The Build-Lease-Transfer Model: First Health Campuses, What´s Next?

Turkey has added a new model in its successful public-private partnership campaign that has been put to good use in the healthcare industry, and no doubt has applications in other industries as well.

Introducing a new alternative to the familiar BOT and BO models – the BLT

The BOT and BO models have been among the most commonly used public-private-partnership models in Turkey since the 1990’s. Both models enabled the construction and successful operation of a number of infrastructure projects including power plants and airports. This duo has fairly recently been joined by a new PPP model, Built-Lease-Transfer (“BLT”).

The BLT bears its own particularities compared to the other two models, mainly due to the nature of the services provided or planned to be provided under this new model.  BLT, unlike the BOT and the BO models, does not include a reference to the “operation” phase within its name - inevitably triggering the question of whom exactly carries out the operation under this newly introduced PPP model? Under the BLT model, unlike the BOT and BO models, the operation of the facilities will be carried out by the State itself and will not be transferred to the private entities. The private sector will mainly be in charge of the building, construction, and maintenance of the facilities together with a limited number of operational activities consisting of support services.  The State, on the other hand, will qualify as the tenant during the “lease” term and will be in charge of running the main operations, particularly medical services. The BLT model can be customized for certain sectors (e.g. health and educational facilities) where the involvement of the State during the operation phase is crucial and the State is still under the obligation to provide public services alongside the privately run facilities.

Turkey’s first encounter with the BLT model was through the extensive health campuses program launched by the Ministry of Health in 2010. This program has, to date, resulted in at least seven projects successfully reaching the financial close through the involvement of number of international financial institutions, export credit agencies, and foreign and local commercial banks. Additionally, eleven projects have completed the tendering stages and are awaiting the financial close, five projects are still going through the tendering phase, and five projects are yet to be tendered.  The second set of PPP projects to be launched under the BLT model are educational facilities projects, a sector, similar to the healthcare sector, where the State needs to keep its presence and offer public facilities in addition to private ones.