The UK Export Finance has guaranteed a €2.1 billion loan for the construction of 503km long high-speed electric railway, according to the UK government press release. As a condition of UK financial assistance, huge nine-figure contracts are expected to be handed out to UK rail manufacturers. The deal was announced at the UK-Turkey Green Finance Conference. The pact aims to assist Turkey finance large climate-friendly projects and achieve its COP26 goals.
UK to grant record €2.1 billion to fund Turkish high-speed railway
The UK government’s biggest ever sustainable, civil infrastructure project will help Turkey finance a new high-speed electric railway line to decarbonize transportation with major contracts handed out to British and Turkish firms.
The new green finance of €2.1 billion will be provided by UK Export Finance (UKEF), via its Buyer Credit Scheme, with Credit Suisse and Standard Chartered structuring and coordinating banks arranging the transaction.
This is Turkey’s first rail project with the United Kingdom for over 160 years, and it’s part of the country’s plan to modernize high-speed rail. Ankara, the capital of Tukey Province, will be linked to Izmir, a large port city on the Gulf of Izmir, by a 503km electric-powered railway line when complete. This new line will offer a faster and less carbon intensive alternative to current air and road routes between Ankara and Izmir, enabling Turkey to fulfill its climate change commitments at COP26.
Anne-Marie Trevelyan of International Trade Secretary stated that:
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.
Dr. Nureddin Nebati, Turkey’s Treasury and Finance Minister stated that:
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.
The UK is one of the Turkey’s most important independent trading partners. Over the four quarters to the end of Q3 2021, trade volume between Turkey and the United Kingdom was £17.5 billion, up £1.4 billion from the same period a year earlier.
The agreement will bring about major contracts for UK firms of all sizes to participate in the project, with several nine-figure deals for UK businesses being negotiated. The project is being aided by ERG International Group’s strong relationships with the British supply chain. The main objectives for UK rail firms are to provide British-made railway tracks, turnouts, point machines, fasteners, signaling, telecommunications, and electrical infrastructure systems as well as critical insurance and freight services.
The financing was provided by Credit Suisse and Standard Chartered Bank, with UK Export Finance and meets internationally accepted sustainability standards. International export credit agencies such as SACE in Italy, SERV in Switzerland, and OeKB in Austria are also insuring the risk to the UK taxpayer.
Yoshi Ichikawa, Head of Structured Export Finance for Europe, Standard Chartered Bank stated that:
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.
Murat Dedeoglu, ERG International UK, Group CEO stated that
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.
