Railway Project Investment Report - DOC by mfo17236

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									                                                    Ambassade van het
                                                    Koninkrijk der Nederlanden
                                                    Ankara




  THE RAILWAY SECTOR IN TURKEY:

        POLICIES, INSTITUTIONS AND
          (PLANNED) INVESTMENT


                                     January 2006




The Royal Netherlands Embassy
Economic and Commercial Department
Hollanda Caddesi No: 3
Hilal Mahallesi
06550 Yıldız / Ankara
ank-ea@minbuza.nl
                    RAILWAY POLICIES AND INVESTMENT IN TURKEY
                                      January 2006
                            Economic and Commercial Section
                              Netherlands Embassy Ankara



This reports provides an overview of developments and investments in the railway sector in Turkey.

It covers the institutional set up of the sector and the changes in this set up that are taking place. The
larger part of the report consists of a fairly detailed overview of ongoing and planned projects and the
stages in which these projects including the acquirement of financing (public/private). The importance
of the EU in terms of connecting the European and Turkish networks is also taken into account. Both
national and local projects are included. Finally the paper gives a brief overview of the history of
railway development in Turkey.

Gathering these data is a complicated affair as many institutions at local, national and international
level are involved. Additionally infrastructure is among the most important fields of public investment
nowadays in Turkey, this implies that the list of projects is extensive. Therefore the underlying paper
became more elaborated than intended.

Public financing of projects in Turkey is not a straightforward affair. Therefore, and in combination
with the time pressure to finish this overview, the current document can be considered a final draft
and it might be somewhat difficult to read. Yet, it contains very relevant and up to date information
which will be of use for the Dutch companies interested in this sector.

For questions or further explanations please contact the economic section of the Royal Netherlands
Embassy (ank-ea@minbuza.nl).
                                          CONTENTS

Current status and summary

I- Organizational Structure

II- Brief overview of history of railway development in Turkey

   a) The historic development of railways
   b) The current status of railways and highways

III- Brief overview of transport policies in relation to the railway infrastructure of Turkey
IV - Activities and projects of international organizations in the field of railways
V- Projects of DLH
a) The ones that will be tendered within 2006
b) The ones that will gain importance after 2006

Additional Comments on DLH projects that are expected to gain importance after 2006.

VI- Projects of TCDD

VII- Municipal Projects
   a) Istanbul Metropolitan Municipality
   b) Izmir Metropolitan Municipality
   c) Ankara Metropolitan Municipality
   d) Samsun
   e) Bursa
   f) Kocaeli
   g) Trabzon
   h) Gaziantep
   i) Konya
   j) Eskisehir
   k) Kayseri
   l) Mersin
   m) Antalya
   n) Adana
                                   Current status and summary
Turkey has not executed any serious railway investments since the 1950s. Most of the railway lines
were actually built between 1850 and 1950. Recently, Turkey has started to take up railway
investments again, although investment in roads and highways will not loose in importance (the
proportion of length of highways to population is still considered very low compared to the EU).
Therefore special attention will be given to railway projects in order to balance the modes of transport
and to support the development of combined transport.

At the moment, only 2% of passenger transport and 4% of cargo transport is done by railway lines in
Turkey. If all the railway projects covered by the period 2005-2008 are realized, it is forecasted that
there is a potential for the share of passenger transport by railway lines (excluding by private cars) to
increase to 45% and cargo transport to 25%.

Turkey recently took some revolutionary steps towards improving the railway sector. The private
sector was given the right to operate its own trains at TCDD rails last year. With this new practice, the
private sector is thought to bring dynamism to railway transportation, to increase competition and to
provide a better quality service. Approximately 25 private companies have received permission within
2005 and some have already started to give this service.

Turkey has made a 3 year budget programme covering the period of 2006-2008 but investment
programmes are announced on a yearly basis. Around 7% of the general budget or 2% of GNP will be
allocated to public investments in 2006. The High Planning Council has set the spending limits for
each institution taking into account the priority and the importance attached to these sectors. The
transportation sector will receive the largest share in 2006 with 30.9% or € 3.3 billion.

Turkish State Railways (TCDD) had requested € 1.4 billion to carry out its ongoing and new
investment projects but was only allocated one third. This means ongoing projects are given priority
and new projects remain relatively deprived of funds. On the other hand, the State Railways, Harbours
and Airports Construction General Directorate (DLH) received a € 312 million, and TCDD a € 507
million allocation, from the 2006 investment budget. These are the upper investment limits and thus
in total approximately € 819 million of this will be spent on railways in 2006. Meanwhile, the High
Planning Council agreed to take the necessary measures to provide additional funds for TCDD‘s
investments if needed during the year. Some of the privatization receipts from Turkish Telecom or the
TCDD ports are expected to be channelled to new TCDD investments.

Turkey also wants to apply to the EU for substantial heavy cost investment funding for some railway
project. Which railway projects will be given priority by the EU and therefore can be partly financed
by the EU pre-accession support fund (IPA), will be identified according to the results of the EU‘s
Transport Infrastructure Need Assesment Study – TINA (see earlier memo).

In the meantime, the EC has a specific programme for “Turkish Rail Sector Restructuring and
strengthening”. The objective is to organize the Turkish rail sector in accordance with the EU acquis.
Under this programme, which will be finalized towards the end of 2006, a Twinning Contract was
awarded to Germany and a Service Contract to Belgium. Also the World Bank intends to give support
and concentrates its efforts on increasing the efficiency of TCDD by separating asset ownership and
the operational parts.

Strategically, Turkey aims at becoming a logistical hub between Europe and the Balkans, Middle
East, Russia, C.I.S, Caucasia, Black Sea and Mediterranean countries. To this end the ―Transportation
Master Plan Strategy‖ of Turkey was finalized at the end of 2005 and the EU‘s Transportation
Infrastructure Need Assesment Study (TINA) will be completed towards the end of 2006. These will
provide the guidelines for Turkey to determine which combined transport corridors and which
infrastructural projects on these transport corridors (ports, highways, railways, airports) will be given
priority. Without doubt, railway projects are expected to play a significant role in the realization of
this strategic goal.

Developments in the light rail system projects of the Municipalities are in parallel with the railway
policies of the government. In order to combat the acute traffic problems in the cities due to the
expanding population/urbanisation, rapidly increasing car park and inadequate road infrastructure,
municipalities are developing many light rail system projects and compete with each other to secure
loans. German, French and Italian companies are known to be quite active in these projects. Dutch
companies are not yet participating in these projects.
                I- Organizational Structure and Developments in the Sector and TCCD

Railways in Turkey are state-owned and -operated for the time being. In principle, the investments for
the maintenance of the existing railways are done by the Turkish State Railways (TCDD) which is
affiliated to the Ministry of Transport. The construction of new railways is undertaken by the General
Directorate for the Construction of Railways, Harbours, and Airports (DLH) which is again under the
Ministry of Transport.

BO (Build-Operate) or BOT (Build-Operate-Transfer) methods are considered to be applied to new
rail projects to be undertaken by TCDD. Under these methods, the infrastructure of railway lines
needs to be provided by DLH and TCDD, which means that at least the ―expropriation‖ of land will
be done by these government organizations.

In the beginning of 2004, TCDD has decided not to carry the loads of the companies if they are less
than 500 tons and 20 wagons. In addition, TCDD accepted the load only if it would be carried
between two cities. Hence, only the State Economic Enterprises and very big companies could have
their goods carried by TCDD. Especially small and medium sized enterprises suffered a lot. SMEs
were forced to use road transport which was more costly. Mid-2004, some companies applied to
TCDD to be allowed to operate their own wagons at TCDD railways as they would be able to work at
a cheaper rate than the road transport companies.

Accordingly the private sector was given the right to operate its own trains at TCDD railway lines on
25 April 2005. With this new practice, the private sector is thought to bring dynamism to railway
transportation, to increase competition and to provide a better quality service.

Nowadays, third parties are only involved in cargo transportation and they find passenger
transportation not yet feasible. Within 9 months, 25 companies have obtained permission and carried
2.5 million tons of loads. TCDD carries 17 million tons of loads annually. According to TCDD,
existing railways have a capacity to carry 50 million tons of loads. This signifies that there is potential
for private companies to grow in this field. The private sector has 1.192 wagons for the time being.
Very big logistic companies like Omsan, Turkon, Erdemir and Firat Lojistik entered to this sector
first. However, there are smaller sized companies which give this service with 10 to 50 wagons, as
well. Reyser Lojistik with 127 wagons intends to procure 250 more wagons within 2006. Companies
buy wagons mainly from Bulgaria for an approximate price of 30.000 USD a piece.

TCDD used to own and manage all the ports which have a railway connection. Six of these ports were
included in the privatization programme in 2005: Bandırma, Izmir, Samsun, Derince, Mersin
(completed) and Iskenderun (completed) The operational rights of these ports will be transferred to
the private sector companies, which will be responsible from new investments, repair and
maintenance works. Revenues from privatization are transferred to the Treasury to be deposited in to
the TCDD‘s account for future use.



                II - Brief historic overview of the railway sector

a) The historic development of railways

The historic development of railways in Turkey can be categorised in three periods:

1) Before the establishment of the Republic of Turkey: During the Ottoman Empire period, the railway
lines were mainly built under concession agreements given to foreign countries, especially to
England, Germany and France. These concession agreements provided the right to excavate and
operate the mining resources within 20 km. to the railway lines. Therefore, the countries involved
concentrated their efforts to build railways for the purpose of facilitating the transportation of raw
materials to their countries. The first railway line was built by England between Izmir- Aydin in 1856.
France was involved in projects in the Northern part of Greece, Western and Southern parts of
Anatolia and Syria. England was active in Romania, Western Anatolia, Iraq and the Persian Gulf.
While Germany was busy in Thrace, Central Anatolia and Mesopotamia. Also, Sultan Abdulhamit
supported the construction of railways to connect Anatolia and the Persian Gulf around 1900 with
German assistance. In 1923 approximately 4.000 km. of railway lines remained within the national
borders of Turkey.

2) Between 1923-1950: 3.578 km of railways was constructed. The First and Second Five Year
Industrialization Plans of Turkey in the years of 1932 and 1936 had put emphasis on the development
of main industries like iron-steel, coal and machinery and their transportation in the cheapest way
possible. During this period, the strengthening of ―national economy‖ gained importance. Railways
were built firstly to reach the potential production centres and natural resources (like cotton, copper);
secondly to connect the production and consumption centres and to link them with ports and thirdly to
reach less developed centres for the purpose of spreading the economic development to these regions
as well. Railway lines have expanded from the Western parts to Central Anatolia, Eastern and
Southeastern regions in the 1930‘s. Currently, 46% lies in the west and 54 % lies in the eastern part.

3) After 1950: Turkey has put too much emphasis on the development of highways. Only 30 km. of
railway was constructed between 1950 and 1980. Between 1950 and 1997, the length of the highways
has increased by 80% whereas the railway lines have increased only by 11%.

b) The current status of railways and highways

An overview of railways in Turkey is shown in the attached table. The total length is 10.984
kilometres, of which 8.697 km are mainlines. Currently 21 % of the railways (2.305 km.) is
electrified, 24% (2.665 km) is signalized. The remaining lines are for non-electrified trains. At this
moment, only 2% of passenger transport and 4% of cargo transport is done by railways in Turkey.

Turkey has 62.000 km of state and provincial highways excluding village roads. Of this 4.187 km is
stabilized and/or has earth roads. Only 8.922 km of the network is suitable for heavy traffic although
90 % of the national cargo transportation is carried out via highways. The divided highway network is
still 8.937 km long; including motorways, approximately 3.000 km of divided highways was
constructed between 2003-2005.

                 III- Transport policies/studies and planned investment in railway infrastructure

Turkey aims at becoming a logistical hub between the Europe and the Balkans, Middle East, Russia,
C.I.S, Caucasia, Black Sea and Mediterranean countries. Many studies are carried out to determine its
own transport needs to achieve this goal.
In 2003, the preparation of a ―Transportation Master Plan‖ was included in the "Emergency
Action Plan" of the government. Then, the Istanbul Technical University (ITU) was asked to
prepare a ―Transportation Master Plan Strategy‖. This two year study was completed in
November 2005. The EU transportation master plan goals were taken into consideration in the
preparation of this study. This strategy paper pinpoints the priority investments in different
modes of transportation for Turkey, such as railways, highways, marine lines, airlines and
pipelines.

The transportation Master Plan Strategy states that Turkey lies on the transit route between
Europe and the Middle East and Central Asia, i.e. on the East – West axis. As far as railway
investments are concerned, Edirne-Istanbul- Ankara – Sivas route constitutes the spine of the
transportation system in Turkey.

Therefore, Ankara – Istanbul and Ankara – Sivas high speed railway lines are seen as the
priority investments. In the long run, the Ankara – Eskişehir line will play a key role in the
connection of Ankara to the Aegean Region and the Eskişehir – Istanbul line in the connection
of Istanbul to the Mediterranean Region and Antalya. Other priority investments include
Tekirdağ – Muratlı, Ankara – Konya, Adapazarı – Karadeniz Ereğlisi , Zonguldak –
Karadeniz Ereğlisi , Ankara – Afyon – Izmir , Isparta – Antalya and Trabzon – Tirebolu-
Diyarbakir lines.

In addition, the report states that the existing lines have to be supported by the following new
lines to ensure optimum network structure. 8 railway lines, two on the east-west axis, five on
the north-south axis and one secondary line have been identified to direct the network
structure.

    1) Western Border – Kars: Edirne- Istanbul- Kocaeli- Bilecik – Eskisehir – Ankara-
       Kirikkale- Kayseri – Sivas – Erzurum – Kars

    2) Izmir – Iran Border: Izmir – Manisa – Uşak – Afyon – Konya – Karaman – Niğde -
       Kayseri – Sivas-Malatya – Elazig- Mus – Van

    3) Adapazari – Antalya: Sakarya – Bilecik- Eskişehir – Kütahya – Afyon – Burdur –
       Antalya

    4) Zonguldak – Mersin: Zonguldak – Karabük- Çankırı – Ankara – Kırıkkale – Kayseri –
       Niğde – Içel

    5) Samsun – Iskenderun: Samsun- Amasya – Sivas- Malatya – Osmaniye – Hatay

    6) Trabzon – Iraqi Border: Trabzon- Gümüşhane – Erzincan – Tunceli- Elazığ-
       Diyarbakır- Mardin

    7) Bandırma – Izmir: Balıkesir – Manisa – izmir

    8) Izmir – Ankara: Izmir- Manisa – Uşak- Afyon – Ankara

Some of the above mentioned lines are already included in the investment programmes of
DLH and TCDD. Unfortunately, not all projects can be included in the investment
programmes of Turkey due to budget limitations. It is expected that the rest of the routes
which will be given priority and financial Support by the Turkish government and the EC will
be known more precisely in the beginning of 2007. (See chapters IV and V-VI)



         IV - Activities and projects of international organizations in the field of railways


The Representation of the European Commission to Turkey (EC) has initiated a project called
"Transport Infrastructure Need Assessment Study- TINA" which started in December 2005 (NEA
participates in the preparation of this study). It will highlight transportation infrastructure needs of
Turkey from the EU perspective. TINA will help to determine which combined transport corridors
and which infrastructural projects on these transport corridors (ports, highways, railways, airports)
will be given priority. The objective is to harmonize the transport infrastructure of Turkey with the
EU standards and eventually connect Turkey to Trans-European Transport Networks. The TINA
study will be completed towards the end of 2006. Later on, feasibility studies on possible
transportation projects will be carried out. Selected priority projects are expected to be partly financed
by the new instrument for EU pre-accession support (IPA), which will come into force in 2007. Given
that time table, the actual investments are expected to start in 2008 the earliest.

The EC has a specific programme for “Turkish Rail Sector Restructuring and strengthening”. The
objective is to organize the rail sector in accordance with the EU acquis. A Twinning contract,
covering the institutional strengthening and a supply and service component, was awarded to
Germany. This project started March 2005 and will be completed towards the end of 2006. The
Service Contract, covering technical assistance in the restructuring and strengthening of the Turkish
Rail sector including the provision of a Financial Management Information System together with the
necessary IT platform, has recently been awarded to Belgium in November 2005. The Service
contract will be finalized by the end of 2006.
The WORLD BANK has agreed to allocate a loan of USD 184,7 million for railway projects.
The agreement is expected to be signed in January 2006. The World Bank concentrates on two
projects:

    1) Modernization of Infrastructure Project: USD 115 million of the above mentioned
       amount will be spent on the signalization and telecommunication works for
       Bogazkopru (40 kms. to Kayseri) – Yenice and Mersin – Toprakkale railway lines. If
       this project is successfully implemented, a similar signalization and
       telecommunication project for Irmak- Karabuk- Zonguldak existing railway line will
       be taken into the scope of a next loan agreement.
    2) Restructuring Project of TCDD (Turkish State Railways): USD 65 million will be spared for
       this project. The World Bank intends to concentrate on increasing the efficiency of TCDD by
       separating the asset owners and the operation parts. There is already a Twinning Project,
       carried out by Germany for the institutional strengthening of TCDD and another service
       contract, carried out by Belgium, for increasing the efficiency of TCDD.

In the past also the Netherlands financed a pre-accession project focussed on management reform of
TCCD, focussed on the port of Izmir.

                                                  V- Projects of DLH

a) The following projects of DLH will in principle be tendered within 2006

    1) The feasibility and engineering projects for the following railway lines; in principle, these
       projects are limited in size but important in the sense that it gives an indication about future
       investments.
    a) Railway connections between certain provinces and industrial facilities and harbours
    b) Sivas – Erzincan- Erzurum—Kars

    2) Menemen – Aliağa Double Railway Line: An international tender is planned to be announced
       in the first half of 2006 for the superstructure construction works of this line. This line will
       enable the transportation of many export goods produced in this organized zone to Aliaga-
       Nemrut and Izmir Harbours via the national railway network and from there to Europe.

    3) The construction of Kemalpasa Organized Industrial Zone Railway Connection Line
       (Izmir): It is 27 kms. The tender announcement will be done in the first quarter of
       2006.
   4) The construction of Tekirdag – Muratli Railway Project (33 kms.): The consultancy
      and engineering services are being carried out by a group of Turkish companies
      (Botek-Mega–Aksa consortium). A tender for the construction of this line will be
      announced within the first half of 2006. This is an important project and this railway
      line will eventually be connected to an important harbour (Akport). This project will
      be continued with the Muratli – Buyukkaristiran Railway project (17 kms).

   5) Gebze-Haydarpasa, Sirkeci-Halkali Suburban Railway Project (MARMARAY): The
      MARMARAY project was planned to be finalized and taken into operation by 2009.
      Marmaray is a three stage project:
                i. First stage: The construction of a sub-merged tunnel under the
                    Bosphorus to connect Europe with Asia. Turkey has entered into a
                    bilateral finance agreement with Japan (JBIC). On 9 May 2004, the
                    Prime Minister Tayyip Erdogan laid the foundation of the tube tunnel.
                    First stage is being done by Taisei- Gama consortium.
               ii. Second stage: Construction of the Gebze-Haydarpasa, Sirkeci-Halkali
                    Commuter Lines: The agreement on € 450 million which is the second
                    and last portion of the project loan provided by EIB for the financing of
                    the turn-key tender for the construction of the commuter lines was
                    signed by the Undersecretariat of Treasury and EIB on 9 December
                    2005. DLH has already invited five consortia to offer bids for these
                    commuter lines and their bids will be received on 15 February 2006.
              iii. Third stage: 450 wagons and rolling stock in the amount of USD 1
                    billion will be procured. This project is included in the 2006 Investment
                    Programme in the category of ―symbolic fund‖. In case financing is
                    secured through EIB or domestic resources (like privatization receipts),
                    an investment fund can be allocated for the project upon a decision by
                    the Council of Ministers. Due the importance attached to this project, a
                    tender is expected towards the end of 2006.
b) Projects expected to gain importance after 2006 (by priority):

   1) Kars - Tbilisi Railway Project: In line with Turkey‘s intension to revitalize the
      ―Historical Silk Road‖, a MoU with Georgia was signed for the realization of this
      railway line in 1993. The length of the railway line will be 104 km, 76 km in Turkey
      (USD 200 million) and 28 km in Georgia (USD 52 million). In addition, 160 km of the
      existing railways between Ahalkelek-Marabda needs to be renovated (USD 150
      million). Eventually, this will be a part of the 2.000 km long Trans-Asian Railway
      Project that will connect Asia to Caucasus. A feasibility study of this project is
      expected to be finalized in January 2006. In February 2006, Georgia, Azerbaijan and
      Turkey are expected to discuss how the project will be constructed and financed.

   2) Ankara-Kirikkale-Yozgat-Sivas Railway Project(470 km): Feasibility project is
      expected to be finalized in February 2006. This will be a high-speed railway project
      (250 km/hr). The project value is estimated to be around USD 1.3 billion. It is highly
      likely that the construction will start in 2007.

   3) Istanbul (Halkali) – Cerkezkoy – Bulgarian Border (Kapikule) Railway Project (253
      km): Engineering studies are being prepared and will be ready by the end of 2006.
        This is a high-speed railway project (250 km/hr) with an estimated cost of USD 600
        million. This project might be given support by the EC and could be taken up in the
        2008 investment programme.

    4) Ankara-Polatli-Afyon-Usak-Izmir Railway Project (600km): Feasibility and
       engineering studies are expected to be finalized in February 2006. This project is
       valued at USD 1.6 billion.

    5) Bursa - Bandirma Railway Project (88 km): Project is included in the 2006 investment
       programme but only with a symbolic amount. No green light was given since 2002.
       DLH considers transferring the execution of this project to TCDD who can have it
       build under a BOT model or under a public-private partnership.
    6) Southeastern Anatolia Railway Project (GAP): The feasibility study for the Narli-
       Toprakkale (Komurler – Osmaniye) railway lines and Nizip- Birecik-Sanliurfa railway
       lines were completed. However, DLH thinks that it is highly unlikely for these lines to
       be taken into the investment programme in the short term.
Additional Comments on DLH projects that are expected to gain importance after 2006.
Ankara –Sivas Railway Line and Istanbul (Halkali) – Kapikule (Bulgarian Border)Railway
Line are accepted as the longer term priority projects by the High Level Working Group of the Wider
European Transport Process of the EU. They both fall on the main international transport corridors
determined by the EU to extend the EU‘s Transport networks to Russia, CIS, Balkans, Mediterranean,
Black Sea and neighbouring countries. Therefore, it is expected that at least one of these projects will
be partly financed by IPA funds in 2007, taking into consideration the TINA study. Turkey also
attaches importance to the Ankara – Izmir Railway Project, which is NOT on the main international
transport corridors according to the EU. Therefore, Turkey will have to find alternative financing.

Kars-Tbilisi Railway Project is a parallel project to the EU‘s TRACECA Study which is an East –
West transport corridor to connect CIS countries to Europe over Caucasia and/or Black Sea. It is an
extension of the main international transport corridor from Kapikule to Kars known as the ‗IV.
Corridor‘ by the EU. With the realization of Kars- Tbilisi railway connections and the Bosphorus
Tube Tunnel Projects (MARMARAY), Caucasia will be connected to Greece and the Trans-European
Transport Networks by railway lines without any interruption. As a part of the Silk Road between the
Atlantic Ocean and the Pacific Ocean already Japanese, Chinese and Indian companies have shown
interest in this project. The governments of these countries are also expected to provide loans with
favourable conditions as the project could support the Asian countries in developing trade links with
the Caucasus. Later this line will be connected to Izmir (Aegean Coast) and Mersin Port
(Mediterranean).

                                        VI - Projects of TCDD in 2006-2008

TCDD received a € 507 million allocation from the 2006 investment budget which is the upper
investment limit, although TCDD requested € 1,4 billion to carry out its investments. The High
Planning Council agreed to take necessary measures to provide additional funds for TCDD‘s
investments if needed during the year. Some of the privatization receipts (for example from TCCD
ports) can be transferred to TCDD investments.

Around € 240 million of the TCDD budget will be spent on the Ankara – Istanbul Railway
Rehabilitation Project, € 120 million on the procurement of locomotives and carriages, € 50 million
on railway renewal works and € 20 million on the Mersin – Adana- Toprakkale Signalization Project.
Some of the major projects of TCDD are as follows:

    1) Ankara - Istanbul Railway Rehabilitation Project (Ankara – Istanbul High Speed
       Railway Project): The first stage of this project covers the Esenkent – Eskisehir
       section (206 km), while the second stage covers the Kosekoy- Vezirhan and Verzirhan
       –Inonu sections. The third stage covers the Köseköy – Gebze section and this will be
       tendered in the second half of 2006. Also, TCDD is preparing an international tender
       for the procurement of 80 electrical locomotives to be used on this railway line.
       The first stage is carried out by the Alsim – Alarko and OHL (Spanish) consortium and
       is expected to be completed by 2006 and the second stage was awarded to CRCC-
       CMC-Cengiz Insaat- Ictas Insaat consortium and will be finalised by 2008. Ten sets of
       high speed trains will be procured from the Spanish company CAF.

    2) Ankara – Konya High Speed Railway Project: It is expected to be finalized within two
       years. With this project, the travel time will be decreased to 1.15 hours (now around
       10 hours by train). The project consists of three stages:
           i)     First stage is the construction of infrastructure for an estimated value of
                  USD 130 million. A tender was opened and more than 40 bids were
                  received on 15 December 2005.
           ii)    Second stage consists of a tender for superstructure works, mainly for
                  signalization and electrification works in the amount of USD 280 million.
                  Tender will be announced in the beginning of 2006. There is a possibility
                  that it will be done on a BOT basis.
           iii)   Third stage will be the procurement of 6 high speed trains for an estimated
                  value of USD 128 million.

    3) Mersin- Adana- Toprakkale Signalization Project. TCDD has allocated € 20 million,
       while approximately USD 115 million has been reserved by the World Bank. As soon
       as the WB approves this loan, an international tender will be opened.

    4) Bursa – Osmaneli (Bandirma) Railway project: Currently being discussed between
       TCDD and DLH. Most likely this project will be carried out by TCDD and it might be
       tendered on BOT basis. The approval of State Planning Organization is awaited.

    5) Menderes – Aliaga Double Track Railway Project: see under Chapter VI/bI- municipal
       projects in Izmir.

                                          VII - Municipal projects/light rail

Many municipalities are competing with each other to secure loans to initiate and/or finalize their
light rail system projects. The light rail system projects of the municipalities have to be approved by
the Ministry of Transport. So far, Ankara, Istanbul, Konya, Eskişehir and Antalya were able to put
(some parts of) their light rail systems into operation. Below is a list of the major activities and
possible upcoming system projects of some major municipalities.

a) Istanbul Municipality

Istanbul currently has 120 km of railways, of which ‗TCDD suburban lines‘ constitute 70 km. The
remaining 50km has been completed by the metropolitan municipality and its affiliated companies
(IETT and Ulasim A.S.). Faced by expanding population/urbanisation, rapidly increasing car park and
inadequate road infrastructure, the municipality has decided to put special emphasis on railway
projects. Therefore, the municipality dedicated more than half of its € 2 billion annual budget in the
years 2005 and 2006 to investments in road and railway infrastructure, purchasing new equipment and
new vehicles.

The metropolitan municipality is planning to add 200 km of new lines to the existing network by the
year 2012. The municipality intends to implement these costly new investments under BOT model. In
order to attract private capital to the low-margin transportation business, the municipality intends to
award successful bidders in project tenders with pieces of land, on which they will be authorized to
operate shopping and transfer centres in addition to the railway line.

Until now, the municipality has relied solely on its own funds and hired consortia of contracting
companies for new projects. Companies like Yapi Merkezi, Dogus Insaat, Yuksel Insaat, Yenigun
Insaat, Bimas and Gulermak are the leading contractors that have been involved. Officials have
informed us that foreign companies can also participate in their tenders and added that companies
from EU countries, such as Italy, France and Germany have shown interest in previous tenders.

Currently there are 4 lines operating within the city and the following 9 large scale projects are under
construction with an allocated total budget of roughly €350 million in 2006:

1- Kadikoy-Kartal Metro: 22 km long, 15 stations, 35,000 passenger capacity.
2- Otogar-Bagcilar Rail System: 4.4 km long, 4 stations, 12,000 passenger capacity.
3- 4. Levent-Ayazaga Metro: 4.25 km long, 3 stations, 70,000 passenger capacity. This line will cost
approximately 100 million USD.
4- Zeytinburnu-Gungoren-Bagcilar Street Tramcar: 5.9 km long, 9 stations, 15,000 passenger
capacity.
5- Taksim-Kabatas Funicular System: 640 m long, 2 stations, 7,500 passenger capacity.
6- Taksim-Unkapani Metro: 2.6 km long, 2 stations, 70,000 passenger capacity.
7- Unkapani-Yenikapi Metro: 2.6 km long, 2 stations, 70,000 passenger capacity.
8- Aksaray-Yenikapi Metro: 700 m long, 35,000 passenger capacity.
9- Edirnekapi-Sultanciftligi Tramcar: 12 km long, 17 stations, 15,000 passenger capacity.

The following projects are being prepared and BOT tenders are underway:

1- Bakirkoy-Kuçukcekmece-Avcilar-Beylikduzu Light Metro Line
2- Uskudar-Altunizade-Umraniye-Dudullu-Samandira Light Metro Line
3- Yenikapi-Bagcilar Metro Line
4- Bagcilar-Mahmutbey-İkitelli-Olympic Village Metro Line
5- Besiktas-Sisli-Otogar Metro
6- Sefakoy-İkitelli-ISTOC Air-Rail Line
7- Golden Horn (Halic) and Environs Tramcar Line

The ongoing Marmaray project of the ministry of transport is projected to integrate the above
mentioned projects on either side of Istanbul in the year 2010. Moreover, the municipality is
considering plans to integrate all its subdivisions in railroad transport under one entity and also
privatizing the operational rights of some of its existing lines in the future. Also, Ulasim A.S. is
developing in-house knowledge to build tram and metro vehicles, with which it aims to replace
imported tram and metro cars in the coming years.

Important Addresses:
- Ulasim A.S.: www.istanbul-ulasim.com.tr, (Tel:+90212 5689970-3370. Mr. Metin Yazar, Proje
Muduru)
- IETT www.iett.gov.tr (Tel: +90 212 245 07 20. Mr. Dogan Kara, Rayli Sistemler Tasima Daire Bsk.
Yrd.)

b) Izmir Metropolitan Municipality:

The railway and light rail system projects in Izmir are as follows:

1- Üçyol- Üçkuyular Light Rail System: length 5.5 km. The construction started in June 2005 and will
be completed within two years. Later on, this line will be extended from Üçkuyular to 9 September
Hospital. Also, studies are continuing to have Buca, Bornova bus station to be connected to the city
center. The municipality carries this project with its own funds.

2-Menderes – Aliaga Double Track Railway Project: This is the first project which TCDD and
a municipality agree to co-operate. It started in early 2003. It was going to be finalized within
36 months. However, the line has not yet been taken into operation.

The aim of the project is to upgrade the TCDD commuter lines to the level of metro lines and
operate them like a metro line. The total cost of the project was estimated to be USD 300
million of which USD 165 million would be used for the procurement of wagons. The first
phase of the project covering civil works was completed by DHL. DHL transferred this
project to TCDD for superstructures. TCDD has installed all the signalization and
electrification works of the line. However, it could not be taken into operation due to the fact
that Izmir Municipality failed to provide the wagons. Finally, in March 2005 Izmir and the
Ministry of Transport on behalf of TCDD have signed an agreement to establish a joint board
for the operation of this line. Accordingly, a new company to be established will be
responsible for the completion of this project.

c) Ankara Metropolitan Municipality:

Ankara is constructing three light rail system lines of 40 km length. Batıkent – Sincan (by Güriş) ;
Kızılay – Çayyolu (by Güriş-Aktürk); Tandoğan – Keçiören ( by Limak- Türkerler). The Municipality
finances this construction with own funds. The next stage is the electromechanical and signalization
works. The estimated cost of the second phase is around USD 1 billion and the Municipality is trying
to secure loans with Treasury guarantee. As soon as an agreement is reached, an international tender
will be announced. Other new lines or extensions can only be taken into account after the above
mentioned three lines are completed. Indeed, Ankara has many potential projects of 100-150 km
lenght.

d) Samsun Metropolitan Municipality:

Samsun Light Rail System Metro Transportation System Project has three stages.
First Stage: City Center – 19 May University - 16 km. long. Estimated budget is USD 156 million (€
130 million). All the feasibility studies have been completed and approvals from the relevant Turkish
authorities are available. Now, negotiations are continuing to find funds from international banks with
a Treasury guarantee. In principle, it is agreed that EIB will finance 50%, the European Council
Development Bank will finance 35% and the Municipality will finance 15% of the project. As soon as
the Treasury agrees and an agreement is signed between these financial groups, a consultancy tender
is expected to be opened (2006), a construction tender will probably be opened towards the end of
2006.
Second stage: Tekkekoy- Samsun
Third Stage: Mert River corridor
Combined with the second and the third stage, the line will reach 28 km. The total project cost will be
USD 345 million.

e) Bursa Municipality is planning to expand its 17 km light rail system to 55 km. The consortium of
Siemens, Tekfen and TUVASAS will complete a new line in 2007 with a € 55 million loan secured
from the EIB. Bursa municipality recently applied to the (SPO) State Planning Organization for the
approval of another rail line project, which will start in year 2007 with a foreseen budget of € 65
million. The turnkey tender for this new project will be announced this year. Contact:
(www.bursaray.com.tr, Ms. Yurdanur Balci, Transportation Director, Tel: +90 224 225 42 80)

f) Kocaeli Municipality has recently set up plans to build a 6 km light rail system with a predicted
budget of USD 25 million. The municipality is still working on the concept plan with the assistance of
its agent, Yuksel Proje. Yuksel Proje (www.yukselproje.com.tr, Mr. Ismail H. Acar, Project Manager,
Tel: +90 262 331 25 88)

g) Trabzon Light Rail System Project: a 9.5 km long project with an estimated cost of USD 200
million. A Canadian company has done the feasibility studies. However, DLH has asked for a review.
The project seems to have come to a deadlock at this stage.

h) Gaziantep Light Rail System Project is part of a recent transportation master plan study which is
not yet finalised.

i) Konya has a 20 km long light rail system which was built by Siemens. Konya is considering new
projects starting from 2007. In addition, Konya has recently seen a vehicle invented by VDL
(Eindhoven) and APTS (Advanced Public Transport Systems) which could be used as an alternative
to light rail systems. They are in the process of evaluating this.

j) Eskişehir Light Rail System was taken into operation last year. It was done by the Yapi Merkezi-
Bombardier consortium.

k) Kayseri Light Rail System Project is being executed by Yapi Merkezi and Ansaldobreda (Italy).

l) Mersin has completed the feasibility studies of its light rail system project. However, SPO did not
accept to include it in the investment programme last year due to the fact that the population of
Mersin is below 1 million. Within 2006, Mersin will re-apply to SPO to have this project included in
the next investment programme. It will be a 40 km long line between the eastern and western areas of
Mersin.

m) Antalya is carrying out the feasibility and engineering projects of a new light rail system project
of 10,5 km. Antalya wants to have it included in the next investment programme.

n) Adana has signed a turn-key construction contract with Adtranz- Alarko in 1996 with a financing
of USD 342 million obtained in 1997. Construction has started in 1999.
                                                    CURRENT SITUATION:

                     Length of lines
                     Main Lines                                                         8697 km

                     Sub-lines (station lines, connections to factories etc..)          2287 km

                     TOTAL                                                              10984 km



                             Electrified                    2305 km (% 21)
                             Signalled                      2665 km (% 24)
                             Mainlines with double ways     403 km (% 4)
                             Mainlines with three ways      28 km (‰ 3)
                             Mainlines with four ways       9 km (‰ 1)


        ALL THE RAILWAYLINES BUILT BEFORE THE ESTABLISHMENT OF THE REPUBLIC OF
                     TURKEY AND WHICH ARE CURRENTLY BEING USED

Route                                                                    Year of operation         Lenght (m)

İZMİR-AYDIN RAILWAY

Şirinyer-Buca                                                                    1860                2.452
İzmir-Sütlaç                                                                     1860               356.505
Torbalı-Tire                                                                     1883               47.541
Gaziemir-Seydiköy                                                                1886                1.088
Alaşehir-Uşak                                                                    1887               117.810
Çatal-Ödemiş (Şehir)                                                             1888               26.452
Goncalı-Denizli                                                                  1889                9.430
Sütlaç-Çivril                                                                    1889               30.224
Ortaklar-Söke                                                                    1890               22.012
Sütlaç-Eğridir                                                                   1912               113.795

İZMİR-TURGUTLU RAILWAY

Basmane-Menemen                                                                  1865               31.680
Halkapınar-Bornova                                                               1865                4.878
Menemen-Manisa-Turgutlu                                                          1865               61.500
Turgutlu-Alaşehir                                                                1875               75.790
Uşak-Afyon                                                                       1890               134.946
Manisa-Kırkağaç                                                                  1890               80.853
Kırkağaç–Bandırma                                                                1912               195.244

Eastern RAILWAYS

Sirkeci-Yenikapı                                                                 1872                4.756
Yenikapı-Florya                                                                  1871               16.372
Florya-Hadımköy                                                                  1872               30.325
Hadımköy-Çatalca                                                                 1873               19.610
Çatalca-Hudut                                                                    1873               209.899
Karaağaç-Hudut                                                                   1873                7.137
Mandıra-Kırklareli                                                               1912               45.594

ANADOLU DEMİRYOLLARI (Anatolian Railways)

Haydarpaşa-Feneryolu                                                             1872                5.088
Feneryolu-Pendik                                                                 1872                21.162
Pendik-Gebze                                                                     1873                19.681
Gebze-İzmit                                                                      1873                47.096
İzmit-Büyükderbent                                                               1890                18.312
Büyükderbent-Mekece                                                              1891                71.709
Mekece-Vezirhan                                                                  1891                32.831
Vezirhan –İnönü                                                                  1892                65.980
İnönü-Ağapınar                                                                   1892                55.823
Ağapınar-Yalınlı                                                                 1892                54.954
Yalınlı-Sazılar                                                                  1892                61.902
Sazılar-Beylikköprü                                                              1892                14.317
Beylikköprü-Ankara                                                      1892                   109.516
Eskişehir-Kütahya                                                       1894                   76.984
Alayunt-Çöğürler                                                        1895                   19.631
Çöğürler-Afyon                                                          1895                   74.615
Afyon-Akşehir                                                           1895                   98.128
Akşehir-Ilgın                                                           1896                   57.641
Ilgın-Konya                                                             1896                   116.796
Arifiye-Adapazarı                                                       1899                    8.491

BAĞDAT DEMİRYOLLARI (Bagdat Railways)

Konya-Bulgurlu                                                          1904                   198.892
Bulgurlu-Ulukışla                                                       1911                   38.733
Ulukışla-Durak                                                          1912                   90.469
Durak-Yenice                                                            1912                   17.915

CENUP DEMİRYOLLARI (Southern Railways)

Fevzipaşa-Meydanıekbez                                                  1912                   35.411
Hudut-Çobanköy-Nusaybin                                                 1917                   382.106
Derbesiye-Mardin                                                        1917                   24.340
Toprakkale-İskenderun                                                   1912                   59.220

MERSİN-TARSUS-ADANA Railways

Mersin-Yenice                                                           1882                   43.209
Yenice-Adana (şehir)                                                    1886                   23.949

SARIKAMIŞ-KARS-Border Railways

Sarıkamış-Kars-Hudut                                       1913
(geniş hat olup, normala hatta dönüştürüldü)

Total Mainlines Before the Republic                        3.714.280

Total Sub-lines before the Republic                        844.995

General Total before the Republic                          4.558.995




  Narrow Lines which were built before the Republic but removed after the Republic

                          Mudanya – Bursa         41.110 m
                          Ilıca-Palamutluk        28.391 m
                          Samsun-Çarşamba         39.465 m
                          Maden-Sarıkamış         231.940 m
                          Toplam                  340. 906 m

                                      The Lines Built after the Republic (1923)

           Route                                               Year of operation   Length (m)

           Ankara-Yahşihan                                           1925            85.360
           Yahşihan –Yerköy                                          1925            118.109
           Samsun-Kavak                                              1926            47.553
           Yerköy-Kayseri                                            1927            176.471
           Kavak- Havza                                              1927            38. 489
           Havza-Kayabaşı                                            1927            59.825
           Kayabaşı – Zile                                           1928            69.256
           Kütahya-Emirler                                           1929            63.812
           Fevzipaşa-Gölbaşı                                         1929            137.800
           Kayseri-İhsanlı                                           1930            110.832
           Emirler – Balıköy                                         1930            36.063
           Zile – Kunduz                                             1930            69.889
           İhsanlı – Sivas                                           1930            111.589
           Gölbaşı- Doğanşehir                                       1930            56.014
           Irmak – Çankırı                                           1931            102.255
           Doğanşehir-Malatya                                        1931            56.745
           Malatya-Fırat                                             1932            32.531
           Balıköy – Balıkesir                                       1932            152.665
Kunduz – Kalın                          1932   92.750
Kardeşgediği- Bor                       1932   45.360
Bor – Boğazköprü                        1933   126.453
Fırat-Yolçatı-Elazığ                    1934   86.244
Çandır – Atkaracalar                    1934   86.158
Yolçatı- Maden                          1935   75.950
Narlı – Gaziantep                       1935   84.077
Atkaracalar – Ortaköy                   1935   56.101
Maden – Diyarbakır                      1935   82.670
Sivas – Eskiköy                         1935   63.481
Adana Gar – Şehir                       1936    2.969
Ortaköy-Bolkuş                          1936   60.115
Malatya-Yazıhan                         1936   33.230
Bolkuş-Hisarönü                         1936   85.638
Eskiköy-Çetinkaya                       1936   47.935
Yazıhan-Hekimhan                        1936   36.960
Hisarönü-Çatalağzı                      1936   14.684
Bozanönü – Isparta                      1936   13.360
Gümüşgün-Burdur                         1936   23.892
Afyon-Karakuyu                          1936   112.400
Çetinkaya-Divriği                       1937   64.847
Hekimhan-Çetinkaya                      1937   69.586
Çatalağzı-Zonguldak                     1937   10.249
Divriği-Erzincan                        1938   155.570
Erzincan-Erzurum                        1939   214.857
Diyarbakır-Bismil                       1940   47.382
Hadımköy-Kurukavak                      1941   10.936
Bismil-Sinan                            1942   28.424
Sinan-Batman                            1943   14.726
Batman- Kurtalan                        1944   68.818
Tavşanlı-Tunçbilek                      1944   13.373
Malatya- Malatya Şehir                  1944    2.964
Zonguldak – Kozlu                       1945    4.279
Elazığ-Palu                             1946   69.947
Palu-Genç                               1947   62.741
Köprüağzı- K. Maraş                     1948   27.903
Erzurum-Horasan                         1949   85.361
Sirkeci – Halkalı ( 2.hat)              1949   27.574
Haydarpaşa –Gebze ( 2.hat)              1949   44.175
Horasan – Sarıkamış                     1951   71.508
Uzunahmetler-Yekabat                    1949   32.716
Yekabat-Rusya sınırı                    1951   229.003
Narlı-Gaziantep                         1953   84.077
Kozlu-Ereğli-Armutçuk                   1953   15.559
Genç – Muş                              1955   108.419
Yenidoğan-Temelli Varyantı              1957    1.415
Çardakbaşı-Beylikahır Varyantı          1957    3.316
Esentkent-Sincan Varyantı ( 1. kısım)   1957    2.575
Beylikahır-Yalınlı Varyantı             1957    4.531
Esenkent – Sincan Varyantı (2.kısım)    1957    2.396
Gaziantep – Karkamış                    1960   90.857
Sarıkamış –Kars                         1961   59.284
Etimesgut-Behiçbey Varyantı             1961    6.124
Kars-Rus Hududu ( Köprü)                1962   64.199
Kütahya-Seyitömer                       1962   26.512
Esentkent-Sincan Varyantı ( 3.kısım)    1963    3.056
Muş-Tatvan                              1964   93.984
Esenkent-Sincan Varyantı ( 4.kısım)     1965    3.239
İğciler – Polatlı Varyantı              1965    0.692
Gazi-Ankara Varyantı                    1965    0.544
Esenkent –Malıköy Varyantı              1966    1.440
Karapınar-Yenidoğan Varyantı            1968   12.000
Sincan – Kayaş ( 2. hat)                1970   36.323
Sapanca –Arifiye Varyantı               1970    6.304
Pehlivanköy – Edirne- Bulgar Hududu     1971   67.852
Van –İran Hududu ( Kotur)               1971   116.691
Tahtaköprü Varyantı                     1972   21.000
Halkalı-Ispartakule Varyantı            1972    9.440
Sazak –Biçer Varyantı                   1972   13.958
Keban Varyantı                          1973   47.000
Sazılar – Biçer Varyantı                1973   12.802
Ispartakule –Ömer Varyantı              1973    8.055
Yalınlı –Yunusemre Varyantı             1974   12.438
Yunusemre –Sazak Varyantı               1974    3.045
İlören –Sazılar Kurp Tashihi            1974    1.035
Biçer –İlören Varyantı                  1974    9.231
        Gebze- Arifiye (2.hat)                                  1975   79.752
        Ankara-Gazi ( 3.hat)                                    1977   5.015
        Ömerli –Çatalca Varyantı                                1980   15.509
        Sinekli-Çerkezköy Varyantı                              1980   10.303
        Samsun-Çarşamba                                         1980   38.500
        Keban Varyantı II                                       1982   9.683
        Samsun-Gelemen                                          1983   13.000
        Ankara-Behiçbey ( 4.yol)                                1984   8.665
        Yapı-Sivas ( 2. hat)                                    1984   7.000
        Basmane – Çiğli ( 2.hat)                                1984   17.141
        Bozüyük – İnönü Varyantı (1. kısım)                     1985   5.161
        Kardeşgediği –Ulukışla Varyantı                         1985   3.317
        Yazıhan –Dilek Varyantı                                 1986   8.000
        Eskimalatya –Bekir Hüseyin Varyantı                     1986   24.500
        Meydan –Bozdağ Varyantı ( 1.kısım)                      1985   4.716
        Yenice -İncirlik ( 2.hat)                               1987   39.268
        Hanlı-Bostankaya                                        1994   44.000
        Çiğli –Menemen ( 2.hat)                                 1995   15.000
        Menemen-Aliağa                                          1995   26.000
        Mersin-Yenice                                           1995   42.000
        Eskişehir-İnönü                                         1996   31.000
        Şirinyer-Cumaovası 2. hat                               1996   15.000
        İzmit-Köseköy                                           1998   31.000

Source: TCDD General Directorate, Reseach and Planning Department

								
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