Mersin International Port Bond

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Translated version of this PSD: Turkish The EBRD is participating in the Mersin Uluslararasi Liman Isletmeciligi A.S (“MIP” or “Mersin International Port”) US$ 450 million debut Eurobond issue. The Project is the first Eurobond issue by an infrastructure project company in Turkey. The Bank’s financing will fund part of the capital investment programme for the planned capacity expansion of MIP, as well as restructuring of the Company’s Balance Sheet. The planned investment programme will further enhance the Port’s service levels to accommodate larger vessels and to cater for increases in capacity in the long run. The Project supports the debut bond issue by an infrastructure company in Turkey demonstrating new ways of financing infrastructure investments. It is the first bond ever to be issued in Turkey by a private infrastructure company. The Project also supports a private port operator. It is expected to increase investments in port infrastructure by the private sector in Turkey in line with best industry norms in terms of operational practice and service provision, allowing MIP to continue being the most successful port privatisation in Turkey. MIP is a special purpose company, established by the Port of Singapore Authority (“PSA”) International and Akfen Holding A.S., as the concessionaire for the port of Mersin. MIP was awarded a 36-year concession by the Turkish authorities to develop and operate Mersin Port on 11 May 2007, following a competitive tender process. MIP is one of the most important ports in Turkey given its high import, export and transit trade volumes. Mersin Port also provides an important sea connection for the development of the South-Eastern Anatolia region and serves as an export gateway for regional industry and agriculture. The proposed investment is crucial for the economic development of the region and to maintain and enhance MIP’s competitiveness in Turkey and the East Mediterranean region. US$ 79.5 million stake of a US$ 450 million 7-year, unsecured, fixed-rate bond issue arranged by UniCredit, Citi and DBS. US$ 737 million. The Project has been categorised B in accordance with the EBRD Environmental and Social Policy (ESP, 2008). Not withstanding the restrictions associated with capital market products, the Bank has been able to undertake an appropriate level of due diligence and structure the Project to meet the EBRD ESP and Performance Requirements (PRs). The Bank’s Environmental and Social Appraisal has been based on a review of an independent Environmental and Social Due Diligence (ESDD) report which was based on a review of a local Environmental Impact Assessment (EIA) study that was prepared for the Project in accordance with Turkish legislation in 2009 and approved by the Turkish environmental authorities, as well as an audit of MIP’s existing Environmental and Health and Safety (EHS) management systems and current EHS performance. The ESDD report shows that the environmental and social impacts associated with the extension of an existing berth within the confines of an existing port will result in some adverse environmental and social impacts that are readily identified and addressed through appropriate mitigation measures. It also confirms that MIP has robust EHS management systems and procedures in place; has demonstrated good EHS operational performance; and has the capability and capacity to effectively manage risks and impacts associated with the Project. The ESDD report did, however, identify that a number of potential impacts had not been adequately addressed in the local EIA. The most significant gap being that there is limited information on the potential impacts of the planned infilling and dredging works, including the disposal of the dredging spoils into the sea. The EIA does, however, refer to a previous dredging study conducted in 2007, which included sampling to confirm sediment quality and concluded that no significant contamination in the port sediments was identified. To address this gap, an additional assessment of the potential impacts associated with infilling and dredging as well as the preparation of a Marine Dredging Management Plan will be required prior to the start of the construction works. Although no protected or sensitive habitats or species have been identified in the vicinity of the Project site, this assessment will need to consider potential impacts on biodiversity and depending on the outcomes of the assessment, develop a Biodiversity Conservation and Monitoring Plan if appropriate. Dredging spoils will be disposed of at an already designated disposal area outside the port breakwater. The cumulative impacts of the Project on land based and marine traffic particularly during construction will also need to be further studied and appropriate mitigation measures designed. The conclusions of these studies will be disclosed to stakeholders via a supplementary Non-Technical Summary. An Environmental and Social Action Plan (ESAP) has been agreed with MIP. The ESAP includes the requirement to undertake supplementary studies to address shortcomings in the local EIA (dredging and traffic impacts); application of MIP's environmental, health and safety management system and associated requirements, procedures and plans to the Project; provision of management plans for construction activities, dredging, health and safety, hazardous materials and waste management; update emergency response plans; and formalise on-going stakeholder engagement activities within a Stakeholder Engagement Plan. MIP will be required to carry out the Project in compliance with National regulatory requirements, International Maritime Environmental and Safety standards and the Bank’s PRs as well as provide the Bank with annual environmental and social reports, including updates on the implementation of the ESAP, and notification on any material accidents of incidents. None. Mersin International Port Ismet Inönü Blv Içel Merkez/Mersin (Içel) Turkey Nuri Peker, Head of Finance Email: npeker@mersinport.com.tr