The tender process for Nakkaş-Başakşehir Motorway Project, which is part of the Northern Marmara Motorway on the European side of Istanbul, has been launched by the General Directorate of Highways (“KGM”) on March 27, 2020.

Project Model and Contractual Structure 

The project model will be build-operate-transfer (BOT). The concession period is expected to consist of a fixed construction term and an operation term, which will be determined as a result of the tender process, as the bidder which proposes the shortest operation term will be awarded the tender. The concession agreement will be the Implementation Contract to be signed between KGM and the project company to be established by the successful bidder. In addition to the Implementation Contract, a separate agreement will be signed between KGM, the project company and the lenders to regulate the rights of lenders vis-à-vis KGM, such as step-in, substitution and KGM’s representations and undertakings. 

Traffic Guarantee 

The project is expected to benefit from a traffic guarantee to be provided by KGM as well as guaranteed minimum tolls for different types of vehicles, which are stated in the tender documentation and will also be provided in the Implementation Contract. The length of the motorway will be approximately 45 kilometers.

Debt Assumption by Treasury

Debt assumption basically refers to the assumption of the loan and financing costs by the State or the relevant public entity (i.e., KGM in this project) upon termination of the underlying concession agreement. As per Law No. 4749 on Public Financing and Debt Management, debt assumption is to be made by the Treasury for projects with a total investment amount of more than TL 1 billion only. The total investment amount of this project is expected to be higher than this threshold, in which case the debt assumption could be made by the Ministry of Treasury and Finance. 

Next Steps 

Potential bidders can review the tender documents free of charge at the premises of KGM in Ankara, starting from April 6, 2020. Although review of the tender documents is free of charge, the bidders which would like to participate in the tender must purchase the tender documents for TRY 50,000. The amount of the bid bond is TRY 25 million.

The deadline for submission of the bids is May 21, 2020, and the tender will be conducted on the same day.

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