Japanese Firm Wants Unpaid Marmaray Bill

- The Japanese company TAISEI has pressured top Turkish authorities for payment of the company’s additional costs to finish the Marmaray line in Istanbul earlier than planned, while sources from the Turkish Transport Ministry say the payments will be made only after the company submits its documents properly.

TAISEI mobilized the Japanese government to support its claim and sent letters to top Turkish authorities, including President Tayyip Erdoğan, Prime Minister Ahmet Davutoğlu and a number of cabinet ministers, to warn them of the “possibility of the non-payment of the bill to affect future infrastructure projects negatively.”

‘Costs expected to be met’

Takashi Yamauchi, the president and CEO of TAISEI, a partner of Turkish GAMA and Nurol, sent a letter to Erdoğan on Jan. 30 requesting a payment of some $200 million, which was used to accelerate the completion of the Marmaray line.

“Dear President, more than one year has passed since you presented your appreciation for our great performance at the opening ceremony of the Marmaray line. Upon the demand of the employer, we completed the construction of the line earlier than planned. We achieved this by showing incredible performance and mobilizing additional resources to compensate for delays, which were … out of our control and were recorded by the employer” he wrote.

“Although we sent you a letter to let you know about the process on March 10, 2014, a majority of the huge additional costs, which were used to enter the Marmaray line into service on Oct. 29, 2013, are still expected to be met. These costs, at around $200 million, cover some 120 items. The costs are still not paid and affect our cash flow seriously, although a loan from Japan’s Development Agency Fund (JICA) was secured in sufficient levels and the then-Transport Minister Binali Yıldırım guaranteed an early accord by the end of 2013” he wrote.

He then signaled the company’s right to address the issue in local and international courts, adding two decisions made by local arbitration authorities were not taken into consideration.

‘Breach of contract’

“This is definitely a breach of contract and cannot be acceptable for us” Yamauchi wrote.
He noted it is not possible to go to international arbitration, as the employer’s examination of the additional costs took “extremely long.”

He also kindly requested Erdoğan give the necessary directions to speed up the process.

“I present my thanks and sincere blessings to you in the name of the contractor for your great support to the project. As you had said earlier to us, we work a lot to make a contribution to the big infrastructure projects of Turkey. However, if the above-mentioned problems are not solved in the long term, I have deep concerns about the possibility of changing our position dramatically. With my deepest sincerity, I hope the related financial issues will be resolved and we will be paid with your respectful support” he added.

Yamauchi had also sent a similar letter to Davutoğlu.

‘We’ll keep our promises’

Sources from the Turkish Transport Ministry said they thanked the company and empathized with them over their claim, but they didn’t find the pressure the company put on top authorities in the country to be appropriate.

“We do not understand why the contractor company has been trying to put pressure over Turkey’s president, prime minister and finance and economy ministers. We have met with them many times since November” a Transport Ministry source said.

“We’ll keep our promises as soon as we receive the required documents in a regular and efficient manner. Some slowness may be the case, but the company needs to do the things in line with the procedures. We can also talk about some exaggeration in the prices” the source said.

Documents must be prepared properly

The Transport Ministry claimed they paid a portion of the money owed to the company, but were awaiting the proper submission of documents from TAISEI before they were able to complete the rest of the payment. “We are thankful the construction process was accelerated and the Marmaray line was opened [ahead of schedule]. Some $320 million worth of business was made and we paid $120 million of this amount. For the remaining items, we asked for the required documents, but we couldn’t receive the documents in a regular manner. We speak of around 800 items. The documents need to be sent to us in the pre-defined presentation formats, but they have not been. The consultancy company is also working to achieve this and they hired additional staff upon our request to prepare the documents” the source said.

The source also added the company couldn’t present some supporting documents showing the company had accelerated the construction, for instance the insurance or passport records of the additional personnel which the company claims to have hired for the completion of the project.

They said they will make the payment when the procedures were completed.

“We plan to make payments in March, April and May after the documents are presented to us in an efficient way” they added.

The Marmaray railway tunnel opened in October 2013 on the 90th anniversary of the Turkish Republic’s founding, earlier than originally planned. Located 62 meters under the Bosphorus Strait, it connected the European and Asian sides of Istanbul for the first time by rail.