News Ports

Erdogan extends port leases for pro-gov’t companies without holding tenders

A bill allowing the extension of lease agreements for 18 seaports operated by private companies without new tenders was passed in the Turkish parliament last week, according to Nordic Monitor. As a result, favored companies will have an additional period of up to 19 years to operate the ports. Interestingly, a previous law proposing the same conditions was annulled by the Constitutional Court in August 2022 on the grounds of insufficient competition and a loss to the public.

Under Turkish law, the ownership of a seaport cannot be transferred to a private company. A private entity can only obtain the right to operate the port through a tender for a maximum of 49 years.

The government claims that the new law will prevent the disruption of seaport services and provide continuity in maritime transportation for 13 seaports belonging to Turkish Maritime Enterprises Corporation and five seaports owned by Turkish State Railways (TCDD). In order for companies to benefit from the extension, they must not be indebted to the state and must unconditionally withdraw any lawsuits filed against the public authorities.

It is noteworthy that the private companies that will benefit from the new law are owned by businessmen in the inner circle of President Recep Tayyip Erdogan, who is going run a contentious presidential campaign in 2023. Among them are five businessmen who are referred to by opposition parties as the “Gang of Five.”

According to World Bank data, those five firms in Turkey are among the world’s top 10 private sponsors of public infrastructure projects by investment and region and by investment and primary sector for the years 1990 to 2020. The companies won tenders valued at $30 billion for infrastructure projects between 2017 and 2021, constituting 30 percent of all tenders held for government projects. The remainder of the public tenders have been shared among 20,851 companies.

The Turkish Trade Ministry last year granted 128 special tax exemptions to these five construction companies in the span of 10 years, a written answer to a parliamentary question posed by an opposition lawmaker last year revealed.

A Qatari firm is among the companies that will benefit the most from the new legislation. QTerminals, which bought the operating rights for the Port of Antalya in 2021 for $140 million, was to operate the seaport until 2028. Now, with the new law, this period will be extended for another 19 years, until 2047. Companies considering bidding for the highly profitable and busy Antalya port, the contract for which was to expire in 2028, faced a rude awakening.

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