Public-private partnership—the case of turkey

Abstract

Project Finance can be defined as the creation of an irreversible or partially returnable source of financing, which is based on the cash flow generated by the project in the calculation of loan repayments and capital profitability to finance the economically decomposable investment projects. Project Finance plays a critical role in Public-Private Partnership (P3) models. P3s have become increasingly popular as a means of procuring and maintaining public sector infrastructure. The public sector can use this partnership for social infrastructure projects including projects ranging from schools, hospitals to social housing or government offices or for transportation projects such as roads, tunnels, bridges, railways, airports, or other specialized services such as defense equipment. P3s have been supported by many countries to overcome the traditional drawbacks of public procurement. However, the experiences of developed and developing countries vary depending on existing economic, political–legal, and social environments. P3 model in Turkey has undergone a different evolutionary process when compared to other countries in Europe. Although various legal arrangements have been made since the 1980s, these regulations have been prepared according to specific sectors and projects, and the framework and unfortunately, the laws of P3 legislation have not been clearly defined. There is a need for a comprehensive legal framework for the successful implementation of P3 in Turkey. In addition, a central public institution with competitive and transparent procurement procedures is one of the issues, which needs to be prioritized. Since P3 projects are often long-term projects with very large investment costs, the legal framework of the projects should be clearly defined for projects to achieve the planned success. In addition to that, it is very important that the relevant managers and staff in the public sector, as well as the contractors in the private sector, should develop their institutional capacity in the areas of planning, management and control of projects. Shortly, a strong political commitment is needed to develop the P3 structure. The aim of this study is to give a general understanding of P3 models, to evaluate their applications, and to provide some policy suggestions for Turkey. This chapter will be structured as follows. Firstly, in Sect. 2, the literature review will be given. Subsequently, in section III, P3 will be defined and in section IV, P3 models will be described. In section V, P3 examples around the World will be given and in section VI, P3 in Turkey will be discussed. Finally, some concluding remarks will be added.