Document of The World Bank FOR OFFICIAL USE ONLY Report No: 72814-TR RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF FOURTH EXPORT FINANCE INTERMEDIATION LOAN (EFIL IV) PROJECT LOAN NUMBER: 8015-TU ADDITIONAL FINANCING APPROVED ON MARCH 17, 2011 TO THE TÜRKİYE SINAİ KALKINMA BANKASI A.Ş. (TSKB) October 10, 2012 PRIVATE AND FINANCIAL SECTORS DEVELOPMENT UNIT EUROPE AND CENTRAL ASIA This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. ABBREVIATIONS AND ACRONYMS TSKB Türkiye Sınai Kalkınma Bankası EFIL IV Fourth Export Finance Intermediation Loan Regional Vice President: Philippe Le Houerou Country Director: Martin Raiser Sector Manager: Lalit Raina Task Team Leader: Isfandyar Zaman Khan 2 TURKEY FOURTH EXPORT FINANCE INTERMEDIATION LOAN (EFIL IV) CONTENTS Page A. SUMMARY ........................................................................................................................... 4 B. PROJECT STATUS .............................................................................................................. 4 C. PROPOSED CHANGES ...................................................................................................... 4 3 TURKEY FOURTH EXPORT FINANCE INTERMEDIATION LOAN (EFIL IV) RESTRUCTURING PAPER A. SUMMARY 1. The only proposed change to the captioned Project is to allow, on an exceptional basis, a one time waiver to permit an increase in the threshold for using Established Private or Commercial Practices from US$10 million to US$23 million equivalent or less per contract for the procurement of raw material-primary unalloyed aluminum. B. PROJECT STATUS 2. The Project has progressed well. Disbursements are ahead of schedule, and 12 financial intermediaries are participating in the Project, including the two borrowers (Türkiye Sinai Kalkinma Bankasi A.Ş (TSKB) and Turk Export Import Bank. The project has supported 146 beneficiary enterprises and the non performing loan ratio is 0.6%. 3. Under Component 1 of the Project, which is implemented by TSKB, additional financing (total of US$180,000,000 and EUR87,800,000) was approved on March 17, 2011 to scale up activities. The additional loan was declared effective on May 2, 2011. As of September 19, 2012 67.39% of funds were disbursed from the US$180,000,000 amount of the loan and 83.17% from the EUR87,800,000 amount of the loan respectively. 4. All Implementation Status and Results Report ratings are satisfactory or better. The project is also fully complaint with all fiduciary or safeguard requirements C. PROPOSED CHANGES  Procurement 5. The Bank has received a request from TSKB dated August 27, 2012 to provide a one-time procurement waiver to lift the procurement threshold of established private sector or commercial practices, referred to in Part B.2 of Section III in the Schedule 2 to the Loan Agreement. The Loan Agreement provides that contracts for goods or works estimated to cost the equivalent of $10,000,000 or less per contract may be awarded in accordance with the established private sector or commercial practices. TSKB has requested that a sub-contract executed by a sub-borrower is estimated to cost the equivalent of US$23 million for raw material-primary unalloyed aluminum, be procured using established private sector or commercial practices. The justifications for the waiver is based on the fact that the global trade practice of procuring aluminum is based on the London Metal Exchange prices, and not through International Competitive Bidding 6. Based on the justifications described above, a one time waiver is proposed for TSKB to use established private sector or commercial practices to procure raw material- 4 primary unalloyed aluminum under a contract estimated to cost the equivalent of US$23 million. Clearance for this has been granted by the regional procurement manager. 5