Istanbul Metro Project

Location:

Turkey

Project number:

48250

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

B

Approval date:

11 Jan 2017

Status:

Repaying

PSD disclosed:

12 Sep 2016

Translated version of this PSD: Turkish

Project Description

The EBRD is providing a EUR 88 million loan to Istanbul Metropolitan Municipality. The proceeds will be used for the construction of Atakoy-Ikitelli metro line with a total length of 13.4 kilometers including 12 underground stations and a depot area as well as electromechanical works of the entire line.

Project Objectives

The construction of a new metro line is part of the extension of the city's urban rail network to meet increasing demand. It will help provide frequent and efficient services to Istanbul residents and will be a fast, reliable, comfortable, and environmentally friendly alternative to the use of private vehicles.

Transition Impact

Good.

The project is expected to create the following transition impacts:

  • Land Value Capture: Land Value Capture ("LVC") is an innovative and increasingly accepted way to fund public transport investments. LVC considers the positive contributions of infrastructure projects to the value of the surrounding properties. As such, LVC does not only help to cover the costs of such projects, but can additionally attract private sector in joint development projects. Technical cooperation funds will be used to assess the feasibility of alternative LVC methodologies that involve private sector.
     
  • Improved regulation: As elsewhere in the region, a multi-year Public Service Contract (PSC) between the city and Metro Istanbul Company (MIC) can be used to have a good effect by establishing a baseline 'all-in' cost per kilometre for the delivery of services, in exchange for public support payments to close any remaining gap between total costs and revenues from user fares. The project will assess future baseline costs and current, expected future revenue sources, including farebox and other, and fare collection systems including tariff integration, as in input for the elaboration and signing of a performance-based PSC. MIC and the city regulators will all be trained on the monitoring and management requirements to implement the PSC approach.
     
  • Green Economy Transition ("GET"): The metro development in Istanbul represents a major investment in zero-emission transport at the local level, and as such is a strong contributor to piloting GET in the municipal sector. The metro system buildout will add 400,000 new passengers daily to the public transport, causing substantial modal shift from private cars and buses, onto low-emission metro mode. Moreover, improvements to existing electromechanical systems on the complete metro lines shall allow operational energy efficiency savings.
     
  • Corporate development: The project, focused on expansion of clean public transport, will help MIC reduce energy costs and improve its operational and financial performance. The investment will also be an opportunity to improve the company's productivity and management. In this regard, technical cooperation will help MIC improve operating, technical and financial management through the introduction of a corporate development programme, with a view to introducing an enhanced management information system, improved worker productivity ratios using industry benchmarks for similar metro system in the region, and training.
     
  • Outsourcing non-core activities: As part of the project preparation, outsourcing options for non-core activities will be explored and targeted in the areas such as cleaning, maintenance, security, etc. This will enable a more commercialised approach and greater private sector participation.

Client Information

ISTANBUL METROPOLITAN MUNICIPALITY

With a population of nearly 15 million, Istanbul is the largest metropolitan municipality in Turkey. The Atakoy Ikitelli Metro Line will be operated by the city's municipal public transport company, MIC.

EBRD Finance Summary

EUR 88,272,000.00

The Bank will provide up to EUR 88.3 million to the municipality as part of a EUR 338.3 million financing package expected to be co-financed by the European Investment Bank.

Total Project Cost

EUR 338,272,200.00

Environmental and Social Summary

The Project is categorised B under the Environmental and Social Policy (2014). Environmental and social issues associated with the project are readily identified and addressed by adequate environmental and social risk management procedures of the Metro Istanbul and mitigation measures identified during Environmental and Social Due Diligence ("ESDD").

ESDD was undertaken by independent consultants and comprised an Environmental and Social ("ES") Audit of the City's corporate environmental, health and safety management systems and practices and an ES analysis of potential environmental and social issues associated with the proposed investments.

The vast majority of the 13,4 km Atakoy-Ikitelli metro line alignment and the 12 underground stations will be constructed underground. The Project will not result in physical resettlement, encroachment on protected areas or cultural sites. The local public infrastructures (such as schools, hospitals etc.) were also taken into account during the site selection and appropriate changes to the site locations have been made to avoid or minimise impacts on communities. The Project will significantly improve the quality of the public transport services and contribute to reduction of air emissions and the traffic in Istanbul. The Project is expected to contribute to the abatement of c. 42,000 tCO2e, 85.6 tNOx and 1.5 tPM per year (starting in 2019), as well as contribute to the reduction of other air pollutants, noise, road accidents and congestion by shifting approximately 160,000 daily passengers to the metro by 2019 from private cars and buses.

The Atakoy-Ikitelli metro line construction and operation falls within the Annex II of the Environmental Impact Assessment Regulation, which requires the screening of the project by the competent authority. Upon review of a Project Description File ("PDF"), the competent authority issued an "EIA Not Required Decision" on 19 March 2015.

The ESDD showed that Metro Istanbul is generally compliant with national health, safety and environment and labour requirements. Metro Istanbul has established environmental (ISO 14001), health and safety (OHSAS 18001) and Customer satisfaction (ISO 10002) management systems. However the ESDD indicated that the selected Contractor needs to establish and implement a more robust EHS and social management system.

The pollution prevention and abatement practices of the Contractor needs to be improved in a number of areas including environmental permits, noise control measures, traffic management, surface runoff management, environmental monitoring, and handling and management of hazardous materials. OHS practices also require further improvement including revision of risk assessment documentation to include: third party access to the construction areas; risks related to handling of fuels; risks in terms of health aspects and night work in terms of fatigue review; risk assessment for tunnel boring machinery; potential risks and preventive measures related to landslide, tunnel collapses and groundwater inflow and road safety risks.

Metro Istanbul has developed a Human Resources policy and procedures in line with the national Labour Code and generally compliant with PR 2 requirements. Workers of Metro Istanbul are members of a workers' union and the Collective Bargaining Agreement expected to be renewed at the beginning of 2017. Metro Istanbul Management is presently in the negotiation process with the Union. Metro Istanbul is required to strengthen the oversight of contractor labour conditions and EHS performance related to construction works, and should enhance the existing grievance mechanism so as to manage anonymous grievances and cover subcontractor employees.

Approximately, 20,000 m2 of land is required for construction of the metro stations. Most of the affected land is owned by state with only around 15 per cent privately owned. 2,635 m2 of this land will be purchased through negotiated agreements on a consensual basis and 442 m2 will be expropriated by the Municipality. All owners have title deeds and are entitled for compensation in line with the national legislation.

Other potential adverse impacts are likely to be related to construction activities, including temporary disruption to traffic, road safety and accessibility, stability of the nearby buildings, and other community safety issues due to transportation of excavation materials and waste. Metro Istanbul and the EPC Contractor will be required to undertake a detailed traffic risk assessment and implement adequate mitigation measures to avoid adverse impacts to the communities. The technical due diligence has reviewed and confirmed the safety features and design are adequate to minimise any risks in case of seismic events and to the stability of nearby buildings.

The City has a Communication Plan which partially satisfies the requirements of PR 10. The project has been communicated to various stakeholders and affected communities through the City's website, bill boards, by media advertisements and face to face interviews. In August 2016, 9,600 survey interviews were conducted and 3,200 leaflets were distributed as part of the Communication Plan. However, the consultation meetings were limited to Cobancesme community members. Metro Istanbul shall implement similar consultation meetings in other project affected communities on the metro line. A detailed Stakeholder Engagement Plan ("SEP") will be prepared and implemented in line with PR 10.

Metro Istanbul has an active grievance mechanism which allows stakeholders and interested groups to easily convey their complaints and suggestions to the Municipality. However the Contractor does not have a formal grievance process which allows stakeholders to convey their complaints to the Contractor directly. An internal grievance procedure will be developed and implemented by the main contractor as part of the ESAP.

The issues identified during the ESDD included above have been addressed in the ESAP.

Implementation of the ESAP will enable the project to be structured to meet EBRD PRs. Key areas covered in the ESAP among others include: enhancement of E&S management systems; contractor management; alignment of Contractors' HR policy and procedures and working conditions in line with Turkish Labour Code and PR 2 requirements; communication of the existing internal grievance mechanism to employees of EPC contractor and subcontractors; improvement of worker accommodation camps; development of management plans and procedures for traffic, hazardous materials, waste, surface water runoff, wastewater, and air quality; enhancement of the existing occupational health and safety practices to guide all Project-related activities during construction and operation; measures to minimise public health and road safety risks; development of a chance find procedure; obtaining all relevant permits; implementation of the agreed SEP and grievance procedure.

The project will be monitored through annual E&S reports. Monitoring visits will be carried out if deemed necessary.

Non-technical summary: English | Turkish

Technical Cooperation

Technical, financial, and environmental and social due diligence will be carried out for the project (approx. EUR 200,000 in total). This technical co-operation is funded from the EBRD's Infrastructure Project Preparation Facility ("IPPF").

In the post-signing stage two technical co-operation assignments are foreseen:

(1) Support to the policy dialogue. The assignment will identify best practice approaches to LVC in Turkey and fully organize, prepare and manage seminars with municipal and ministry representatives, land developers and relevant private sector stakeholders in Istanbul. The estimated cost of the assignment is EUR 200,000, proposed to be financed by an international donor.

(2) Corporate development support programme. Assistance to the municipality and the metro company with re-organisation, project monitoring, urban rail management techniques, business and capital investment planning, capacity building and preparation and signing of a  Performance based public service contract. The estimated cost of the assignment is EUR 400,000, proposed to be financed by an international donor or the EBRD's Shareholder Special Funds.

Company Contact Information

Nuri Sezgin
nuri.sezgin@ibb.gov.tr
+902124494000
www.ibb.gov.tr
Mehmet Nezihi Ozmen Mahallesi, Kasim Sok. Merter Istanbul

Business opportunities

For business opportunities or procurement, contact the client company.

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Email: procurement@ebrd.com

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Public Information Policy (PIP)

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Text of the PIP

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