Build Operate Lease Transfer Agreement

Turkey`s first experiments with the BLT model were carried out in the framework of health projects. Considerable efforts have been made to put in place a legal framework that would implement these projects over a period of almost 30 years. The first legislative measures to introduce the BLT model in the field of health were taken in 2005-2006 by the addition of Article 7 of Law No. 3359 on Basic Health Services, as well as by the former BLT Regulation of the Ministry of Health on the construction of health facilities in exchange for rents and renovations of facilities in exchange for operating rights in non-clinical areas[1]. While already in 2005 legislative attempts were made to tackle BLT projects in the health sector, the first call for tenders was only launched in 2010. During these five intermediate years, work on the legal framework continued and culminated in the publication by the Ministry of Health of the Law on the Construction, Renovation and Operation of Facilities through the PPP Model[2] (“BLT Act”). This law was specifically put in place to define the legal basis for BLTs in the health sector in 2013. The BLT Act addresses the legal needs that, since the effective launch of the BLT projects in 2010, have been the subject of a number of appeals against the tendering phases of certain BLT projects, in particular with regard to the need to increase the banking capacity of these projects. The BLT law is unique in that, compared to other PPP-related legislation, Turkey refers more to the registration fees of lenders and their ability to conclude an agreement with the administration for the takeover of projects. The number of BLT projects (currently twenty-three, some of which are in the operational phase[3]) in the healthcare sector has also created synergy between industry players, lenders and consultants (technical, financial and legal, etc.). This synergy has greatly contributed to the adaptation of their project agreements to ensure the greatest transparency between all BLT projects in the field of health, to give investors and lenders the necessary comfort so that all parties are treated equally, and also to help fill and fill the gaps in the legislation through an ongoing dialogue. It should also be noted that the constitutionality of most of the provisions of the BLT Act was challenged before the Constitutional Court, which it found to be in conformity with the Constitution in its decision of 1 April 2015.

Now, until April 1, 27, 2025, no new constitutional challenge will be held against any of these provisions of the BLT Act[4]. Under a bot contract (Build-Operate-Transfer), a company – usually a government – grants a private company a concession to finance, build and operate a project. The company manages the project for a fixed period of time (perhaps 20 or 30 years) in order to repay its investment, and then entrusts control of the project to the government. While none of the ongoing BLT projects in the health sector (for which the tender is finalized as of the date of this article) have benefited from a state guarantee[5] or an acquisition of government bonds, the BLT model has arrived with its own guarantee-type compensation mechanism entitled “Compensation in the event of termination”. Under this new compensation model (in Turkey), lenders are entitled, in the event of termination of a BLT project agreement, to a lump sum payment to be made by the Ministry of Health to cover all outstanding financial debts of the project company responsible for the project, including any termination costs. . . .