Infrastructure

Turkey secures $1.3bn for high-speed railway

January 9, 2024, 12:33 PM

The high-speed line will cover 140km between Yerköy and Kayseri

Support from UK, Austria, Poland, Italy
Line will connect Yerköy and Kayseri
Saving of 6,500 tonnes of CO2 a year

Financing worth more than $1.3 billion has been secured to build a high-speed electric railway in Turkey.

The deal, which was structured by Mitsubishi UFJ Financial Group, was enabled by support from UK Export Finance (UKEF) and three other export credit agencies: Austria’s OeKB, Italy’s Sace and Poland’s Kuke.

The agreement allows Turkey’s Ministry of Transport and Infrastructure, acting through the General Directorate of Infrastructural Investment, to develop 140km of electric railway between Yerköy, in central Anatolia, and Kayseri to the south.

The new line will connect to the Ankara-Sivas route, which opened in April last year. It aims to reduce road congestion and cut net emissions by more than 6,500 tonnes of CO2 a year.

It is the third high-speed railway project that UKEF, Sace and OeKB have jointly backed in Turkey, with their support helping to lay more than 900km of track.

The financing package comprises a $1.13 billion loan guaranteed by the export credit agencies and a $241 million commercial loan facility supported in part by the Islamic Corporation for the Insurance of Investment and Export Credit.

The project will be delivered by a joint venture between Turkish contractors Doğuş İnşaat, Çelikler and Özkar.

The State Railways of the Republic of Turkey, known as TCDD, operates about 14,000km of railway, including 219km of high-speed line.

Another high-speed line, which will connect Ankara and İzmir in 3.5 hours, is set to start operations in 2027, said Abdulkadir Uraloglu, Turkey’s minister of transport and infrastructure last September.

A 2053 transport and logistics masterplan, prepared by the ministry, aims to increase the network to 28,590km and the number of provinces connected by high-speed services from eight to 52.

The financing announcement was made during a visit to Turkey by Kemi Badenoch, the UK’s secretary of state for business and trade.

She said talks were planned to “elevate” the bilateral trade relationship.

UK firms are expected to supply steel, pipes and other equipment for the rail project.

Oussama Kaissi, CEO of Islamic Corporation for the Insurance of Investment and Export Credit, said the Yerköy-Kayseri line was part of Turkey’s “visionary approach to a sustainable transport system”.

President Recep Tayyip Erdoğan announced plans last year for a $17 billion infrastructure and transport project linking southern Iraq to Turkey.

It will connect Grand Faw Port, a commodities port in Iraq, by rail and road to the border with Turkey. It is expected to be complete in 2025.

Uraloglu said this week that the UAE and Qatar were considering joining the project.

“We will implement the project hopefully, in collaboration with Iraq. The UAE and Qatar also seem to be interested in this process,” he told Anadolu, Turkey’s state-run news agency.