Announcement of World Bank Supports the First Phase of Railway Restructuring in Turkey on June 9, 2005

Turkey: World Bank Supports The First Phase of Railway Restructuring Ankara, June 9, 2005— The World Bank approved today a Euro 143.7 million equivalent (USD 184.7 million) Railway Restructuring Loan for Turkey. The project will help to improve the financial viability, productivity, and effectiveness of railways operations in the country. The Bank’s investment lending support for the proposed Government’s railway restructuring program would be through a two-phased Adaptable Program Loan (APL). The APL1 (with a total cost of US$221.0 million of which US$184.7 million is Bank financed) would include: (i) advisory services to implement the restructuring of the TCDD under current Railway law and to prepare APL2; (ii) initial staff adjustment program; (iii) line capacity increase along Mersin- Toprakkale and Yenice-Boğazköprü corridors; (iv) training for TCDD staff; and (v) support for improved internal and public communication. The APL2 (with a total cost of about US$230 million, of which at least US$115 million is expected to be Bank financed) that will be finalized during the implementation of the APL1 would include: (i) advisory services to complete the restructuring of the TCDD and assist in the implementation of the new institutional and regulatory setup resulting from the new laws; (ii) support for continuing the staff adjustment program; (iii) line capacity increase along Irmak-Zonguldak corridor; and (iv) other components as deemed necessary to ensure the success of the of the overall program. Through its first APL, the project will assist in setting up a new legal framework allowing TCDD to operate on a commercial basis; increase the transparency and accountability of TCDD operations through the separation of the infrastructure and operating (freight, passenger) entities; shift from current regional based organization toward a “lines of business” organization; and modernizing some of TCDD’s core infrastructure and operating assets to improve safety level. In the short term, establishing a new structure with accrued accounting, operating, bidding procedures, transparency, and efficient governance, will permit pinpointing the flaws of the company, so as to be able to solve them more efficiently in a subsequent phase of the reform. “The World Bank is happy to help the Government of Turkey in improving the productivity and effectiveness of railway operations and to assist TCDD in reaching a financially sustainable situation and reducing the fiscal burden” said Andrew Vorkink, Country Director for Turkey. “The project will also serve to align the Turkish railways competitiveness with European railways, which is extremely important, at a period when EU accession negotiations are starting. The project will also contribute to improved rail safety in Turkey – an important consideration for all”. The lending instrument for the Railway Restructuring project is the World Bank’s a two-phased Adaptable Program Loan (APL) in two currencies (US Dollar and Euro). Adaptable program loans (APLs) provide phased support for long-term development programs. They involve a series of loans that build on the lessons learned from the previous loan(s) in the series. For more information about the World Bank’s work in Turkey, visit: http://www.worldbank.org.tr. For more information about this project, visit: http://www.worldbank.org/projects