now loading...
Wealth Asia Connect Middle East Treasury & Capital Markets Europe ESG Forum TechTalk
Asia Connect
AIIB, EBRD join €715 million funding for Istanbul rail link
The 67-kilometre line will provide a link to the southern border of the European Union
Michael Marray 24 Nov 2021

The Asian Infrastructure Investment Bank (AIIB) and the European Bank for Reconstruction and Development (EBRD) are participating in a €715 million (US$803 million) financing package for a rail link between Istanbul and the Bulgarian border. The 67-kilometre section of the rail line runs from Ispartakule station in Istanbul to the Bulgarian border, which also forms part of the southern border of the European Union.

Of the total amount, €150 million will come from the EBRD. The loan was approved by the bank's board of directors on November 10 2021, and has since been signed. AIIB project documents show that it will provide a €300 million loan, with the deal expected to be signed in the coming weeks. The Turkish government will provide another €265 million (including €75 million for land acquisition) to complete the funding for the project, which is being implemented by the General Directorate of Infrastructure Investments. Both the EBRD and AIIB loans are denominated in euros.

“We appreciate the EBRD’s support and contribution to the Ispartakule-Çerkezkoy railway line project, the first public project financed by the bank in the field of transportation," says Lutfi Elvan, Turkey’s minister of treasury and finance. "It is expected to improve Turkey's internal and cross-border connectivity, and is also an important opportunity to nurture our productive partnership with the EBRD for the future.”

In April 2021 the EBRD and AIIB signed a co-financing framework agreement for the project, and the loan will be in line with these principles. The EBRD Environmental and Social Policy, EBRD Procurement Policies and Rules, and EBRD Independent Project Accountability Mechanism will apply in lieu of the AIIB Environmental and Social Policy, AIIB Procurement Policy, and AIIB Project-affected People’s Mechanism.

“The loan for the construction of the Ispartakule-Çerkezkoy line builds on more than four years of joint work by the EBRD and the Turkish authorities on legal and regulatory reforms aimed at improving the commercialization of the railway sector and providing opportunities for greater private-sector participation,” says Arvid Tuerkner, EBRD managing director for Turkey.

The line is part of the EU Trans-European Transport Network (TEN-T) and will provide safe, sustainable and low-carbon passenger and freight transport to and from the EU, improving connectivity and trade.

The double-track Ispartakule-Çerkezkoy section is part of the electrified Halkali-Kapikule railway line, co-financed by the EU Instrument for Pre-accession Assistance funds. 

Talks on Turkey's accession to the EU have been stalled for many years, and Turkey sees its chances of joining the bloc as receding.

However, the EU continues to support connectivity initiatives. The TEN-T programme consists of hundreds of projects, whose ultimate purpose is to ensure the cohesion, interconnection and interoperability of the trans-European transport network.

Conversation
Yu-En Ong
Yu-En Ong
head of Southeast Asia
Norton Rose Fulbright
- JOINED THE EVENT -
In-person roundtable
Beyond Covid: Emerging trends in a changing lending landscape
View Highlights
Conversation
Bhaskar Laxminarayan
Bhaskar Laxminarayan
chief investment officer, Asia and head investment management, Asia
Julius Baer
- JOINED THE EVENT -
Asset Servicing Leadership Series
How digital assets are transforming Asia's investment landscape
View Highlights