The provision of a senior loan of up to USD 50 million in favour of Mersin Uluslararasi Liman Isletmeciligi A.S (the "Borrower", "Company" or "MIP"), a joint-stock company incorporated in Turkiye and the operator of the Mersin International Port (the "Port" or "Mersin International Port"), to partially finance the second phase of the construction of the East Mediterranean Hub Project (the "Project"), which aims to increase the Port's container handling capacity.
EBRD proceeds will be used to partially finance the second phase of MIP's East Mediterranean Hub ("EMH") Project started in 2013, which aimed to upgrade and expand the port's container handling capacity. The Phase 1 of EMH Project ("EMH1") was completed in 2016. In order to maintain its competitive position, MIP is now proposing to undertake the Phase 2 of the EMH Project ("EMH2"), which primarily includes the expansion of the container facilities to provide better services with fewer restrictions to the customers.
ETI score: 63
The Project will contribute to Competitive and Integrated transition impact qualities.
1. Competitive: The Project is expected to improve the operational efficiency of MIP by eliminating the current traffic bottlenecks; and lead to productivity and cost efficiency improvements in multiple key performance indicators of the port.
2. Integrated: The Project is expected to support regional connectivity through expansion and material quality improvements of the current infrastructure; and lead to increased container handling capacity, increased imports and exports from/to MIP, and increased transshipment throughput.
MERSIN ULUSLARARASI LIMAN ISLETMECILIGI AS
MIP, an existing client of the Bank, is a special purpose vehicle jointly owned by (i) PSA International (51%), (ii) Australia's IFM Investors ("IFM") (39%), and (iii) Turkiye based Akfen Holding A.S. ("Akfen") (10%). MIP operates the Port under a 36-year concession agreement signed in 2007 with the Turkish Privatisation Administration and the Turkish State Railways.
MIP is Turkiye's largest port in terms of total container throughput. The port is well equipped to handle a range of dry bulk, liquid bulk, containers, and ro-ro cargos.
EBRD Finance Summary
Total Project Cost
The total project cost is estimated at circa USD 409 million, which will not include the final phase of the EMH2 project.
The Bank's additionality derives from (i) offering a financing not readily available in the market with similar terms, (ii) ensuring application of the international standards towards mitigating the environmental and social risks related to the Project, and (iii) helping the Company to achieve higher standards in gender equality and economic inclusion.
Environmental and Social Summary
The project was categorised A in line with 2019 Environmental and Social Policy. A large expansion of existing Mersin Port facilities through construction and operation of additional container terminal EMH2 will require dredging and offshore disposal of over 3 million m3 of material, land reclamation of the area of over 27ha. The terminal will cater for vessels of over 1,350 tons and requires an Environmental Impacts Assessment ("EIA") in line with the EU EIA Directive 2014.
A national EIA report has been prepared for the project and approved by the competent authority (Ministry of Environment, Urbanization and Climate Change in Turkiye) on 26.03.2020 in accordance with the Turkish National EIA regulation under the title "Additional Filling and Construction of a New Cruise Port" to Mersin Cruise and Container Port located in Turkiye's Mersin Province, Akdeniz District, Mersin International Port. The positive EIA decision has been subsequently challenged by the Mersin Municipality and (later) the Mersin Chamber of Architects Branch in 2020 on the account of non-compliance with the Master Plan for the area. The objection to the project was rejected by the 6th Chamber of the Council of State on 02.03.2023 allowing the project to proceed.
The project was subject to an Environmental and Social Due Diligence ("ESDD") undertaken by independent consultant on behalf of consortium of lenders, which included gap analysis of the national EIA and project preparation activities undertaken by MIP against EBRD Performance Requirements. As result of the gap analysis, additional assessments in regards to social impacts, additional analysis of dredging and offshore disposal, update of air quality and noise assessments, biodiversity assessment, traffic assessment and review of associated facilities (reconstruction of K4 interchange) were conducted. Project legal proceeding has been monitored by consortium of lenders and finalization of ESDD was undertaken upon final decision of Council of State in 2023.
Supplementary Information Package ("SIP") was prepared and will be disclosed for 60 days in line with the Access to Information Policy. In addition, targeted stakeholder engagement activities will be undertaken during the disclosure period. The package includes: national EIA, SIP report, Social Impacts Assessment ("SIA"), Non-Technical Summary ("NTS"), Livelihood Restoration Plan ("LRP"), Stakeholder Engagement Plan ("SEP"), Construction Environmental and Social Managements Plan ("CESMP"), Biodiversity Management Plan ("BMP"), Dredging Management and Monitoring Plan ("DMMP") and Environmental and Social Action Plan ("ESAP").
The ESDD confirmed that Mersin International Port has an established Environmental Management System ("EMS") and capacity to implement the project in line with EBRD Performance Requirements. MIP has implemented the previously agreed ESAP (2013) pertaining to bond issue for development of EMH1 in a timely manner and reporting on the environmental and social performance to the EBRD has been satisfactory. The EMH2 will be located within existing industrial port area and over 10km from the closest sensitive biodiversity site i Kazanli beach. The port is however surrounded by a mix of commercial, industrial and residential areas from land side with city amenity area of Ataturk Park located 150 meters away from the expanded terminal. Current distance from see is 650 meters. Main social impacts were identified as risks of decrease of visitors in Ataturk Park and customers of business in Park and fishing shelter, relocation of agency boats, construction nuisance and visual impacts. Most of these impacts will be managed by environmental and social management plans as Social Management Plan, LRP, CESMP, and DMMP. Additionally, a local employment plan is being developed by MIP on voluntary basis to ensure that local communities benefit effectively from employment opportunities with the expansion of the port since employment was expressed as most important issue by local communities during consultations. In terms of visual impacts, during site visit, it was observed that eastern edge of the park bordering port which is already currently exposed to view of the terminal will be further exposed to view of extension. However, it was observed that, that part of the Park was not popularly used and not crowded. Visitor data was still recorded within ESDD and will be monitored within LRP. Additionally, MIP will be supporting cultural and social activities of the Park to support initiatives for public benefit and businesses around. During the site visit, it was also observed that a union was authorized in the port and functioning freely with adequate space and resources provided both by MIP and union. Monitoring of ESAP includes labour and working conditions with a specific independent labour audit during peak of construction.
The supplementary assessment of impacts on the marine environment related to capital dredging, undertaken in 2021 has concluded that no significant contamination in the port sediments was identified and the dredged material is suitable for disposal offshore at the site licensed by the Ministry of Environment. As dredging will be undertaken within marine area constrained by breakwaters, and characterized as not sensitive in regards to biodiversity, the temporary turbidity will not cause significant impacts. A set of mitigation measures, including time limitations on the dredging activities in the port approach channel in order not to interfere with the migration times of the sea turtles, adaptive management and real time monitoring of water quality has been agreed with the Company and covenanted in the Dredging Management and Monitoring Plan and Biodiversity Management Plan prepared for the project.
The project will require transportation of backfilling material from a pre-identified nearby quarry. This will require a significant number of additional trucks on the roads for limited time. This impact will be managed through a detailed Traffic Management Plan prepared by the EPC contractor prior to works, which will implement the agreed time limitations to avoid congestion and road safety risks. In addition MIP is already implementing reorganization of the access roads to the port and implementation of so called "gate project" to limit traffic impacts on main D400 city road during construction and future operation. Increased port capacity by 1 million TEU will result in additional operational road traffic in the future. This is being addressed mainly by the reconstruction of K4 interchange undertaken by Highways Directorate General ("KGM"), with support from MIP. Apart from enhanced environmental and social monitoring programmed during construction works, the Port has also committed to preparation and disclosure of noise map in the future and installation of continuous noise monitoring.
As majority of impacts and risks will occur during construction period enhanced contractor management is a key mitigation measure. Management plans (CESMP, BAP, DMMP, LRP and SEP) prepared, disclosed and communicated to EPC and Dredging contractors contain a number of prescriptive requirements and good international practices to limit impacts to environmental and society, implementation of which will be monitored by lenders Independent Environmental and Social Consultant ("IESC") and the Supervision Engineer with suitable EHS staff already contracted by MIP. In order to deliver social impact management as well as SEP, LRP, MIP appointed a Community Liaison Officer.
The comprehensive ESAP was agreed with the Company to structure the Project to be in line with EBRD PRs, includes (in addition to measures already outlined above): improvement of human resources management; improved grievance management, control and monitoring of construction labour and working conditions in line with PR 2 requirements (inclusive of external labour audit at the peak of construction); implementation of GBVH procedures; maximizing local employment; undertaking external review of the site traffic management prior to opening of EMH2 and incorporation of the new terminal into existing ESMS.
The Project construction stage will be monitored by the IESC with 6 monthly reports to the Bank and annual reports for the first 3 years of operation. The Bank will monitor the project based on the reporting from the IESC, the Client and site visits as required.
Company Contact Information
Mersin International Port Ismet Inönü Blv Içel Merkez/Mersin (Içel) Turkey
PSD last updated
18 Jul 2023
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