UK keeps Turkey’s high speed railway on track with $865m backing

Reuters/Mert Ozkan

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The UK government’s export credit agency has underwritten $865 million of financing to support construction of a 286km high-speed electric railway in southern Turkey.

With financing provided by UK Export Finance (UKEF), Turkey’s Rönesans Holding will finish construction of the Mersin-Adana-Gaziantep High Speed Railway on behalf of the Turkish Ministry of Transport.

The deal is expected to create multi-million pound export contract opportunities for the UK’s infrastructure, engineering and project management sectors, a statement said.

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It added that Rönesans Holding, one of Europe’s 10 largest construction companies, intends to use the rail project to build its wider relationships with the UK supply chain.

The UK and Turkey are preparing for negotiations later this year on a new free trade agreement which aims to build on a relationship worth more than $30 billion in 2022.

UKEF’s backing has been given on the condition that UK exporters supply to the project and Rönesans Holding has already engaged with UK suppliers to negotiate contracts for electronic infrastructure, ESG consultancy services, catenary and mechanical components, the statement added.

Mehmet Şimşek, treasury and finance minister for Turkey, said the project was crucial for economic, social and environmental integration.

“Mersin, Adana and Gaziantep are among the highly industrialised and important cities of the region,” he said.

“This project will ensure a reduction of transportation costs, decrease travel time between Mersin and Gaziantep and strengthen our railway connectivity”

While the existing railway relies on diesel locomotives, the electrified line will provide a lower-carbon alternative to existing routes between Mersin and Gaziantep. 

Project forecasts suggest the completed route will save 157,000 tonnes in CO2 emissions in its first year alone.

The UKEF-backed project will also contribute to Turkey’s objective of increasing high-speed railway coverage to 10,000km. Able to carry trains travelling up to 200 km/h, the new railway will reduce the travel time from Gaziantep to Mersin by four hours. 

Mersin is the second largest container port in the country and a city of over one million people.

Gaziantep, the railway’s eastern terminus, was near the epicentre of the 7.8 magnitude earthquake which struck Turkey in February and the UKEF-backed project also aims to contribute to reconstruction in areas of southern Turkey severely damaged in this disaster.

Last week, Turkey and the UK said they will start talks later this year on a revised free trade agreement. Total bilateral trade increased by 30 percent last year compared to 2021.