Izmir Tram Estimated Cost

Izmir Tram Estimated Cost :The proposed investment is a EUR 55 million A loan to the Metropolitan Municipality of Izmir to help finance the construction of two new tramway lines on opposite sides of the Izmir Bay in Konak and Karsiyaka districts and the purchase of the related rolling stock.

The Konak line (F. Altay-Halkapinar) has a route length of 12.4 km, and will operate with 19 stations and 21 vehicles; while the Karsiyaka line (Mavisehir-Alaybey) has a route length of 9.6 km, and will operate with 16 stations and 17 vehicles.

The tramways will complement the sea transportation project and the traffic management project recently financed by IFC and other IFIs, with the goal to reduce road congestion and promote alternative environmentally-friendly modes of public transportation in Izmir.

Project Sponsor and Major Shareholders of Project Company

The project sponsor is the Metropolitan Municipality of Izmir, serving a population of nearly 4 million inhabitants. Izmir has a diversified economy and a strong socio-economic profile with a GDP per capita 30% above the national average. Given its favorable geographic location as the main port on the Aegean coast, Izmir has been one of the most vibrant cities in Turkey and a preferred destination for international trade and foreign direct investment.

The Metropolitan Municipality of Izmir has received a BBB- rating from Fitch, in recognition of its strong revenue base, prudent financial management and stable political administration. It derives most of its revenues from the share of national taxes collected within its metropolitan area (~85%). Operating margins have averaged 45% since 2008 and are projected by rating agencies to remain above 40% over the next 3 years. Capital expenditures represent the bulk of Izmir’s budget and are primarily associated with the large investments needed to modernize the City’s public transportation system. Including off-balance sheet liabilities and debt of municipal companies, total debt is expected to be at 82% of revenues and debt service coverage ratio at 3.4x at year end 2013.

The mayor, Mr. Aziz Kocaoglu, is at the end of his second term in office. The next elections scheduled for March 2014. He belongs to the Republican People’s Party (CHP), the main opposition party in the national parliament, which holds an absolute majority in the municipal council in Izmir.

Total Project Cost and Amount and Nature of IFC’s Investment

The total Project cost is estimated at EUR 212 million. The proposed IFC investment is a EUR 55 million long-term A loan for IFC’s own account.

Location of Project and Description of Site

The Project will serve the metropolitan area of Izmir, the main port city on the Aegean Coast of Turkey.

Expected Development Impact

By construction and operation of tramways, which represent an efficient and environmentally-friendly alternative to cars, the project aims to create a more functional multi-modal public transportation system, leading to reduction in travel times and contributing in the long run to higher productivity and economic growth in Izmir. By alleviating congestion on the urban road network, the project is also expected to lead to significant environmental and social benefits, including reduction in CO2 emissions, noise and traffic in the City center.

IFC’s Expected Role and Additionality

At a time when local currency long-term financing is scarce, IFC would help the municipality raise the long-term financing it needs to successfully pursue its public transportation investment program. Moreover, IFC would leverage its broad experience in the urban transport sector – in Istanbul as well as many other cities worldwide – to share with Izmir global best practices in project design and implementation as well as in the management of environmental and social risks.

Environmental & Social Categorization Rationale

This project has been classified as a Category B project as the expected E&S risks to be limited, generally site specific, and can be avoided or mitigated by adhering to generally recognized performance standards, procedures, guidelines or design criteria.

The net environmental impact is expected to be positive as a result of reduced GHG emissions. Key environmental and social issues are likely to include identification and management of environmental, social, occupational, health and safety risks of both construction and operational phases; managing potential economical displacement related with taxi dolmus drivers and commercial shops/restaurants; managing the adverse effect to existing trees and loss of car parking slots along the project route; external communications, grievance mechanisms and ongoing reporting to affected communities; contractor management during construction phase; community health and safety during construction and operational phases.

As the project is not located within the vicinity of a sensitive and/or a protected area and/or there is no loss of critical habitat, PS6 is not triggered. No Indigenous People are known to have been in the area or affected by the project thus no issues have been identified in relation to PS7.

Izmir Tram Estimated Cost


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