TURKEY: Work on four stalled metro projects is set to resume after Istanbul municipality successfully raised US$580m to fund construction through its first international Eurobond sale.
The Eurobond offer was conducted in London under UK law. The bond has five year maturity at a yield of 6·6%. IBB intends to use the proceeds to reactivate the four schemes, which were all tendered in 2017 and are officially scheduled to be completed in 2022-23.
The four are:
- · the Pendik – Kaynakca Merkez-Tuzla section of Line M4, for which a consortium of Alsim Alarko and Cengiz Metro holds a construction contract valued at US$205m;
- · the Çekmeköy – Sancaktepe – Sultanbeyli section of M5, which is due to be built by a consortium of Doğuş Inşaat, Özaltin and Yapı Merkezi under a US$300m contract;
- · the Mahmutbey – Bahçeşehir – Esenyurt section of M7 for which a consortium of Makyol, Astur and Içtaş Insaat has a US$390m contract; and
- · the whole of the Kirazlı – Halkalı Line M1a for which a consortium of Makyol, Içtaş, Kalyon and Astur holds a contract valued at US$310 m.
Although the projects were successfully tendered and the construction contracts awarded, progress on all four schemes was initially halted by a severe economic crisis in 2017-18, which saw the government in Ankara cut funding for all but those infrastructure projects deemed to be of the highest priority.
Following the election of opposition mayor Ekrem Imamoglu in Istanbul in the 2019 municipal elections, Ankara imposed further restrictions on the municipality, blocking IBB’s ability to secure financing from Turkish state banks.
Announcing the Eurobond sale, Imamoglu said that it had far exceeded expectations, attracting bids totalling US$2·5bn. The mayor added that the municipality was considering further use of international financial instruments to complete its ambitious metro building programme, as it was still unable to borrow from state banks.
‘In my election campaign I said completing construction of the metro system was my primary concern’, he explained, criticising the previous city administration for starting projects that it did not have the necessary finance to finish.
Imamoglu also confirmed that the long-stalled Alibeyköy – Eminönü tram route T5, which is being constructed by Doğuş Insaat under a 2016 contract worth €153m, will open ‘in a few weeks’. The İkitelli –Bahariye section of metro Line M9 being built by a consortium of AGA Enerji and Mad Insaat under a 2016 contract valued at €338m is now expected to open next year.
In addition, the mayor confirmed that the municipality was considering tendering in 2021 for construction of the proposed ‘Hizray’ fast rail line linking Sabiha Gökçen airport on the Asian side of Istanbul, with Halkalı on the European side, and for a metro line connecting Incirli and Beylikduzu, on the western edge of the city.
