ECOSAI - 2019
Audit of Public Private Partnerships (PPPs) by
the Turkish Court of Accounts (TCA) in Turkey
Osman DANI󾜀 AN
SAI Turkey
Public Private Partnership (PPP) is a
commonly-used procurement method that is
becoming widespread around the world due
to various reasons such as the change in the
mentality about the delivery of service
expected from state, the limitations of
resources to be used for infrastructure
investments, benefiting from the efficiency
and service speed of private sector and
m a k i n g l a r g e - s c a l e t e c h n o l o g i c a l
investments. The State of the Republic of
Turkey has carried out and is still carrying out
various investments with the PPP models due
to above mentioned reasons.
In the first section, this study briefly identifies
the current situation of the PPP project in
Europe, developing countries and Turkey
according to sectors and contract sizes. Then,
it addresses the findings included in the Audit
Reports, which were prepared by the Turkish
Court of Accounts (TCA) after the audits of
PPP projects, in the framework of the phases
accepted as the main components of PPP
projects and sectors.
PPP projects in the world and Turkey
As a result of the economic, social and
political changes and interactions in the last
quarter of the 20th century, there has been a
shift in the state mentality from a service
generator and operator state to a policy
making and regulating state. Resultantly, the
private sector oriented development model,
adopted in the 1980s in Turkey, public
investments in industry has gradually
decreased and infrastructure investments
came to the forefront in the central
investment budget.
Increasing population and urbanization,
developing economy and commercial
activities make the need for infrastructure
investments obvious. At the same time, the
existing infrastructure is below the level of
developed countries in terms of quality and
standards. The need of Public-Private
Partnership projects as procurement method
has increased due to limits of public
resources and need to realize infrastructure
investments. PPP projects play an important
rol e in re ali zing the i nfr astru ctu re
investments in developing and developed
countries. PPP models draw attention with
supplying the necessary financing for the
increasing infrastructure investments, and
they are accepted as a model through which
the private sector's efficient investment and
management skills are used and public can
focus on areas such as investments'
coordination, overall planning, auditing and
policy making.
After success of PPP investments in UK, the
PPP practices have spread through out
Europe. The contract size of the PPP projects
that had financial closure in Europe reached
12 billion euros. Transportation sector had the
highest volume among PPP sectors with a
contract size of 3.7 billion euros and 11
projects that had financial closure. Excluding
the contract size (1.6 billion euros), education
sector had the highest volume in PPP sectors
with 27 projects.
According to World Bank data, the number of
PPP projects in developing countries reached
5800 in 1990-2017 and the contract size of
those projects was around 1.430 billion
dollars. When these projects are evaluated in
terms of the number of projects and contract
size, energy sector was in therst place
according to both criteria. In the said period,
the number of projects realized via PPP
models in the energy sector were 2793, and
the contract size of those projects was
around 800 billion dollars. Other sectors
using PPP projects included water-waste
water, transportation (motorway, seaway,
railway and airway), telecommunication and
While these developments occurred in the
world, projects were carried out in Turkey in
d i e r e n t a r e a s i n c l u d i n g e n e r g y ,
transportation, customs and industrial
Turkey has started to use PPP models of
investments in energy projects in since 1986.
By the end of 2018, implementation contracts
were signed for 238 projects in 11 sectors with
Build Operate, Build-Operate-Transfer (BOT),
Build-Rent-Transfer and the Transfer of
Operating Rights (TOOR) models. When we
examine t he data coming from the
publications of Ministry of Development, we
see that this analysis did not include the PPP
investments that were made by local
administrations and nuclear power plants
that were made with a new model called
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When we look at the sectoral distribution of
implementation contracts, energy sector is in
the first place with 89 projects. Motorway,
harbour, airport and marina sectors are the
other areas that have a long-term PPP
Audit of PPP Projects by the TCA
When we examine the World Bank data for
2017, we see that PPP project cycle was
basically addressed in 3 parts. Those are the
pre p a r ati o n , bid d i n g an d c o n tra c t
management phases. In this section, we will
address the auditndings, which were
included in the audit reports published on the
TCA's webpage, in the framework of these 3
The audit reports for 2012 2017 published by
the TCA include the following ndings
regarding the preparation phase:
a) In the projects regarding motorways
and customs gates, there were
practices that extended the operation
time, and there were mistakes in the
revenue and cost calculations used for
calculating the operation duration,
b) While preparing the immovable
properties for investment, regulations
foreseen in legislation were not
followed, and
c) Request and purchase warranties were
not recognized.
The audit reports for 2012 2017 published by
the TCA include the following ndings
regarding the bidding phase:
a) Waste management projects were left
to the contractor without bidding and
receiving any price, and
b) Public transportation investments were
not bid out and there was no duration
foreseen in the contracts signed.
The audit reports for 2012 2017 published by
the TCA include the following ndings
regarding the contract management phase:
a) The assets were not recorded in the
energy, customs gates, health and
transportation projects,
b) In the customs gates projects, there
were executions that did not comply
with the contract, and the amount
transferred by the contractor to the
client was not included in the general
c) In marina projects, revenue share was
not received from thenal lease-
d) In health projects, rent payments were
recognized with mistakes, and book
inventory actions were not performed,
e) In motorway projects, there were
executions that did not comply with the
contract but the penalties foreseen in
the contracts were not applied to them.
When we look at the audits performed by the
TCA in the field of PPPs, we see that those
audits concentrated in the fields of energy,
customs gates, motorways, harbours, waste
management in local administrations, public
transportation and health.
There has been a significant increase in the
number of investments and contract sizes
made with PPP models in the last 20 years
both in the world and in Turkey. Those
projects dier from the conventional
procurement methods, in which the public
resource is used in one go while supplying the
need, as they extend the use of public
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resource to years. If the audits are performed
via conventional audit techniques while the
use of public resources change as such, the
expected benefit from the audit activity will
fall short of the desired level. Therefore, the
SAIs should increase their capacity and
competency in this field.
If the SAIs increase their activities related to
the audit of such projects, this will have a
positive impact on receiving the desired
outcome from those projects and also ensure
that those projects become transparent,
accountable and open to public auditing.
ECOSAI - 2019