Shooting through North-western Turkey like a silver bullet, a new high-speed electric train will connect important hubs with far less environmental impact than road traffic. Scandinavian export financing made the Green Loan possible.
Turkey has finalised financing and procurement for a new 201 km high-speed electric railway between Bandirma and Osmaneli via Bursa in the northwest of the country. Bursa is one of Turkey’s most industrialised cities, but not yet connected to the national railway network. The project is crucial for economic integration of the inland industry and of the population of the Osmaneli region with the Ankara–Istanbul high-speed railway line.
Standard Chartered Bank acts as lead arranger of the EUR 1.24 billion project, with Turkey’s Kalyon as EPC contractor. The project involves a range of Sweden-based suppliers: Volvo CE, Epiroc and Sandvik supply construction and tunnelling equipment, while Vossloh delivers rail technology and Alstom signalling equipment. In all, Swedish deliveries amount to EUR 462 million, funded by the Swedish Export Credit Corporation (SEK) and guaranteed by EKN.
Frederic Petersson, Senior Underwriter at EKN, says, “This project is a great example of how sourcing from Swedish suppliers not only generates benefits related to the usage of high-quality equipment in a Turkish infrastructure project, but also enables competitive financing through the Swedish export credit system.”
The project also includes Danish suppliers, which permitted EKF, the Denmark’s ECA to step in. Yoshi Ichikawa, Head of Structured Export Finance for Europe at Standard Chartered, says the involvement of Scandinavian export credit partners was crucial in making the project happen. “It’s extremely difficult to beat ECA-backed financing when it comes to tenor and pricing. In this case, we developed a fit-for-purpose, multi-reinsurance structure that helped achieve long-tenor financing at competitive blended pricing levels.”
At Alstom Commercial Support, Michael Thulin, agrees. “Without the backing of EKN, this deal would not have happened.”
Advanced signalling system
Modern high-speed railways rely on advanced signalling systems to ensure a smooth and efficient flow of passengers and cargo. Alstom’s Swedish operations, formerly Bombardier, will enable the new line to use ERTMS (European Rail Traffic Management System) by deploying a system including Traffic Control Centre (CTC).
One of the main components of the systems is radio and the GSM-R (Railway communications system) will be used to increase reliability, performance and functionality.
Efficient traffic flows on the new electric railway line will ease the pressure from road-based traffic in the heavily industrialised region and thus contribute to sustainability. “The project provides clear environmental benefits given the lower greenhouse gas emissions associated with rail transport vis-à-vis road transportation,” notes Ichikawa.
As a result, the project qualified as being eligible for a Green Loan, the first of its kind for the borrower, Turkey’s Ministry of Treasury and Finance, where Serhat Köksal, Acting Director General of Foreign Economic Relations says: “’We are very grateful to Danish and Swedish trading partners and appreciate all other parties for their contribution to this important project, which will reduce the distance between Bursa, the fourth largest city of Turkey, to both Ankara and Istanbul to two hours and 15 minutes. The project is expected to improve Turkey’s internal railway connectivity and increase the socio-economic value of the region.”
Ensuring that the project complies with the international standards and the Green Loan Principles, however, required extensive pre-studies over many months, reveals Ichikawa. “The sheer volume of work related to the environmental and social impact assessment was a thorough process. We systematically identified relevant issues and developed plans for mitigating the environmental and social impact from the new railway, both during construction and when in operation.”
To this end, the project involved two independent teams of consultants to secure an unbiased, comprehensive outcome and to verify results. Among issues under consideration were construction site’s health and safety, biodiversity in general taking into account seasonal variation as well as the possible disturbances to local communities.