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Legal Alerts

26/03/2021

Debt Assumption for Build-Operate-Transfer Projects and Railway Transportation Supports

Legal Alerts
Energy, Mining & Infrastructure

New Developments

The Law No. 7297 Amending Certain Other Laws (“Law No. 7297“), which was published in the Official Gazette on 20 March 2021, introduced significant changes to the Law No. 3996 Concerning the Performance of Certain Investments and Services with the Build-Operate-Transfer Model (“Law No. 3996”) and the Law No. 6461 Concerning the Liberalization of Turkish Railway Transportation (“Law No. 6461”).

What Changes Does the Law No. 7297 Introduce?

1.         Debt Assumption for Build-Operate-Transfer Projects

The Law No. 7297 paves the way for debt assumption for certain build-operate-transfer projects carried out by special budgeted affiliates of the Ministry of Transportation and Infrastructure (“Ministry of Transportation”). Accordingly, the Ministry of Transportation can become a party to debt assumption agreements, along with its relevant affiliates, for build-operate-transfer projects to be financed from abroad, tendered after 15 March 2020, and whose implementation contracts are not signed as of 20 March 2021. As a party to these agreements, the Ministry of Transportation will not be subject to Articles 4 and 8/A of Law No. 4749 on the Public Finance and Debt Management, which stipulate the conditions of debt assumption by the Ministry of Treasury and Finance (“Treasury“). This amendment entered into force on 20 March 2021.

2.         Railway Transportation Supports

The Law No. 7297 extends the periods for certain supports the Treasury can provide to Türkiye Cumhuriyeti Devlet Demiryolları (en. State Railways of the Republic of Turkey, “TCDD“), the administrative authority for railway transportation, and its affiliate TCDD Taşımacılık A.Ş. until the end of 2023. In addition, the President is authorized to extend these periods for up to ten years. These amendments entered into force on 20 March 2021, but will become effective as of 31 December 2020.

Conclusion

The Law No. 7297 shows the government’s continuing support for transportation services and projects. Firstly, the Law No. 7297 provides an opportunity for increasing the bankability of certain build-operate-transfer projects carried out by special budgeted affiliates of the Ministry of Transportation. Secondly, it extends the time periods for certain Treasury supports to the TCDD for services regarding railway transportation.