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Build-Operate-Transfer Projects in Turkey: Contingent Liabilities and Associated Risks

Author

Listed:
  • Ilker Ersegun Kayhan

    (Chevening/Abdullah Gül Research Fellow, Oxford Center for Islamic Studies, University of Oxford)

  • Glenn P. Jenkins

    (Queen’s University, Canada and Eastern Mediterranean University, North Cyprus)

Abstract

The government of Turkey actively promotes public-private partnership models in infrastructure projects. Public-private partnership implementation contracts risk incurring a heavy fiscal burden on the state through contingent liabilities. It is therefore important to distribute risk among contract parties, according to the risk-management capacities of each. In the context of Build-Operate-Transfer projects, governments are expected to cover political and force majeure risks, as well as to guarantee demand for the goods and/or services produced. In Turkey, however, the government also assumes responsibility for finance risk, construction risk, and availability risk, which are usually assumed by the private sector. This study presents an overview of the legal and institutional frameworks relevant to Build-Operate-Transfer projects in Turkey, assessing the explicit contingent liabilities and associated risks to formulate policy recommendations on the evaluation, monitoring, and management of such contingent liabilities and risks in line with international best practice.

Suggested Citation

  • Ilker Ersegun Kayhan & Glenn P. Jenkins, 2016. "Build-Operate-Transfer Projects in Turkey: Contingent Liabilities and Associated Risks," Development Discussion Papers 2016-01, JDI Executive Programs.
    • Handle: RePEc:qed:dpaper:283
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    References listed on IDEAS

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    3. Hana Polackova, 1998. "Contingent Liabilities : A Threat to Fiscal Stability," World Bank Publications - Reports 11522, The World Bank Group.
    4. Holger Mühlenkamp, 2014. "Public-Private Partnerships and Government Debt," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 12(3), pages 24-30, October.
    5. Timothy C. Irwin, 2007. "Government Guarantees : Allocating and Valuing Risk in Privately Financed Infrastructure Projects," World Bank Publications - Books, The World Bank Group, number 6638.
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    Cited by:

    1. Uner, M. Mithat & Çavuşgil, Erin & Çavuşgil, S. Tamer, 2018. "Build-operate-transfer projects as a hybrid mode of market entry: The case of Yavuz Sultan Selim Bridge in Istanbul," International Business Review, Elsevier, vol. 27(4), pages 797-802.

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    More about this item

    Keywords

    Public-private partnerships; infrastructure; contingent liabilities; Turkey;
    All these keywords.

    JEL classification:

    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures

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