Existing Solutions

Financing water in irrigation project

financial

legal

The finance model Built-Operate-Transfer is the construction, maintenance, operate and transfer of the hydo electric power plant (HEPP), irrigation projects and other hydraulic structures by the contract signed between public and private sectors. In Turkey during the first experiments of this model to HEPP, the finance had been met 25-35%private sector and 75-65% by the loans under the government guarantee (but the government guarantee is not available any more ), for the experiments of this model to irrigation projects the finance was planned to be met by private sector and loans without government guarantee. The investment period is 3-4 years and operation period is 15-20 years. The investment cost covers all the construction cost, operation and maintenance cost and the profit of the contractor. Expropriation, land acqusation and infarm development cost may be or may not be in the content of the investment cost. For HEPP projects

Rural

DSI initiated the project. The stakeholders of this project are; the farmers, Turkish Government ( Turkish Ministry of Forestry- General Directorate of DSI , contractors and land owners in the rural areas). The strategy was planned by the Ministry and DSI and the project was brougt to the bidding stage. Between the years 2008 and 2009 two irrigation project was bidded under Buit-Operate-Transfer (BOT) Model in DSI.

In the first examples of the HEPP which were constructed by BOT Model by Turkish Government Guarantee to buy the electricity produced and the tariff of the electricity had been detected according to the investment cost but now the Turkish Government doesn’t give the guarantee to buy the electricity. For the irrigation Projects which will be constructed by BOT Model the reimbursement of the investment cost will be started right after the completion of the investment cost at the begining of the operation period. The crop pattern and the financial availability of the farmers will be taken into account and the reimbursement will be shared by the farmers using the irrigation and local (government) budget.

Sharing the finance of the hydraulic structures construction cost with the farmers and land owners dealing with crop production.

Because water is a scarce product and big amounts of water has been using for irrigation it’s necessary that the farmers use it carefully . Modern irrigation networks are needed. Modern irrigation networks are not cheap it’s necessary that governments, strong construction firms and farmers join their pottential and realise irrigation networks.

Strong construction firms sufficient water volunteer and hardworking farmers productive land and availability to produce different crops industrial plants to process the crops produced.

The farmers, governments and contactor firms are most interested to this solution. In the regions where there are financially strong construction firms, volunteer farmers and enough water for irrigation this model works.

In the first experience of BOT Model applied to HEPP, the existence of government guarantee to buy the electricity cause the unnecessary cost increases in the investment cost. Because the tariffs were detected according to the investment cost and the government was the only buyer. But after this difficulty the government change this situation and now there are several buyers. Between the years 2008 and 2009 two irrigation project was bidded under BOT Model. The risk of reimbursement shared by the farmers effect the contractor firms and there aren’t any firm proposed a bid. So the bids are canceled.

DSI Genel Mudurlugu, Proje ve Insaat Dairesi , Yucetepe ,Ankara, 06100 , TURKEY phone number: 00903124178300#2656 e-mail: nerminh@dsi.gov.tr