The clean transport deal marks the first UK-supported rail transaction in Turkey in over 160 years, bringing boost £1.7 billion boost to UK rail industry
Turkey’s high-speed electric railway line forms part of the UK Government’s largest sustainable civil infrastructure deal.
The boost comes in the form of a EUR2.1 billion loan from the UK Export Finance to aid in the construction of a 503km high-speed electric railway. In return for the UK support, nine-figure contracts are set to be awarded to UK rail suppliers.
Turkey has been striving to meet its COP26 commitments and the climate-friendly projects have been a result of that. The deal to fund the high-speed electric railway line was announced at the UK-Türkiye Green Finance Conference.
It’s expected that the new railway line will decarbonise travel, with major contracts being awarded to British and Turkish businesses.
The financing will be guaranteed by the UK Export Finance (UKEF) through its Buyer Credit Scheme, with Credit Suisse and Standard Chartered structuring and coordinating banks arranging the EUR2.1 billion transaction.
The railway will support its COP26 commitments by providing a faster, lower carbon alternative to current air and road routes between Ankara and Izmir, topping out at 503km.
“Turkey is a vital trading partner for the UK. Our shared global outlook on free trade and the environment is the driving force behind economic growth in our two nations.
It is fitting that UK Export Finance’s biggest ever civil infrastructure deal is strongly sustainable. This is a proud moment for the UK railway industry, using its industrial roots to reduce emissions in heavily polluted cities.”
International Trade Secretary Anne-Marie Trevelyan
“Referring to the Bilateral Cooperation Agreement signed between the UK and Türkiye in 1999; we have successfully achieved the closing of the landmark financing of Ankara İzmir High Speed Railway Project under the green loan structure.
We have given utmost importance to the environmental and social procedures during this project and as the Ministry of Treasury and Finance we are closely following the improvements of such issues. We also desire to be among the active and important players of the rapidly growing green finance market.
We are very glad for the cooperation and strong longstanding relations with UK government and we hope to further strengthen our collaboration.”
Treasury and Finance Minister for Türkiye Dr. Nureddin Nebati
The trading relationship between Turkey and the UK is an important one for both nations, with the trading relationship having brought in £17.5 billion in the four quarters to the end of Q3 2021, increasing by 1.4 billion from the same period in 2020.
Following the agreement, major contracts of UK companies of all sizes will be secured in order to deliver the major railway transformation project. ERG International group will be calling on its close ties with the UK supply chain to support construction – which will consist of British-made railway lines, turnouts, point machines, fasteners, material and equipment for signalling, telecommunication and electrification systems, as well as vital insurance and freight services.
To ensure the financing of the project is sustainable, the loan has been led by Credit Suisse and Standard Chartered Bank, and it has been ensured it’s been aligned to the Green Loan Principles. The risk to the UK taxpayer has been reduced as reinsurance is being provided by international export credit agencies such as SACE in Italy, SERV in Switzerland and OeKB in Austria
“We’re proud to further strengthen our relationship with the Turkish government, providing a loan structured with a clear focus on international social and environmental standards, and working closely with Credit Suisse and UKEF. This support is another in the line of Standard Chartered’s financing in Türkiye to help the government deliver its railway infrastructure plan.”
Yoshi Ichikawa, Head of Structured Export Finance for Europe, Standard Chartered Bank
“ERG is honored with the achievement and its historic milestone. ERG look forward strengthening ties with UKEF and the Turkish Government in the construction sector and adding value to the economies by making advance engineering and technological solutions available. Like in all our previous projects over the last 50 years, ERG is committed to create sustainable economic added value.
ERG’s Turkish and UK based Environmental & Social teams will bring many years of international experience to this important project, in order to ensure that IFC, Equator Principles, and national standards are at all times met. We would like to thank all our partners and stakeholders in the UK, Europe and Turkey to make this dream project come true, which will positively change and enhance the lives of millions of travellers and people living along the alignment.”
Murat Dedeoglu, ERG International UK, Group CEO