The UK government’s UK Export Finance (UKEF) agency has partnered with a range of credit providers to secure €1.2bn (£1bn) in financing for a 140km electrified high-speed rail project in Türkiye.
The project will be delivered by a joint venture between Turkish contractors Doğuş İnşaat, Çelikler and Özkar. This JV was also the main contractor on the recently opened Ankara-Sivas high speed railway in Türkiye.
MUFG (Mitsubishi UFJ Financial Group) is the sole Mandated Lead Arranger. MUFG is a Japanese financial services company headquartered in Tokyo and is the country’s largest bank.
The government said the financing would enable Türkiye, the country which changed its name from Turkey in 2022, to build a new high-speed electric railway on the Yerköy-Kayseri route in the Ankara region.
UKEF guaranteed the ECA facility, with Italian (SACE), Polish (KUKE) and Austrian (OeKB) state counterparts providing reinsurance. The Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) provided insurance to several of the commercial lenders.
The UK Government said that the new railway line would help Türkiye to expand its “low-carbon rail network, reduce road congestion and cut net emissions on the Yerköy-Kayseri route by over 6,500t of CO2e per year.”
It also said it hoped the new route would “support regional economic growth by increasing regional passenger and freight rail capacity around Turkey’s capital region.”
The €1.2bn deal allows Turkey’s Ministry of Transport and Infrastructure – acting through the General Directorate of Infrastructural Investment (AYGM) – to develop 140km of electric railway between Yerköy and Kayseri.
The project will be delivered by a joint venture between Turkish contractors Doğuş İnşaat, Çelikler and Özkar. Doğuş, Çelikler and Özkar were also main contractors for the newly opened Ankara-Sivas High Speed Railway.
This is the third high-speed railway project which UKEF, SACE and OeKB have jointly backed in Turkey, helping to lay more than 900km of track. Most recently, a €781M (£680M) loan, via UKEF, was committed to fund the Mersin-Adana-Gaziantep High Speed Railway in southern Türkiye in July.
UK business and trade secretary Kemi Badenoch said: “I’m delighted to be in Turkey ahead of talks to upgrade our existing trade deal to make it fit for the 21st century.
“With its major economy and strategic position, Turkey presents huge opportunities for UK businesses. And I’m excited to start discussions on ensuring our new trading relationship with Turkey unlocks those opportunities.”
Doguş Çelikler Özkar JV chairman of the board Tolga Akkaş said: “We are honoured to be entrusted as the main contractor for the Yerköy-Kayseri High-Speed Railway project, advancing the sustainable rail infrastructure in Türkiye.
“As one of the contractors for the Ankara-Sivas High-Speed Railway project, inaugurated in April 2023, we are eager to bring our expertise to the Yerköy-Kayseri route. The adoption of high-speed rail technology inherently leads to a more energy-efficient and eco-friendly mode of transportation compared to traditional alternatives.
“This project features not only a significant stride in Türkiye’s railway network but also connecting communities, driving economic prosperity, and fostering sustainable development.
“This impactful transaction is made possible through the collaborative efforts of esteemed partners such as UK Export Finance and MUFG. We express our sincere gratitude for their unwavering commitment to supporting initiatives that contribute to the sustainable development of countries.”
Vice President of the British Exporters Association (BExA), Marcus Dolman, said: “This deal demonstrates continued support for the development of the Turkish rail network. The UKEF guarantee offers a huge boost to UK exporters looking to increase, or start, their export portfolio under a secure umbrella.
“Deals of this type are essential to increase the UK supply chains of large overseas contractors. BExA congratulates UKEF on this transaction and their continued support for UK exports.”
The financing package comprises a €1.027bn (£884M) loan guaranteed by ECAs and a separate €220M (£189.5M) commercial loan facility supported in part by the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC). MUFG was appointed the sole mandated lead arranger, coordinator, structurer and agent bank by the Turkish Ministry of Treasury and Finance.
The government said that the UKEF “is an export credit agency operating at no net cost to the UK taxpayer. Its involvement secures substantial opportunities for UK firms, which are expected to supply steel, pipes and other equipment.”
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