Financial woes hit highway and third Bosphorus bridge tender

Financial woes hit highway and third Bosphorus bridge tender

ISTANBUL- Hürriyet Daily News
Financial woes hit highway and third Bosphorus bridge tender


A key tender that included the building of a third bridge over Istanbul’s Bosphorus fizzled out yesterday, as none of the domestic and international companies were able to produce a concrete bid. As the deadline to place a bid expired at 2 p.m., the episode became a stark indicator of the unfavorable global and domestic climate for investment.

The potential bidders included Japan’s Mitsubishi, Italy’s Astaldi, Russia’s Moskovskiy Metrostroy, Austria’s Stradag and Spain’s FCC – all from countries that have been hit hard by the global financial crisis and the ensuing eurozone debt crisis.

After the deadline for the North Marmara Highway tender, there were no bidders, İhsan Akbıyık, a deputy chief at the General Directorate of Highways, said in Ankara. “As of 2 p.m., bids should have arrived. They did not,” Akbıyık said, adding that what happens now will be decided by the Transportation, Maritime and Communication Ministry and the General Directorate of Highways.

Turkey has ‘alternative plans,’ Transport Minister Binali Yıldırım said in Istanbul before the tender fizzled out, without specifying what they were.

“If no companies bid for the third bridge, we will launch our plan B,” said Yıldırım. “If we receive no offers, nothing would change for us. We would evaluate the situation and decide according to our evaluation.”

Suggestion to slice the project
“Under the current conditions, it is not possible to finance such a big project,” an executive from one of the potential bidders said, according to a Reuters report. “This project could be sliced into pieces and then auctioned,” the executive said, speaking on condition of anonymity. “Or it could be given to contractors by the state through a negotiated tender.”

Minister Yıldırım said he acknowledged the “economic slowdown” in Europe. “[But] there is no crisis, or risk of a crisis, in Turkey. But there are some people who [lament] why Turkey didn’t go through a crisis,” he added.

Nine domestic and nine foreign companies received specifications ahead of the tender, which promised high returns through transport fees. After completing the giant project, the winning company or consortium would have had the “management rights” to the bridge and connected highways for 25 years. To make the project even more appealing, the investor liability in possible expropriation activities was cut from 950 million Turkish Liras to 400 million liras. This meant the Turkish state would undertake all land acquisition costs above this cap.

The project, which spans 414 km from Adapazarı to Tekirdağ, is described as Turkey’s second-biggest build-operate-transfer scheme. It was first announced on March 8 last year. Originally, the bidding was to be held Aug. 23, but potential bidders had asked for a delay.

In a written statement ahead of the tender, four chambers from the Turkish Union Engineers’ and Architects’ Chambers (TMMOB) said the auction itself constituted a crime according to existing laws. A lawsuit launched by TMMOB is proceeding at an Ankara court, the statement said, adding that a tender on a legally contested issue is against the law.

Gökhan Kurtaran from Istanbul contributed to this report.