On October 6, 2010 MIGA issued a guarantee of $522,000 to cover Troy AB’s equity investment in the privatization of Bandirma Port in Turkey under a transfer-of-operating-rights scheme for a period of 36 years. MIGA’s guarantee covers against the risks of currency inconvertibility and transfer restriction as well as expropriation of funds for a period of 14 years.
Following a competitive tender, Celebi Joint Venture Group was named preferred bidder in May 2008, offering an upfront operating rights fee of $175.5 million.
The project represents an ongoing process of privatization started by the government of Turkey in the early 1980s. It aims to introduce openness and competitiveness into the country, increase efficiency in former state-owned enterprises and promote economic growth.
The privatization of Bandirma Port will introduce a new and experienced management team and best market practices that will improve productivity and efficiency of the port. In turn, this will strengthen the competitiveness of local exporters in the hinterland by decreasing transportation costs. In particular, better port operations will further stimulate the growth of the region’s automotive manufacturing industry as a hub for Central and Eastern Europe. The local economy will also benefit from improved connectivity to international markets, a key infrastructure requirement to attract foreign direct investment. Finally, the new operators of the port will introduce higher standards of operation, including environmental and safety rules in line with national and European Union guidelines.
The project is also aligned with the World Bank Group’s Country Partnership Strategy for Turkey. Improving transportation infrastructure is a key component of the Bank Group’s focus on helping Turkey improve its competitiveness and employment opportunities.