement of the Track Mechanization Machinery Sets to be used on the new lines which exist and which are under construction, particularly in the High Speed Train Projects, with financing from the European Investment Bank (EIB).

The Special Committee formed after obtaining bid invitation approval from the Board of Directors at its meeting dated 29 December 2009 has completed its final preparations and forwarded the tender announcement text to the Official Gazette. Accordingly, the international tender announcement will be published on 8 February 2010. Approximately 65-day period will be granted to interested companies to enable them to prepare their bid files.

The international tender to be launched by the Materials Department will be announced in EIB’s official publication organs and in the Official Gazette, and bids will be collected directly without a prequalification procedure.

International companies interested in the tender

According to TEBA inquiry at this stage, all companies interested in the former tender which was brought to contract signing stage but under which the machines could not be procured due to the difficulties experienced in connection with the credit are expected to be interested in the present tender as well. TCDD’s international tender is expected to attract a big interest. Following are the companies which are expected to be interested in the tender:

- Plasser Und Theurer GmbH (Austria)

- Matisa Material SA (Switzerland)

- Progress Rail Services

- Loram Maintenance Of Way

- Harsco Track Technologies

- Socofer SA+Imagemnp

- Rail Maintenance

- Mer-Mec SpA

- Speno Int. S.A.

Total investment cost of the project is €58 million

The track mechanization machinery sets to be used on the new lines which exist and which are under construction, particularly in the High Speed Train Projects will have a total investment cost of €58 million. The machinery covered by the project are as follows:

1 ea Continuous Tamping Machine with 48 picks,

2 ea Continuous Tamping Machines with 32 picks,

9 ea Combined Tamping Machines,

1 ea Switch Tamping Machine,

4 ea Ballast Regulators,

4 ea Dynamic Line Stabilizers,

1 ea Rail Grinding Machine.

Tenders launched for two times earlier had been cancelled

A tender launched with 100% foreign credit for procurement of 11 items of various railway machinery had attracted 8 bids by 15 September 2005, and the tender was cancelled due to the bids exceeding the total cost (TEBANEWS#1240/January 9, 2006).

TCDD had launched a second tender, and collected bids by 5 October 2006. A contract amounting to $41 million was signed in April 2007 with the contract winner Auastrian Plaser und Theurer for supply of railway machinery. Then, the credit package negotiations held with the Undersecretariat of Treasury had yielded no results and the tender had been cancelled again (TEBANEWS#1306/May 7, 2007).

February 8 2010-TEİAŞ’s Project for the Expansion of ITM.66 Davutpaşa GIS

Only Siemens AG+Siemens A.Ş. consortium submitted a bid to the international tender

TURKISH Electricity Transmission Corp. (TEİAŞ) has re-announced its tender earlier announced under the reference of ITM.64 but cancelled, under ITM. 66 now in connection with the tender for the Expansion of 380 kV Davutpaşa GIS (addition of one 380 kV GIS cable feeder) and only Siemens AG-Siements A.Ş. consortium submitted a bid on 3 February 2010 (TEBA:1441/28 December 2009).

According to TEBA information, the subject tender will cost approximately TL 3.1 million. Total bid submitted appeared as €1,449,960.61. Sources close to the subject note that after the only bid submitted is evaluated and decided that if the consortium met the conditions stipulated, it will be invited for contract signing.

As might be recalled, we informed you earlier that for the previous tender announced under the reference of ITM.64, only one bid had been submitted by Siemens again, and that this tender had been cancelled on the grounds that no competitive environment had been created (TEBA:1439/14 December 2009).

February 8 2010-DSİ’s Kralkızı-Dicle Stage 2 Irrigation Project Under Dutch Protocol

Preparation of final designs for Kralkızı-Dicle Stage 2 Irrigation excluded from the Dutch Protocol. DSİ preparing the specifications for the tender to be launched

IT IS REPORTED that preparation of the final designs for Kralkızı-Dicle Stage 2 Irrigation Project of the General Directorate of State Hydraulic Works (DSİ) has been excluded from the Dutch Protocol, and that related Cabinet Decree was signed a while ago.

According to TEBA information, the Cabinet Decree requiring that final design works planned to be performed under the Protocol signed between the Turkish and Dutch Governments be excluded from the coverage of the Protocol will be put into force these days after being approved by the President’s Office.

As might be recalled, we reported earlier that the Undersecretariat of Treasury had issued a letter stating “it is difficult to conclude an agreement for the credit”, which had prompted DSİ to cancel the contract signed with the Joint Venture in February 2009 for preparation of final designs, and that a Cabinet Decree requiring that the Intergovernmental Agreement be abandoned was being awaited to cancel the contract (TEBANEWS#1436/November 23, 2009).

DSİ preparing the specifications for the tender to be launched for preparation of final designs

It is reported that action will reportedly be taken immediately for preparation of final designs for Kralkızı-Dicle Stage 2 Irrigation Project for which approximately 2 years was lost at contract stage, and that bids will be invited from local engineering companies in March for preparation of the final designs.

A prequalification invitation announcement will be issued under the Public Procurement Law for the engineering tender to be financed from the own resources of DSİ. There is sufficient appropriation for the project under 2010 program. Final designs are expected to be received in the second half of the year, sources say.

TL 11 million appropriation available for Kralkızı-Dicle Stage 2

Total investment cost of Kralkızı-Dicle Stage 2 Irrigation Project is stated as TL 536 million in 2010 Investment Program of DSİ. TL 11 million appropriation is available for the project under 2010 Investment Program.

The irrigation project will cover the construction works of P3 and P4 Pumped Irrigation to be put out to tender under the Irrigation Project. Upon preparation of the final designs, DSİ will proceed with the construction works for both irrigations.

Kralkızı-Dicle Stage 2 Project is included in the investment program since 1997, and covers irrigation of 44,950 ha area.

February 8 2010-HEPP Projects of DSİ Opened for Private Sector Construction in the Scope of the

Water Use Right

While revision work on feasibility studies related to Bayram Dam and HEPP project is continued by LNS Enerji company attached to Limak Group, feasibility studies towards Bağlık Dam have been taken delivery of from Pelinsu Enerji company attached to Türkerler Group. A grace period has been given to Pelinseu Enerji

company by 15 April 2010 to complete the feasibility studies for Mut Dam

WORK on reaching the license stage has been accelerated in connection with the Bayram, Bağlık and Mut Dam and Hydroelectric Power Plant (HEPP) projects, investment preparations for which have been completed upon a decision taken to this end in the scope of the Water Use Right Agreement of State Hydraulic Works (DSİ) in line with the amendments made to the existing law.

DSİ collected the bids submitted in the Water Use Right meetings for Bayram, Bağlık and Mut Dam and HEPP Projects held in August 2009 and DSİ has started to examine the revised feasibility reports of the companies offering the highest unit energy prices (TEBA: 1434/9 November 2009).

LNS Enerji company will deliver its revised feasibility studies to DSİ by 15 February 2010 and so far it has not requested any time extension from DSİ.

Furthermore, DSİ Survey and Planning Department has given a 80-day grace period for the completion for the revision of the feasibility studies towards Mut Dam and HEPP project and it has also given a grace period of 60 days to Pelinsu Enerji company upon its request. Within this coverage, the company will presented its revised report to DSİ by 15 April 2010.

EMRA should approve the results of the meetings so that the Water Use Right Agreements can be signed

Energy Market Regulatory Authority (EMRA) should write a letter in which it approves the results to appear in the Water Use Right meetings for those companies (LNS Enerji and

Pelinsu) undertaking the projects by having offered the highest unit prices so that the Water Use Right Agreements can be signed.

These projects attract attention with the energy they will produce and with their installed power

Bayram, Bağlık and Mut Dam and HEPP projects attract attention with the energy (746.2 million GWh) they will produce and with their installed power; bids for which were received by DSİ after it had opened these projects for private sector construction. In this scope, Mut Dam and HEPP project has the highest installed power of 91 MW which will generate 270 GWh electricity per annum on the average.

February 8 2010-TÜİK Announces Inflation Rates for January

In January 2010, CPI increased by 1.85% and PPI by 0.58%. As of January, annual inflation increased by 8.19% in CPI and by 6.30% in PPI

STATE Statistical Institute (TÜİK) announced Consumer Prices Index (CPI) and Producer Prices Index (PPI) figures for January 2010 on February 3, 2010.

According to TÜİK, in January 2009, CPI increased by 1.85% and PPI by 0.58%. While CPI increased at the rate of 0.29% and PPI 0.23%. Accordingly, inflation rose by 1.56 points in CPI and by 0.35 points in PPI on a monthly basis compared to January of the previous year.

As of January, annual inflation became 8.19% in CPI and 6.30% in PPI. In the same month of the previous year, annual inflation became 9.50% in CPI and 7.90% in PPI. Hence, as of January, annual inflation realized below 1.31 points in CPI and below 1.60 points in CPI compared to the same month of the previous year.

As might be recalled, in 2009, CPI increased by 6.53% and PPI by 5.93% in 2009 (TEBANEWS#1443/January 11, 2010).

In terms of Main Spending Groups, the highest rate of increase appeared in alcoholic beverages and tobacco group at the rate of 22.04%

On the other hand, in terms of main spending groups the highest rate of increase realized that the rate of 22.04% in the alcoholic beverages and tobacco group in CPI compared to the previous month. In January, an increase of 3.53% was observed in transportation, 1.58% in food and non-alcoholic beverages, 1.51% in housing, 1.11% in restaurants and hotels, 0.71% in household furniture, and 0.23% in various goods and services. Decrease was observed in the following: in health –0.11%, in communication –0.24%, in entertainment and culture –0.27%, and clothing and shoes –8.20%.

Monthly change in PPI appeared in agriculture at the rate of 2.54%, in industrial sector at 0.18%. In the agricultural sector index, an increase appeared at the rate of 2.54% compared to December of the previous year and 16.96% increase in the same month of the previous year and 3.79% increase according to the 12-month averages. In the industrial sector index, an increase was experienced at the rate of 0.18% compared to December of the previous year, and 4.07% compared to the same month of the previous year, and 0.56% according to the 12-month averages.

February 8 2010-İNTES’s Meeting on Turkey Energy Agenda

Energy and Natural Resources Minister Taner Yıldız, “Work on founding working groups with Russia has started with Russia for nuclear energy. We are having negotiations with other countries to install a nuclear power plant in Sinop. The

intergovernmental agreement signed for Nabucco Project will be submitted to the Turkish Parliament General Assembly. Renewable Energy Law (REL) is on our

agenda but there will be no delay in investments due to delay of the legislation of the law.”

TURKISH Construction Industrialist Employers Union (İNTES) organized a meeting titled “Turkey’s Energy Agenda” at the Ankara Sheraton Hotel on February 2, 2010 in which Energy Minister Taner Yıldız also participated.

Minister Yıldız answered the questions raised by the reporters before the meeting in which he said that work on founding working groups for Nuclear Power Plant Project, and that they would negotiate with REL Co-Chairman Seçin in İstanbul so as to accelerate the works to this end.

Minister Yıldız went on to say that this year Turkey would get a good result on the subject of nuclear energy, and that they had negotiations with other countries to install a nuclear power plant in Sinop. Minister Yıldız further noted that they left the public participation in nuclear energy open and he added, “That will be our preference”.

Nabucco Intergovernmental Agreement will be deliberated at the Turkish Parliament General Assembly

On the other hand, Minister Yıldız communicated that they held an confidential informative session with the parliamentarians from AKP Party Group in connection with the Nabucco Project, and said ''this week or next week, the intergovernmental agreement signed will be presented to the Parliament General Assembly”. He further added that they had 3 meetings in the scope of the work on the Project Support Agreement, that foundation process of a national company continues, and that next month, these will have been completed”. Minister Yıldız pointed out, “In the talks we had with the resource countries, we have experienced a number of developments related to Azerbaijan and Turkmenistan. When these become more concrete, we will share them with them”.

Related to the issue of “take or pay” obligation with Russia and Iran, Yıldız said that they would continue negotiations with the Russian Federation, and that they transmitted their demand to Iran as well and in the Turkish side all the preparations were completed. İ

“There will be no delay in investments due to the delay of the legislation of the law”

Minister Yıldız delivered a speech in the meeting in which he said that they had the Renewable Energy Law (REL) bill was on their agenda but there would be no delay in investments due to the delay of the legislation of the law, and that this Law already provided purchasing guarantee for those accepting the price 5.5 Euro cent per kWh. Minister Yıldız added that the applications made to EMRA for wind power licenses would be taken up by EMRA Board this week, and that they continued work to benefit from solar energy in Turkey in return for a reasonable price.

Minister Yıldız also supplied information on the investment in HEPPs and indicated that if the criticized HEPP projects would not be construction, it would be a must to increase importation, instead. He continued to say that they attached importance on the environmental sensitivity and in this scope, they carried out joint work and meetings with Environment and Forestry Ministry which took a decision to cancel 4,000 MW HEPP project for environmental reasons.

Haşemoğlu İnşaat Company Executive Board Member Barış Haşemoğlu, “REL bill is to be enacted forthwith”

Haşemoğlu said that this REL bill had to be enacted forthwith, and that, otherwise, a great number of companies would decide to quit making investments. The fact that the bill had been withdrawn created a shocking effect in the market, and that thereafter, the question appeared in Turkey whether Turkey was decisive or not in benefiting from the renewable resources.

February 8 2010-Municipalities’ Environmental Infrastructure Projects Financed with EU Donation

Consultancy tender to be launched by Central Financing and Tender Unit for the preparation of applications on EU standards to be made to the EU Commission for

the Municipalities’ Drinking water, Solid waste and Waster Water Treatment Projects

WORKS continue towards financing Drinking Water, Solid Waste and Wastewater Treatment Facility Projects within the context of Municipalities’ “Environmental Operational Program” throughout Turkey with European Union (EU) Pre-Accession Financial Cooperation Instrument (IPA) donation by 75%.

According to information available to TEBA, a consultancy tender will be launched in the forthcoming days by the Central Finance and Tender Unit (MFİB) towards improving the capacities of and providing technical assistance to Ministry of Environment and Forestry IPA Coordination Center and the Municipalities conducting environmental infrastructure projects. Relevant sources report that 131 projects are included in the list of priorities within the context of the work conducted by the Ministry of Environment and Forestry in 2006 and a tender reportedly will be launched for the preparation of applications to be made by the Municipalities on EU Standards under the coordination of the Ministry.

As is known, we earlier reported that Ministry of Environment and Forestry has made application for donation from EU Commission for 27 projects of the Municipalities as of end-2009 and evaluation process of EU Commission run for 26 environment projects among them was underway. Among the subject projects, IPA financing decision was first reached for “Ordu Wastewater Treatment Facility Project” and preliminary announcement was made towards the construction tender by MİFB (TEBANEWS#1446/February 1, 2010).

Budget of the Project to be €3.5 million

Reporting the budget set for the project is €3.5 million Euro, the relevant sources further note that 75% of the financing will be met with IPA donation and 25% from national contribution share.

Preliminary announcements towards the application packages consisting Feasibility Survey, Benefit Cost Analysis and Environmental Impact Assessment towards the projects were

made and the tenders will be announced in the days ahead. Tender announcement will be made on www.mfib.gov.tr.

Application process for projects to received EU donation

Relevant sources report that for Municipalities to make application for the project to EU Commission, it is prerequisite to be in the list of priorities prepared by the Ministry of Environment and Forestry. The same sources further note that the applications should be prepared on EU standards and the application process may prolong because of the issues such as expropriation, location allocation, EIA report and designs of the Municipalities. It is noted that the evaluation process of the Commission takes about 6 months for bringing the project to confirmation stage and then the tender process starts.

February 8 2010-Turkey’s Net Foreign Debt Stock Reached $205.2 Billion as of End-September 2009

Net Foreign Debt Stock increased by 1.5% relative to end-June 2009, 93% relative to 2003-end

Treasury realized $9.3 billion foreign debt service in January-December 2009

Turkey’s rising Net Foreign Debt Stock stood at $205 billion 265 million as of end-September 2009.

Turkey’s Net Foreign Debt Stock increased by 1.5% relative to June 2009, decreased by 1.9% relative to December 2008. The Net Foreign Debt Stock increased by 38% relative to 2006-end, by 93% relative to 2003-end. Turkey’s Net Foreign Debt Stock amounted to $202.9 billion in June 2009, $208.8 billion in December 2008, $147.8 billion in December 2006, and $ 106.1 billion in December 2003.

Treasury realized $9.3 billion foreign debt service in 2009

On the other hand, the foreign debt service realized by the Treasury in January-December 2009 totalled $9 billion 336 million, of which $5 billion 318 million (57%) represented principal repayments, $4 billion 18 million interest payments.

The Treasury’s foreign debt service amounted to $727 million in January 2009, $1 billion in February, $1 billion 107 million in March, $636 million in April, $ 209 million in May, $1 billion 656 million in June, which was the biggest debt repayment of the year, $ 494 million in July, $ 509 million in August, $1 billion 595 million in September, which was the second biggest lot, $633 million in October, $269 million in November, and $ 498 million in December. Cross rates prevailing on respective cash outflow dates are taken as basis for the foreign debt repayments.

February 8 2010-DSİ’s HEPP Projects Opened to Private Sector within the Context of Water Usage

Right

Having received an application for Yusufeli Dam and HEPP Project only from Bilgin Elektrik firm, DSİ will not accept application for some time temporarily. The Council of

Ministers decision is told to be sufficient for solving the financing issue emerged from the resettlement and DSİ Legal Department started scrutiny

WORKS are underway by DSİ General Directorate for bringing Yusufeli Dam and HEPP Project into construction stage, one of the HEPP Projects which was first within the context of Intergovernmental Agreements however, could not be realized on the basis of modification made in the relevant law, then taken into the coverage of Water Usage Right Agreement and opened to Private Sector construction.

According to information obtained by TEBA, for Yusufeli Dam and HEPP Project which was opened to Private Sector construction on June 15, 2009, only an application from Bilgin Elektrik firm was received until February 1, 2010. After having taken the decision not accepting the applications for the project as of February 1, 2010, it is not clear yet when DSİ General Directorate will cancel the subject decision.

As it might be recalled, in the most recent news story on the subject we reported that despite the awaited announcement was made for receiving Water Usage Right Meeting offers for Yusufeli Dam and HEPP Project, no application was made by Private Sector yet (TEBANEWS#1444/January 18, 2010).

Works started for solving resettlement spending issue

The sources close to the subject report that the subject project which is of note with the installed capacity and the energy amount to be generated among 455 projects of which Water Usage Right Meeting were made by the DSİ to be opened to Private Sector, attracted no attention from the Private Sector until today because of the resettlement costs considered within the context of the realization of the project. The same sources further report that the resettlement costs of the projects opened to Private Sector within the context of Water Usage Right Meeting, increase the construction cost of the project and DSİ works on various alternatives.

DSİ put emphasis particularly on the legal arrangement to be made towards the resettlement and met with the officials from the entities such as Energy Market Regulatory Authority (EMRA) in the first week of January. Reportedly, subsequent to the discussions, an opinion was reached so as DSİ to be the final authority to solve the resettlement issue provided that the expropriation is to be made by the firm assuming the HEPP projects under Council of Ministers decision. Within this context, DSİ Legal Department has started scrutiny. The road map to be pursued in the project will be redefined after the announcement of the opinion of the Legal Department.

Technical characteristics of the subject HEPP project is as follows:

Yusufeli Dam and HEPP

Province: Artvin

Installed Capacity: 540 MW

Average Annual Generation: 1.705 GWh

February 8 2010-EÜAŞ’s Project for the Rehabilitation of Kangal Thermal Power Plant

It is expected to complete the boiler rehabilitation works being carried by Hungarian Transelectro and German Siemens companies towards the 2. unit in February and the

provisional acceptance procedures of the 1. unit in the coming months

REHABILITATION works continue speedily in connection with the 1. and 2. units of Kangal Thermal Power Plant in the scope of the Rehabilitation of Thermal Power Plants of Electricity Generation Corp. (EÜAŞ).

According to TEBA information, in the project being executed by Hungarian Transelectro and German Siemens companies on the basis of original equipment manufacturer contract, the ongoing rehabilitation works in the 2. unit of the power plant are expected to be completed in February. Relevant sources note that upon completion of the rehabilitation works, trial operation will be launched in the unit, and thereafter, provisional acceptance procedures will follow.

On the other hand, the same sources add that trial operation towards the rehabilitation works being carried out in the 1. unit of the power plant have been completed, that provisional acceptance stage has been reached, and that procedures to this end will be completed in the coming days.

As might be recalled, we informed you earlier that completion of the ongoing rehabilitation works in the 2. unit of the power plant had been expected to be completed in the first quarter of 2010, and that the provisional acceptance procedures for the 1. unit had been started in October (TEBANEWS#1439/December 14, 2009).

An allocation of TL 18 million has been reserved for the project in 2010

When the 2010 Investment Program of EÜAŞ is studied, it can be seen that for the Boiler Rehabilitation and Optimization Project of 1.and 2. Units of Kangal Thermal Power Plant, a total investment amounts to TL 130 million and the allocation reserved for the year 2010 appears in the amount of TL 18 million.

As might be recalled, we reported you earlier that in line with the original equipment contract signed by Hungarian Transelectro and German Siemens companies, (TEBANEWS#1277/October 2, 2006), rehabilitation works in the power plant had been targeted to be completed in 2009 (TEBANEWS#1292/January 29, 2007).

February 8 2010-Eriç Enerji Üretim ve Ticaret A.Ş.’s 170 MW Eriç Dam & HEPP Project

Water Usage Right Agreement signed with Eriç Enerji in second week of January. Eriç Enerji starts activities to obtain generation license

While it is increasingly important to deploy new investments into the network in order to ensure the security of electricity supply in Turkey, licensing stage has reportedly been reached for Eriç Dam & HEPP Project which is one of the steps taken towards realization of Hydroelectric Power Plant (HEPP) Projects.

Exercising its assignment right, the General Directorate of State Hydraulic Works (DSİ) invited Eriç Enerji Üretim ve Ticaret A.Ş. in January to sign related Water Usage Right Agreement. The company completed related preparations and signed the Agreement in the second week of January.

If assigned companies wish to realize their projects with their own means, they may, by exercising their vested rights, obtain license for their projects from the Energy Market Regulatory Authority (EMRA) without a bidding process, and sign a Water Usage Right Agreement with DSİ without paying any price for the same, according to the current Law issued last year for DSİ’s projects covered by Intergovernmental Protocols.

The companies holding assignment right for Eriç Dam & HEPP Project are Black & Veatch (USA), Clark (USA), Voest Alpine, Bayındır İnşaat, Limak İnşaat and Temelsu Mühendislik. Some companies had left the consortium which later on included Palmet Elektrik and Feyza Elektrik. The consortium had established a company named Eriç Enerji Üretim ve Ticaret A.Ş.

As might be recalled, we reported earlier that EMRA had decided to issue a license to Eriç Enerji Üretim ve Ticaret A.Ş. for construction of Eriç Dam & HEPP Project, and that DSİ was preparing to invite the said company to sign related Water Usage Right Agreement (TEBANEWS#1439/December 14, 2009).

Eriç Enerji Üretim ve Ticaret A.Ş. continuing activities to obtain the license

According to TEBA inquiry at this stage, Eriç Enerji may obtain a generation license for Eriç Dam and HEPP Project on condition that the information and documents required by EMRA are delivered. In this scope, the company which is to prepare required information and documents within 90 days is carrying on its activities to this end.

The generation facility project covered by the license application is included in the scope of the Environmental Impact Assessment Regulation. The period determined for submission of Environmental Impact Assessment Favorable Decision for the projects that are subject to Environmental Impact Assessment is 300 days, on condition that the company’s undertakings are fulfilled within 90 days.

The EIA report for Eriç Dam and HEPP Project will be obtained by Eriç Enerji Üretim ve Ticaret A.Ş. from the Ministry of Environment and Forestry to which DSİ reports.

Characteristics of the Project

Total installed capacity of Eriç Dam and HEPP to be established in Erzincan is 170 MW. Average annual generation of the project will be 703 GWh.

February 8 2010-Central Administration Total Debt Stock Reached TL 441.3 Billion in end-December

2009

Central Administration Total Debt stock which increased by 16% compared to end-2008 is constituted by domestic debts by 74.8%

Public net debt stock reached TL 302.9 billion as of end-September 2009 compared to June 2009

ON THE BASIS of Treasury Undersceretariat data, Central Administration total debt stock has been set as TL 441 billion 373 million (excluded USD 293 billion 135 million) as of end-December 2009.

Of the Central Administration Total Debt stock, total TL 312 billion 837 million is of TL denominated of which TL 235 billion 260 million fixed and TL 206 billion 113 million variable and remaining TL 128 billion 536 million is of foreign currency denominated.

Central Administration Total Debt stock increased by 16% compared to 2008, 32% compared to 2007

In the Central Administration Total Debt stock, an increase by 16% has been observed compared to end-December 2008, an increase by 32% compared to end December 2007. Central Administration Total Debt stock had been TL 333 billion 485 million as of end-December 2007 and TL 380 billion 321 million as of end-December 2008.

Total Debt stock consisted domestic debts by 74.8%

Of the Central Administration Total Debt stock, 74.8% corresponding to TL 330 billion 5 million TL (USD 219 billion 170 million) is the domestic debts. Remaining TL 111 billion 368 million (USD 73 billion 964 million) is the foreign debts.

Public net debt stock is TL 302.9 billion as of end-September 2009

Meanwhile, total net debt stock of the Public has been set as TL 302 billion 944 million as of end-September, at the end of 3rd quarter of 2009. In the Public net debt stock, an increase by 6.2% compared to end-June 2009, by 13% compared to March 2008 and by 22% compared to December 2007 December has been observed. Net debt stock of the Public has been TL 284 billion 651 million as of end-June 2009, TL 267 billion 980 million as of March 2008 and TL 248 billion 420 million as of end-2007.

Total gross Public Debt Stock as of end-September 2009 has been only TL 455 billion 793 million. As is known, grossly calculated total public debt stock consist of Net Assets of the Central Bank, Net Assets of Public Savings and Unemployment Insurance Fund. Net Assets of the Central Bank as of end-September 2009 is set to be TL 62 billion 638 million, Public savings to be TL 47 billion 644 million and Unemployment Insurance Fund net assets to be TL 42 billion 567 million.

February 8 2010-Treasury’s February-March-April 2010 Financing Program

Debt repayments will total TL 56 billion, while new domestic borrowing will amount to TL 50.6 billion in the said quarter. Treasury will make TL 5 billion foreign debt

repayments and borrow TL 2 billion from abroad, maintaining its position as the net foreign debt payer in the said period

THE TREASURY’S quarterly financing program for the months February-March-April 2010 has been disclosed. Accordingly, the Treasury will make debt repayments totalling TL 56 billion, and enter into new domestic borrowing amounting to TL 50.6 billion in the said quarter.

In the said period, the Treasury will obtain TL 2 billion foreign debt from only the World Bank in April, while making TL 5 billion foreign debt repayments in the said quarter, thus maintaining its position as the net foreign debt payer in the said period.

The Treasury will realize domestic debt service amounting to TL 20.4 billion and will enter into domestic borrowing totalling TL 19.3 billion in February. Corresponding figures will be

TL 13.6 billion and TL 13.5 billion in March, TL 16.9 billion and TL 15.8 billion in April, respectively.

How will Treasury finance TL 56 billion repayments in the said quarter

Of a total of TL 56 billion repayments in the said quarter, TL 50.6 billion will be financed with domestic borrowing, TL 5.4 billion with other financing methods by the Treasury.

The Treasury will realize domestic borrowing through tender amounting to TL 15.4 billion in February, TL 12.6 billion in March, and TL 11.6 billion in April. Of the domestic borrowing to be made through tender, the portions to be obtained through Reference Bill tender (with 6-month tenor) will amount to TL 3.1 billion in February, TL 2 billion in March. Other tender methods will be determined later on. The bills to be sold to the public in this period will amount to TL 3.9 billion in February, TL 900 million in March, and TL 4.2 billion in April, totalling TL 9 billion.

Other financing methods are as follows: the revenue to be generated from the non-interest surplus; privatization revenues; cash-bank change; and the revenues to be obtained from the Saving Deposits Insurance Fund (TMSF). The Treasury’s Financing Program for February-March-April 2010 is given in the following table.

Treasury’s Financing Program for February-March-April 2010 (TL Billion)

 February March (*) April (*)

Repayments 23.6 14.7 17.7

Domestic debt service (**) 20.4 13.6 16.9

Principal 17.1 9.1 11.2

Interest 3.4 4.5 5.6

Foreign debt service 3.1 1.1 0.8

Principal 2.2 0.3 0.6

Interest 1.0 0.8 0.2

Financing 23.6 14.7 17.7

Borrowing 19.3 13.5 17.8

Domestic borrowing 19.3 13.5 15.8

Domestic borrowing from market through tender 15.4 12.6 11.6

Reference bill tender (with 6-month tenor)) 3.1 2.0 0.0

Other 12.3 10.6 11.6

Public issues 3.9 0.9 4.2

Foreign borrowing (***) 0.0 0.0 2.0

Other financing (****) 4.3 1.2 -0.1(*) Data for March & April are provisional.

(**) The debt service figures may change if payments are made to the Real Estate Immovable Mutual Fund by issuing Special Category State Domestic Borrowing Notes under the Law dated 08.12.2009, numbered 5939 Amending the Law on Payments to Housing Support Right Holders.

(***) The amount shown for April represents the program credit obtained from the World Bank. The amount of foreign borrowing may change if additional financing is obtained from the international organizations or international markets.

(****) Non-interest balance, privatization revenues, receipts from onlending, cash-bank change and revenues obtained from TMSF are shown under the item: “Other Financing”.

February 8 2010-New Credit Agreements for TCK’s Motorway Projects

New credit agreements signed with T. İş Bank and T. Halkbank, amounting to $35 million for Gaziantep Belt Highway, $ 20 million for Bursa Belt Highway and $15

million for Kemerhisar-Pozantı Motorway enter into force

New credit agreements amounting to $70 million in total were signed in December and put into force in order to finance 2009 work programs for Kemerhisar-Pozantı, Gaziantep-Şanlıurfa and Bursa Belt Highway Projects for which construction contracts were signed between the years 1996-98 by the General Directorate of State Highways Administration (TCK).

Said credit financing has been obtained from the syndications obtained from the Gulf funds by Bahrain branches of Türkiye İş Bank and Türkiye Halkbank under the agreements signed by the Undersecretariat of Treasury in the name of TCK.

As might be recalled, we reported earlier that the first credit package had been signed in August to finance 2009 work program of Kemerhisar-Pozantı Motorway Project of TCK (TEBANEWS#1422/August 17, 2009), and that the Undersecretariat of Treasury was rendering ready for signing the second credit package to be used for Kemerhisar-Pozantı Motorway in the year 2009 (TEBANEWS#1442/January 4, 2010).

The first credit financing for 2009 work program of all three motorways had been signed and out into force in September by Bahrain branch of Halkbank. After determination of the work programs for the stretches to be constructed every year of the Motorway Projects included in TCK’s investment program, the appropriations granted for the same are financed with the syndication credits obtained from abroad.

Stretches of motorway projects for which the credits will be used

Following are stretches of the motorway projects for which the syndication credits with 10-year tenor, obtained by Türkiye İş Bank and Türkiye Halkbank will be used:

Motorway Project Stretch Creditor Credit Amount ($)

Contractor

Gaziantep-Şanlıurfa Motorway, Suruç-Şanlıurfa Stretch

T. İş Bank 35 million Makyol İnşaat-Yüksel İnşaat

Bursa Belt Highway, Yalova Junc.-Karacabey Köprülü Junc.

T. İş Bank 20.3 million Gülsan İnşaat

Kemerhisar-Pozantı Motorway, Eminlik-Çiftehan Stretch

T. Halkbank 15 million Limak-Kolin-Metiş

Besides the appropriation allocated from TCK’s investment program, those appropriations that remain unused at every year-end under the public investment program are granted as additional appropriation to be used in the investments of the agency. At the meeting dated December 24, 2009 of the Supreme Planning Council (SPC), it was decided that an additional appropriation amounting to TL 1.8 billion from 2009 program be used in TCK’s investments. Of the said amount, TL 184 million additional appropriation was set aside for Motorway Projects (TEBANEWS#1442/January 4, 2010). The credits obtained for the three Motorway Project will be used for financing the additional appropriation disbursements.

February 8 2010-İstanbul Metropolitan Municipality’s 70 ea Metro Vehicle Procurement

Project

Metropolitan Municipality awaits SPO approval for the procurement of 70 ea vehicles to be used in Rail System projects under construction

IT IS REPORTED It is reported that the approval for 70 ea Rail System Vehicle Procurement Project to be used in the Rail System Projects in İstanbul has been given conditionally by the State Planning Organization (SPO) and the project has been included in 2010 Investment Program.

According to information obtained by TEBA, scrutiny conducted by SPO continues on 70 ea vehicle procurement of Metropolitan Municipality for meeting the railway vehicle requirement of the rail system projects under construction.

Relevant sources report that the vehicle requirement will be set by Metropolitan Municipality as the rail system projects commission and Municipality Office approval will be sought for the tenders eventually to be launched. The same sources further report that rail system lines require vehicle urgently are to be given priority and the tender calendar will take precision after the Authority approval granted.

Investment cost of the project in 2010 Investment Program to total to TL 225 million

In the Metropolitan Municipality’s 2010 Investment Program, it is seen that an allocation of TL 1.6 million for the procurement of 70 vehicles with the total investment cost of TL 225 million on the condition of making the spending only after SPO approval to be granted.

Relevant sources report that SPO will approve the allocation spending after the approval of the project which is envisaged to be financed with foreign credit without Treasury guarantee. Meanwhile, the possibility of asking the tender winning firms to bring foreign credit financing is being considered by the Metropolitan Municipality as well.

As is known, Metropolitan Municipality had signed a contract of € 138.7 million with Spanish CAF, which won the international tender launched for the procurement of 120 vehicles to be used on Kadıköy-Kartal Line (TEBANEWS#1426/September 14, 2009).

February 8 2010-EÜAŞ’s Yeniköy Thermal Power Plant Rehabilitation Project

Test operation in the 2nd Unit to be started nowadays in Boiler Rehabilitation and Burning Optimization Project in the Power Plant conducted by Polish Rafako firm.

Test operation in the 1st Unit is expected to start in end-Summer 2010

INSTALLATION works continue towards Rehabilitation and Burning Optimization Project of 1st and 2nd Units of Yeniköy Thermal Power Plant run within he context of Rehabilitation Project under implementation for increasing the electricity generation in the existing lignite fired thermal power plants by EÜAŞ General Directorate.

According to information available to TEBA, test operations in the 2nd Unit Power Plant are awaitedf to be started nowadays within the context of construction works conducted on Original Manufacturer Method in line with the Article 22 of the Public Procurement Law no. 4734 for making the units to work in full capacity through eliminating the failures in the Unit Boilers.

Relevant sources report that the rehabilitation works in the 2nd Unit have been completed and if the test operations can successfully completed, the temporary acceptance process will be started. Reportedly, 2nd Unit of the Power Plant generates 210 MW.

Test operation in 1st Unit awaited to start in end-Summer 2010

According to information obtained from the relevant sources, the rehabilitation works conducted in the 1st Unit of the Power Plant are awaited to be completed in end-May and test operations to start in end-Summer 2010. The temporary acceptance process will reportedly be started in the 1st Unit after the test operation run successfully and temporary acceptances can be completed in both units in the same period.

When EÜAŞ’s 2010 Investment Program is studied, it is seen that an expenditure allocation of TL 30 million is envisaged to be made in 2010 for the Rehabilitation and Burning Optimization Project of the boilers of Yeniköy Thermal Power Plant and total investment cost of the project to be TL 125 million.

Characteristics of the Project

The boilers of Yeniköy Thermal Power Plant manufactured by Polish Rafako are of 660 ton/hour steam pressure capacity each and of OB-660 type lignite fired boilers. The boilers have been operated in full efficiency until 2005 from the date of installation, and after the

completion of the rehabilitation, an efficiency increase by 5% will be attained in the Power Plant to increase the boiler efficiency to 80%.

As is known, Original Manufacturer Contract of €57.5 million was signed between EÜAŞ and Polish Rafako firm on November 22, 2007 and took effect (TEBANEWS#1336/December 3, 2007).

February 8 2010-DSİ’s Köprüçay Energy Group Project

Closing date for applications set as 28 February 2010 for 21.6 MW HEPP

The closing date for applications has been set as 28 February 2010 for Köprüçay Energy Group Project which was opened by the General Directorate of State Hydraulic Works (DSİ), the main investor agency responsible for developing all water resources of Turkey, to private sector construction under Water Usage Right Agreement to ensure a more effective utilization of the hydraulic energy potential.

According to TEBA information, Çatalkaya Enerji was the first company that has made an application to undertake the project to DSİ which had obtained approval from the competent authority after completing its activities to include Köprüçay Energy Group Project in the “List of Group Hydroelectric Power Plant Projects for which Applications have been and may be Made”.

As might be recalled, we reported earlier that no applications were received as of January for Köprüçay Energy Group Project which was among the Hydroelectric Power Plants (HEPPs) opened by DSİ to private sector applications (TEBANEWS#1445/January 1, 2010).

Project expected to attract a big interest from private sector

Köprüçay Energy Group Project draws attention with its installed capacity (21.6 MW) and generation quantity (70 million kWh/y) among the projects opened by DSİ to the private sector recently. Given its size, the project is expected to attract a big interest from the private sector.

Following the receipt of the applications by 28 February 2010, offers for related Water Usage Right Meetings are to be received in the first half of 2010, according to the timetable for the project. A Water Usage Right Meeting will be held by DSİ and a Water Usage Right Agreement will be signed with the company that will submit the highest unit energy price per kWh on the basis of the bid opening session results.

HEPP Projects covered by the Energy Group

According to the information gathered by TEBA at his stage, Köprüçay Energy Group Project consists of 2 HEPP Projects, namely, Başak Dam & HEPP and Bora Regulator & HEPP.

Characteristics of Köprüçay Energy Group Project

Location: Isparta Province

Installed Capacity (MW): 21.6

Average Annual Generation (kWh): 70,000,000