Istanbul Metro Project
Project number: 48250
Business sector: Municipal and environmental infrastructure
Notice type: Public
Environmental category: IESE
Target board date: 30 Nov 2016
Status: Passed Concept Review, Pending Structure Review
PSD disclosed: 12 Sep 2016
Translated version of this PSD: Turkish
The EBRD is considering a EUR 88 million loan to Istanbul Metropolitan Municipality. The proceeds will be used for the construction of Atakoy-Ikitelli metro line with a total length of 13.4 kilometers including 12 underground stations and a depot area as well as electromechanical works of the entire line.
The construction of a new metro line is part of the extension of the city’s urban rail network to meet increasing demand. It will help provide frequent and efficient services to Istanbul residents and will be a fast, reliable, comfortable, and environmentally friendly alternative to the use of private vehicles.
The project is expected to create the following transition impacts:
- Land Value Capture: Land Value Capture (“LVC”) is an innovative and increasingly accepted way to fund public transport investments. LVC considers the positive contributions of infrastructure projects to the value of the surrounding properties. As such, LVC does not only help to cover the costs of such projects, but can additionally attract private sector in joint development projects. Technical cooperation funds will be used to assess the feasibility of alternative LVC methodologies that involve private sector.
- Improved regulation: As elsewhere in the region, a multi-year Public Service Contract (PSC) between the city and Metro Istanbul Company (MIC) can be used to have a good effect by establishing a baseline ‘all-in’ cost per kilometre for the delivery of services, in exchange for public support payments to close any remaining gap between total costs and revenues from user fares. The project will assess future baseline costs and current, expected future revenue sources, including farebox and other, and fare collection systems including tariff integration, as in input for the elaboration and signing of a performance-based PSC. MIC and the city regulators will all be trained on the monitoring and management requirements to implement the PSC approach.
- Green Economy Transition (“GET”): The metro development in Istanbul represents a major investment in zero-emission transport at the local level, and as such is a strong contributor to piloting GET in the municipal sector. The metro system buildout will add 400,000 new passengers daily to the public transport, causing substantial modal shift from private cars and buses, onto low-emission metro mode. Moreover, improvements to existing electromechanical systems on the complete metro lines shall allow operational energy efficiency savings.
- Corporate development: The project, focused on expansion of clean public transport, will help MIC reduce energy costs and improve its operational and financial performance. The investment will also be an opportunity to improve the company’s productivity and management. In this regard, technical cooperation will help MIC improve operating, technical and financial management through the introduction of a corporate development programme, with a view to introducing an enhanced management information system, improved worker productivity ratios using industry benchmarks for similar metro system in the region, and training.
- Outsourcing non-core activities: As part of the project preparation, outsourcing options for non-core activities will be explored and targeted in the areas such as cleaning, maintenance, security, etc. This will enable a more commercialised approach and greater private sector participation.
ISTANBUL METROPOLITAN MUNICIPALITY
With a population of nearly 15 million, Istanbul is the largest metropolitan municipality in Turkey. The Atakoy Ikitelli Metro Line will be operated by the city’s municipal public transport company, MIC.
EBRD Finance Summary
The Bank will provide up to EUR 88 million to the municipality as part of a EUR 338.3 million financing package expected to be co-financed by the European Investment Bank.
Total Project Cost
Environmental and Social Summary
The proposed project has been categorised B in accordance with the 2014 EBRD Environmental and Social (“E&S”) Policy, as the potential impacts are expected to be readily identifiable and addressed through mitigation measures.
The environmental and social due diligence (ESDD) for the project will be undertaken by independent consultants and will include an environmental and social analysis of the project and an environmental, health and safety audit of existing operations and facilities of the municipality.
Based on the results of the ESDD, an Environmental and Social Action Plan (ESAP), stakeholder engagement plan and non-technical summary will be developed for the project. The project is a large scale infrastructure project which is listed in Annex II of both the EU Environmental Impact Assessment (EIA) Directive and the Turkish EIA Regulation. The project has been screened by the Turkish Competent Authority and it was decided that no national EIA would be required for the project.
Initial information indicates that there will be no physical displacement required and no major issues related to Performance Requirement 5 are foreseen. Although one of the proposed stations (Mehmet Akif Station) was originally designed to be built in the garden of a primary school, the city has developed an alternative location for the station in order to avoid potential disturbance and health and safety risks to children at the school.
Other key issues related to the project are contractor management, traffic management, construction waste management, health and safety management, labor and working conditions, stakeholder engagement and grievance management, which can be readily identified and addressed through robust mitigation measures included in ESAP.
This project summary document will be updated when the results of due diligence become available.
Technical, financial, and environmental and social due diligence will be carried out for the project (approx. EUR 200,000 in total). This technical co-operation is funded from the EBRD’s Infrastructure Project Preparation Facility (“IPPF”).
In the post-signing stage two technical co-operation assignments are foreseen:
(1) Support to the policy dialogue. The assignment will identify best practice approaches to LVC in Turkey and fully organize, prepare and manage seminars with municipal and ministry representatives, land developers and relevant private sector stakeholders in Istanbul. The estimated cost of the assignment is EUR 200,000, proposed to be financed by an international donor.
(2) Corporate development support programme. Assistance to the municipality and the metro company with re-organisation, project monitoring, urban rail management techniques, business and capital investment planning, capacity building and preparation and signing of a Performance
based public service contract. The estimated cost of the assignment is EUR 250,000, proposed to be financed by an international donor or the EBRD’s Shareholder Special Funds.
Company Contact Information
Mehmet Nezihi Ozmen Mahallesi, Kasim Sok. Merter Istanbul
For business opportunities or procurement, contact the client company.
For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794
EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168
Public Information Policy (PIP)
The PIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations.
Text of the PIP
Project Complaint Mechanism (PCM)
The EBRD has established the Project Complaint Mechanism (PCM) to provide an opportunity for an independent review of complaints from one or more individuals or from organisations concerning projects financed by the Bank which are alleged to have caused, or likely to cause, harm.
Any complaint under the PCM must be filed in accordance with the timeframes prescribed in the PCM Rules of Procedure. You may contact the PCM Officer (at email@example.com) for assistance if you are uncertain as to the eligibility of your complaint.