Antalya Water and Sewage Services

cancelled

In November 1996, the local government of the city of Antalya, Turkey, granted a 10 year lease contract to private consortium ANTSU for the provision of water and sewage services in the city. The contract followed a competitive tender based on the lowest bid price. On the part of the city of Antalya the contract was signed by the metropolitan municipality’s water and sanitation authority (ASAT). The contract was expected to serve a population of 535,000. Antalya was a popular tourist destination in the summer, making water demand highly cyclical. ANTSU was expected to reduce the large loss of water from the pipeline system down to a manageable level. Private operator ANTSU was a joint-venture between Suez Lyonnaise des Eaux and Enka A.S. The project was funded with a $100 million loan from the World Bank (IBRD) and a $44.5 million loan from the European Investment Bank. The private operator and the local municipality started having disagreements over compliance with specific obligations in the contract in the late 1990s. ANTSU notified ASAT in February 2002 that it was initiating international arbitration proceedings because of various breaches of the contract by ASAT. In May 2002, ANTSU cancelled the lease contract and notified ASAT it was in liquidation because of losses incurred due to ASAT’s contract breaches. From mid 2002 ASAT took over the water and sewage services in Antalya.