27309 - Istanbul Kadikoy-Kartal Metro

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Summary of Proposed Investment

Project Number

27309

Company Name

METROPOLITAN MUNICIPALITY OF ISTANBUL

Date SPI Disclosed

Aug 6, 2008

Country

Turkiye

Industry

Infrastructure

Projected Board Date

Sep 11, 2008

Status

Completed

Sector

Transit and Ground Passenger Transporation

Department

Gbl Infrastructure & Natural Resources

Environmental Category

B - Limited

Previous Events

Approved : Sep 11, 2008
Signed : Sep 25, 2008
Invested : Jul 3, 2009

Project Description

The proposed transaction is a EUR 50 million senior loan to Metropolitan Municipality of Istanbul (MMI) in Turkey to help finance a EUR 751 million investment for construction of the 22 km long Kadikoy-Kartal metro rail line on the Anatolian (Asian) side of Istanbul, including 16 metro stations. The project will help reduce travel times and improve mobility along one of the most congested traffic corridors on the Anatolian side of Istanbul by providing a clean, safe and efficient mode of public transit.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	78.33
Equity

Development Impact

The project and other ongoing investments to extend the city’s mass transit network will help make Istanbul a more attractive business location and improve the living standards of its population. By extending coverage of an efficient mode of public transit to the Asian side of the city, the project will help improve overall urban mobility, reduce travel times, expand the labor market, improve access to essential social services and improve the functioning of land markets, thereby contributing to increased urban productivity, economic growth and private sector development. By extending coverage of a clean and safe mode of public transit, the project will reduce dependence on road-based transport/ fossil fuels and contribute to climate change mitigation – helping reduce growth of transport related greenhouse gas emissions. It will also contribute to improved public health outcomes through cleaner air quality and improved road safety (fewer fatalities and injuries) along the project corridor.

The project also presents an opportunity to help MMI move towards greater reliance on market-based financing for its large infrastructure investment programs, enabling the national government to free up scarce concessional resources and sovereign-guaranteed borrowing to meet the investment needs of less creditworthy municipalities.

IFC supports Turkey’s economic program through its active involvement in the main sectors of the economy. The project will help improve competitiveness, employment opportunities and the efficient provision of high quality public transport services in Istanbul which accounts for about a quarter of the national economy.

Istanbul needs to undertake large investments in urban mass transit over the medium term to sustain economic growth, private sector development and meet the demands of a rapidly increasing urban population. These cannot be financed solely by reliance on central transfers, limited concessional financing and sovereign guaranteed multilateral debt. The municipality needs to increasingly access market-based financing. However, commercial lender appetite is limited in the current global credit environment. IFC’s participation in the proposed investment will help:

- fill a financing gap and achieve financial close on this high priority project that will help overcome critical infrastructure gaps which may otherwise constrain continued growth and development of the Asian side of Istanbul.
- improve the project’s sustainability through the application of IFC’s environmental and social performance standards.

Contacts

For Inquiries About the Project, Contact

Mr. Salih Dogenci,
Istanbul Metropolitan Municipality
Department of Financial Services
E-mail: salih.dogenci@ibb.gov.tr

Tel: +90 212 449 43 97
Fax: +90 212 449 43 95

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Local Access of Project Documentation

The Environmental and Social Review Summary (ESRS) is available to the public at the offices of local government authorities.

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. It is not an offer of shares to the public and is intended solely to enhance the transparency of IFC’s activities. This document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC’s Policy on Disclosure of Information that went into effect April 30, 2006.

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