Risk Management in Transport PPP Projects
In the Islamic Countries
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The institutional reforms foreseen in the Eleventh Development Plan of the Republic of Turkey
should tackle the improvement of project preparation and identification of a more stable
pipeline of projects (PSB, 2019). Furthermore, ensuring appropriate preparation and
supervision of feasibility and demand studies is paramount to avoid risks related to wrong
traffic estimates (Ozorhon, Durna, Caglayan, 2017; Budayan, 2018).
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Box 45 Traffic forecasts and revenue guarantees: the case of Yavuz Sultan Selim Bridge
The 2,164 m long Yavuz Sultan Selim Bridge is the third bridge crossing the Bosphorus Strait. It is
located in the North of Istanbul, near the Black Sea, and it is dedicated to rail and motor vehicles’
traffic. It was opened in 2016, after 39 months of construction works, and it is part of the O-6
motorway (Northern Marmara Motorway, 414 km). The main goal of the project was to reduce
traffic congestion on the two already existing bridges linking the European and the Asiatic sides
of Istanbul, by providing a by-pass of the city to heavy vehicles, in particular freight traffic
transiting through the metropolitan area (Özcan, 2016; 2018).
The remuneration scheme of the contract foresees a demand guarantee set at 135,000 car
equivalent vehicles/day, which according to the contract shall correspond to a minimum revenue
of 464 million USD 71, for the private operator ICA İçtaş-Astaldi, the company that will operate the
bridge until 2032. However, the observed traffic on the Yavuz Selim Bridge in 2017 is below the
guarantee treshold, consequently the private operator should be refunded by KGM.72
The Authorities notice that most of the route of the O-6 motorway is not completed yet.
Additionally, the minimum goal of 135,000 equivalent vehicles/day was expected to be reached
within the first 3 years of operation, according to the feasibility studies.
On the other hand a study by the Chamber of City Planners of Istanbul (CCPI) underlined in 2010
that the share of transit traffic among the entire Bosporus strait crossing was barely 2-3%, and
then this marginal share could not justify the huge investment in the construction of another
bridge in Istanbul. According to the same study other issues concerning environmental
sustainability of the project were raised concerning the uncontaminated natural environment in
the North of Istanbul and the project benefits to the city and the inhabitants in terms of climate,
air quality, living conditions and recreational value (CCPI, 2010).
Whilst network effects may effectively compromise the performance of a PPP project embedded
in a transport system, like road projects included in a motorway network, feasibility studies and
demand analyses developed as part of these studies should be prepared based on accurate
methodologies and transport network simulation models properly calibrated on the basis of
robust surveys. In the event the project is embedded in a wider network also under development,
sensitivity tests should also be elaborated to consider the impact of delays in the completion of
the project surrounding network.