Recent development

On November 14, 2015, the Privatization Authority adopted new zoning plans for the Izmir Cruise Port and Izmir Cargo Port in preparation for their likely privatization in the first half of 2016. The privatization is expected to be through a “transfer of operational rights.”

First privatization attempt

The privatization of Izmir Port, Turkey's largest commercial port, was first initiated in 2006 following the privatization of the Mersin and Iskenderun ports. A consortium of Global-Hutchison-Ege Ihracatci Birlikleri and Deutsche Bank Infrastructure Fund, which offered USD 1.275 billion for 49 years -- the longest period permitted under the Privatization Law, was the successful bidder. After multiple legal challenges, however, the privatization of Izmir Port was cancelled.  

Preparations for privatization

To leverage the benefits from cruise tourism and the substantial export potential given the port's highway and rail connections, the Privatization Authority split the port into two, creating the Izmir Cruise Port and Izmir Cargo Port, in 2012. In spite of this separation, the Privatization Authority is expected to privatize both ports together to a single investor. The Privatization Authority's specific plans will be clearer once the tender specifications are published.

Under the Izmir Cruise Port’s new zoning plan, the developable area of the facility has been decreased by approximately 50,000 m2, leaving a developable area of 125,000 - 130,000 m2. To increase the port's capacity, two new piers will be added. Hotels and small shops will be built to serve tourists, in place of the shopping mall planned during the 2006 privatization.

The 2006 privatization tender specifications also required the successful bidder to dredge the port. For the upcoming tender, it is expected that Turkish State Railways will be involved in the dredging activities, although it remains unclear whether the investor will have any related obligations.

Conclusion

Given the recent return of political stability and predictability in the Turkish market, coupled with the updated zoning plans, we expect the privatization process to commence soon.