Fulfilling sustainable ambitions of urban pioneer Izmir
Izmir, Turkey’s third largest city, located on the west coast, has secured financing that will enable it to drive an ambitious project to convert the thriving seaside metropolis into a regional beacon of sustainable transportation. The local government, the Metropolitan Municipality of Izmir, aims to make the city a pioneer among Mediterranean cities and one of the most outstanding urban centres globally.
The plans took shape in 2009 after a city-wide vision was launched to establish the city as a Mediterranean pioneer in design and innovation. A local think tank, the Izmir Mediterranean Academy (IMA), was then tasked with finding new ways to promote design and innovation, develop organic farming and eco-friendly housing and establishing a cultural network for Mediterranean nations.
Among the many projects included in the plan are the Design Forum, which works to promote design and sustainability in Izmir, a sea transport project, a project for urban transformation, renewal and restoration of historical artifacts projects, healthcare and sport facility projects, and measures to transform the Gulf of Izmir into a sustainable swimming friendly environment.
The €165 million deal in which ING participated will finance two new light railway lines that are part of the vision’s wider multi-mode transportation plan to gradually diminish the public’s reliance on cars and roads by offering fast, comfortable, safe and environmentally friendly alternatives. The transaction follows a similar accord in June last year for €170 million to revitalise and expand the city’s ferry transportation system with new passenger ships, vehicle ferries and wharves.
“We are confident that these ongoing sustainable projects, in addition to the projects of the same caliber that we have in the pipeline, are going to assist us in our ambitions,” says Aziz Kocaoğlu, Mayor of the Metropolitan Municipality of Izmir. “They will pave the way to make Izmir a truly sustainable city, which is the vision we’ve launched under the slogan ‘A living city to live in’”.
While Izmir’s vision, history and cultural heritage are entirely unique, Mayor Kocaoğlu and his colleagues have also been mindful of inspiring examples of urban developments elsewhere in the world. “We are not aiming to replicate another city, but to create one that is unique by fulfilling Izmir’s true potential. Design, innovation and art are key components of our formula, and they will transform Izmir into a big player in the region.”
The MMI’s transport initiatives include a tramway project, a sea transportation project, a new fully adaptive traffic management system and emergency response vehicle purchases. The authorities are hopeful these measures will lead to an integrated public transportation system that is an efficient, and more environmentally-friendly alternative to its present day road network, which has become saturated by private vehicles.
This addresses the significant mobility challenges affecting Turkey’s third largest city. Izmir is a major transportation hub with around 1 million registered vehicles out of a population of 4 million inhabitants, and has a vast network of regional and state roads. It is estimated that the local vehicle fleet is growing by about 10% each year, and with only one active suburban railway system running from north to south and a limited light tramway line, the resulting traffic congestion has become a threat to the area’s prosperity.
The authorities calculate that once the new tramway lines are operational, the share of passenger car usage will decrease from over 76% today, to around 72% by 2015. At the same time, the lines are expected to help reduce travel times, and provide a welcome boost to productivity and economic growth.
“The lines will not only alleviate the congestion but also lead to significant environmental and social benefits. These include reducing CO2 emissions, noise and traffic in the city center,” explains Mayor Kocaoğlu. “They will also complement the sea transportation and traffic management projects, financed by ING and other organisations.”
The tramline facility was arranged together with the International Finance Corporation, member of World Bank Group and L’Agence Française de Developpement, a public development finance institution. As with the ferry transaction, the loan benefited from a 95 percent cover from Multilateral Investment Guarantee Agency, part of the World Bank Group. The successful closure of both deals, which were subject to final approval by Turkish Treasury, was due in no small part to the strong cooperation between ING’s Structured Export Finance team in Germany, representing the lender, and the Local Structured Finance team in Turkey, as the longstanding client relationship bank.
“There was a smooth cooperation between all parties that enabled the client and the lender to sign the facility within a very limited timeframe. This performance was appreciated and has really helped strengthen a relationship with a very well-performing sub-sovereign,” says Gorkem Atac, Head of Structured Finance at ING Turkey. “The deal also demonstrates our strong sustainability credentials in project financing. Since late 2013, all deals in ING’s pipeline have been evaluated according to these standards and we have had great success across a number of key sectors, in helping to push the sustainability agenda forward.”
According to Mayor Kocaoğlu, the support of a globally renowned financial institution such as ING has gone a long way to prove the long term financial viability of the plan. “I look forward to an ongoing relationship with them and to projects yet to come. They have been trust-worthy and consistent in our dealings, and have a strong customer-centric approach and value-added services they have sustained throughout the process."