Risk Management in Transport PPP Projects

In the Islamic Countries

247

5.7.6.

Operation

Management of risks during the operation phase

As a general rule under both

BOT and TOR schemes

in Turkey, contractors are responsible for

all the activities related to the operation and maintenance of the assets. Accordingly, they bear

the risks associatedwith these activities, i.e. operating cost overrun, possibly resulting in a lower

income, higher maintenance costs. According to interviews with the Turkish Authorities, the

existing concessions do not seem to be affected by significant underperformance by the

contractors at the operation and maintenance stages, specified that

currency risks

may affect

the economic performance of the contracts. According to a survey carried out in 2015

professionals and experts involved in the PPP sector, also addressing the performance of the

PPP contracts at the operational stage, 75% of respondents were of the opinion that investor

companies in Turkey are successful in the management of this phase.

Bonus/malus schemes and compensation measures

Bonus-malus schemes and compensation measures are in use in Turkish PPP contracts which

apply to both the construction and operation phases of contract implementation:



Construction phase

For BOT contracts under the responsibility of AYGM and KGM, time savings in the

construction period could be absorbed in the operation phase as a bonus, whereas

delays would result in the reduction of the concession period.



Operation phase

For BOT contracts under the responsibility of AYGM, revenues in excess of the demand

guarantee threshold could be retained fully by the private or shared between the

private and public sector (e.g. 70% to the private, 30% to the public). The same

mechanism has been adopted for some projects under the responsibility of KGM;

For projects under the responsibility of DHMI, revenues in excess of the demand

guarantee or additional revenues not foreseen at the tendering stage may be retained

by the private, shared between the private and public, or fully transferred to the public.

Contract renegotiations

According to the Procuring Infrastructure Public-Private Partnerships report (WB, 2018),

contract renegotiation is regulated by contractual provisions

in Turkey. Accordingly, the

terms and conditions to change or amend the contracts are specified in the implementation

agreement. For instance, changes in the contractor’s stakeholder composition are allowed

provided the qualifications legally required at the tendering stage aremet by the new/additional

entity. Lenders step-in rights are also foreseen by the Turkish legislation.

Survey carried out in the context of a thesis on the evaluation of construction projects realized with Public-

Private Partnership model in Turkey by Osman Can Ürel, 2015.