HOW WE GOVERN OUR BUSINESS
Committees Formed under the Board of Directors and Art Card Paper
Their Evaluations by the Board of Directors
Global Investment Holdings Corporate Governance
Risk Management and Internal Audit Mechanism
Amendments to the Articles of Association in 2019
Developments after the Reporting Period
Consolidated Financial Statements and Independent
success started 30 years ago in Turkey, then crossed continents and oceans to reach the most distant corners of the world, including the Americas and Singapore.
have started each new project with the excitement of a voyage of discovery. We have always set our course for a productive future
and have chosen appropriate routes. We have continuously grown and developed with bold yet well-reasoned moves in the strategic areas of port infrastructure, clean energy and asset management.
We see our ports as de facto ambassadors to other markets. As a result, we strive to represent our
country in the best way possible. We see our energy business as the clean and productive future. We
on creating value for Turkey in real estate and
our market leadership, we are navigating forward to many more successful 30 year periods to come. The successestremendous we see when we look back at our history
give us optimism about our future.
from KuŞadası to NASSAU
We are expanding our port infrastructure network to destinations across the continents of the world where cruise tourism is intense. We are successfully executing our growth strategy, particularly in the Americas with a specific focus on the Caribbean. We operate our ports with a forward-looking perspective.
Our CNG (Compressed Natural Gas) subsidiary continues to take concrete steps with the vision of being in the leading position in non-pipe natural gas market in Turkey and turning the experience in this field into international projects, while making
terms of product diversity, operations in different regions were undertaken and a success was achieved in geographical diversity.
10 bulk CNG plants, 3 auto-CNG stations,
296 CNG road tankers and 47 industrial scale compressors
We aim to reduce our country's dependence on energy imports by focusing on renewable resources and contribute to the country's economy. Having been involved in clean and efficient energy solutions for the last few years, we intend to establish a diversified and a balanced power generation portfolio, both
resources and geography. Our strategy thanks integrated business approach is to develop energy projects with attractive long-termfeed-in tariffs and innovative
energy efficiency solutions in destinations we operate ports, especially in the Caribbean.
100.1 MW TOTAL INSTALLED CAPACITY OF WHICH
46.0 MW IS FROM RENEWABLE SOURCES
FROM DENİZLİ TO VAN
We have opened an exceptionally fast lane of growth in the real estate business. We diversified our investments by evaluating potential in Turkey's Anatolian region. The SkyCity office project in Denizli is now complete.
The strong performance of Van Shopping boosted revenue in our real estate business
7 VAN Shopping.5 CENTRE has attracted more than million visitors in 2019 and boasts an
from brokerage to ASSET management
We have served as a bridge between international capital markets and our country since 1990, when we hit the road with capital markets brokerage activities. In 2017, when we went to a strategic partnership with Centricus, one of our goals was to create the largest domestic and independent asset management company in Turkey. In 2019, our asset management subsidiary Actus has reached an agreement to merge
another major player to realize this
Over TL1 billion Assets Under Management
Across the world, 2019 was a middling year. While the US and China continued to demonstrate robust economic growth, other major economies were in a gradual down- shift. The on-again,off-again trade disputes - mainly between the US and China, but also between the US and the rest of the world, in turn - added unnecessary drama to the global stage. This had a geopolitical component too, as the world slipped into a new de facto cold war. All these factors suppressed global economic growth, which is expected to have been the lowest since the 2008 financial crisis.
Turkey continued the considerable re-adjustment of its economy and particularly foreign balance, so that the currency more or less stabilised by the summer. That and the exceptional interest rate cuts provided an accelerating impetus to growth, whose fruits will be seen in fourth quarter numbers.
However, the world economy and Turkey's comeback performance in 2019 were quickly overshadowed by the fast unfolding events of early 2020. The Covid-19 pandemic led to unprecedented restrictions on the movement of people, goods and services worldwide. Great swathes of the global economy came to a halt as the world battles a health care crisis unseen in modern times. What the "new normal" will look like in the months ahead is anyone's guess. Ongoing disruption of trade and commerce, widespread economic volatility and contraction, negative consumer sentiment due to mass unemployment are all likely.
That said, our first thoughts are of those directly impacted by the virus on a personal level and to health care workers around the world who are on the frontlines to save lives.
Most Global Investment Holdings companies improved their performance over the prior year. We did not emerge from the turbulent environment of 2019 unscathed, how- ever. Operating as a Turkish company during a time when perceptions often hold sway over facts has its own particular challenges, even under the best of circumstances.
Now, we are faced with a vastly changed economic landscape and murky outlook. With our core busi-
ness in particular, cruise operations, virtually on hold due to temporary global travel restrictions, the challenges of 2020 will be immense. From day one, our Board and management have taken steps to protect the business from the impact of this unprecedented crisis, by reducing costs, conserving cash, and safeguarding the balance sheet. This is not the first external crisis Global Investment Holdings has faced and we are confident that we will navigate the Company through these tumultuous times.
We are well accustomed to outperforming expectations, thriving in the face of adversity, seeing opportunity where others cannot. This successful track record will serve us well going forward, as we enter a world of heightened uncertainty and a new normal.
In consequence, in 2019, Global Investment Holdings reported record high Consolidated Net Revenues of TL 1,441 million and Operating EBIT- DA of TL 563.3 million up 28% and 21% compared to 2018, respectively and we expect the overall trend to be positive in 2020, though the contributions of each subsidiary may well change.
During the reporting year, our strategic focus remained on our core businesses: port infrastructure, clean energy, and asset manage- ment.
Global Investment Holdings continues to build upon its leadership position as the world's largest independent cruise port operator. With the addition of the storied Prince George Wharf Cruise Port in Nassau, The Bahamas to our portfolio, we now operate one of the world's busiest cruise ports in an iconic destination. Continuing our push into the Carib- bean, we have also started cruise port operations in Anti- gua. Expanding into the world's largest cruise market is an immensely exciting leap forward for Global Ports Holding, our LSE-listed ports subsidiary.
During the year, apart from the remarkable steps taken in the Carib- bean, we also extended the Marina Bay Cruise Centre Singapore concession to 2027, further anchoring our presence in the fast-growingAsia-Pacific region. Additionally, we concluded the acquisition of the operator of La Goulette in Tunisia, thus operating in three oceans and four continents, proving to be literally a "Global" power as our name indicates. After adding our newest family member - Ha Long Cruise Port in Vietnam, for which we have the management contract, initially for a period of 15 years - we now operate 21 ports, including two
For further information www.globalyatirim.com.tr
Naturelgaz, our compressed natural gas distributor, stood out for its excellent performance in 2019. The company's management has remained committed to continuous, material and ongoing improvement in the operational and financial performance of our CNG business.
With their drive and professionalism, Naturelgaz rationalized operating processes and aggressively acquired new customers. While part of the company's robust performance during the year was due to circumstances outside our control, 2019 would have been Naturelgaz' best year ever regardless. I am confident that the underlying business performance will continue to improve.
management firm - Actus - had a bright year even before being put into full context. Thanks to continued strong growth in market share, our assets under management expanded nearly 20% in real terms in 2019. This robust result was recorded before our merger with İstanbul Portföy Yönetimi was complete. The transaction is expected to be finalized in 2020. Actus' pension and equity funds posted a stellar performance for the year. Actus Asset Management's Equity Funds (Equity Intensive Funds) ranked first among all mutual funds in the market with 73.0% return in 2019, compared to the BIST 100's 25.4% return. Mean- while, Actus' pension fund Vakıf
line with its budget despite a mixed year stemming from temporary ore quality issues and exchange rate movements. Unfortunately, international supply and demand conditions are likely to worsen in 2020 so the outlook is not as strong this year. Regardless, respectable profitability should still ensue.
Real estate, as represented by Ar- dus, endured another difficult year, along with the entire industry in Turkey. Even in this challenging en- vironment, Ardus worked hard, contained costs and hit its budget targets - no easy feat.
One area we all work hard to em-
Our long track record of success, during boom periods and through challenging times, demonstrates that we know what we are good at and how to do it best.
commercial ports, across 13 coun- tries. The coming months should see a further increase in this num- ber. We are always actively seeking to boost our portfolio of cruise ports across the world. Our dreams are coming to fruition on a global scale.
Strong growth in the cruise ports division was overshadowed by a slowdown in the commercial port of Antalya ("Port Akdeniz"), which was negatively affected by macro-economic issues outside our control. While these external macro challenges are unlikely to improve in the short run, Antalya will become strategically more important due to its close proximity to extensive natural gas reserves in the Eastern Mediter- ranean. The total amount of natural gas reserves determined so far in the region is some 3.5 trillion cubic meters, which likely is the tip of the iceberg. The regional economy and trade will get a significant boost and Port Akdeniz is positioned to benefit with increased trade, in- vestments, and maritime services for the exploration and extraction infrastructure (which Port Akdeniz already provides) as well as project cargo.
With climate change topping the world agenda, especially with extreme weather events becoming the norm globally, our focus on clean energy is more important to us than ever.
During the year, Global Investment Holdings took major steps forward with its clean energy efforts. Our electricity generation business started to deliver better results after a lengthy learning curve and testing process. Rising to the challenge, we added our first solar power plant, Ra Solar, to renewable portfolio with
Naturelgaz has signed an agreement to purchase 100% of SOCAR Turkey LNG (as of the publishing of this report). Such acquisition will further strengthen the position of Naturelgaz in LNG, bulk CNG, and auto-CNG businesses; increasing volume and geographical coverage while diversifying the product portfolio. This acquisition is a perfect fit to Naturelgaz' strategies to enter into the LNG business, grow in bulk CNG, and establish an auto-CNG station network on critical routes of heavy duty vehicle transportation in Turkey.
In 2020, Naturelgaz aims to extend its experience and investments to surrounding markets that have an underdeveloped power infrastruc- ture, and therefore solid growth prospects. New international expansion opportunities will be evaluated as well. We also have tentative plans for an IPO for Naturelgaz in 2020, market conditions permitting.
Asset management is our third focus area at Global Investment Holdings. Turkey has great potential in this burgeoning filed and we plan to capitalize on it. Our asset
Emeklilik Variable Mutual Fund, has had the highest return in its peer group comprising 70 pension funds, with 47.0% return, compared to 27.9% return of its benchmark.
Actus is well positioned to greatly boost Global Investment Holdings' net asset value. The tie-up between İstanbul Portföy and Actus will give Turkey's second and third-largest money managers total assets of almost TL 4 billion, with plans to boost assets under management a further 40% by end-2020. This dream is attainable thank to our accumulated knowhow, experience and expert human capital.
One encouraging turnaround story at GIH is our brokerage business. Under new leadership, our brokerage business has completed another very difficult year by navigating through extremely tough market conditions. In the end, Global Securities recorded an impressive trading volume of TL 80.4 billion for the year.
Straton Mining, one of Turkey's leading players in industrial minerals with
brace, across the Group, is sustain- ability. Our efforts here run wide and deep. In recognition of our success in this key area, GIH was included in the BIST Sustainability Index for another term along with other Bor- sa Istanbul listed companies that demonstrate high performance in sustainability. Listing in the index provides companies with reputational and competitive advantages as well. GLYHO is also included in the BIST Corporate Governance Index.
As you can see, even in times of great adversity and challenge, there is much to be positive about at Global Investment Holdings. We continue to execute an exceptional performance across the Group - and to dream big.
Looking beyond Global, howev- er, we see a growing number of "known unknowns" that are cause for attention and concern. Even prior to Covid-19, the world was slipping into a new, undeclared cold war. Now, coupled with the ongoing pandemic and economic upheaval on a global scale, the stakes are higher than ever.
The established economies of the "first world" will struggle to preserve the order instituted at their behest at the end of WWII. In the challeng- ers' corner are China, possibly India, and other, emerging market countries of Asia. Turkey has for many years tied its fortunes to what happens in and to Europe. Our country finds itself caught between its traditional friends and partners and emerging new opportunities. How we navigate the fast shifting waters will largely determine what sort of society we become and how successful.
China will also remain at the forefront of world news. Not merely due to the ongoing trade dispute and now Covid-19 row with the US but also due to increasing Chinese self-confidence in its near abroad, especially the South China Sea. Even if these conflicts are resolved amicably, and both economies stabilize quickly, other similar spats are sure to arise. In addition, Hong Kong and North Korea will no doubt continue to roil the region.
WE THANK YOU VERY MUCH FOR ADDING NEW VALUES TO OUR VALUES AND FOR WALKING WITH US IN THIS PROCESS, AND WE WISH TO CELEBRATE THE NEW 30 YEARS TOGETHER.
In this new fast-changing world are markets long discussed as being of growing importance but, for one reason or another, have not attracted the attention of all Turkish businesses - and here I mean those of both Sub-Saharan and North Africa
2020 should be a far more volatile and unpredictable year than 2019. After regaining its footing in the latter half of 2019, Turkey now faces stronger headwinds, battling Covid-19 with the rest of the world, shrinking commerce and trade in the near term as well as a temporarily diminished tourism industry. Recession in the Turkish economy seems unavoidable in the coming year, like in most quarters of the world. The Turkish lira is more exposed than in mid-2019. Turkey entered the new year with a small current account surplus but will
struggle in the short term to maintain exports in this unchartered en- vironment. Frankly, it will be unclear sailing ahead, with choppy waters and the fog of recession descending with the rising uncertainty of Covid-19.
Moving forward with our strong management, skilled and hardworking employees, prudent risk management and robust financial structure, Global Investment Holdings posted another exceptional year overall.
In 2020, Global Investment Holdings celebrates 30 years since its foun- dation. It has been an exhilarating ride with its ups and downs. We began operations as a brokerage house in June 1990, with paid-in cash capital of 5 million (old) Turk- ish Liras (then equivalent to roughly USD 1,900), occupying only one floor of offices above a department store in Şişli. Along the way, we transformed into a diversified con- glomerate, with operations in 4 continents and 13 countries - stretching from Nassau and Antigua in the Caribbean to Singapore and Ha Long Bay in the Far East, and to Bar- celona in the Mediterranean. In this 30-year unique and perfect journey,
the trust, faith and professionalism of all our business partners have become indispensable values for us. We thank you very much for adding new values to our values and for walking with us in this pro- cess, and we wish to celebrate the new 30 years together.
Our long track record of success, during boom periods and through challenging times, demonstrates that we know what we are good at and how to do it best. Our true measure of success is the value we create over the long term and the strength of our market leader- ship. We are especially grateful to our shareholders, for their ongoing support and encouragement, and to the rest of the Global Family, for their hard work and commitment to excellence. Meanwhile, we at Global Investment Holdings will not only continue to dream big but also work to realize our ambitious dreams, even during these unprecedented times.
Global Investment Holdings Group in Summary
WITH INTERESTS IN A RANGE OF BURGEONING BUSINESS SECTORS AND TRADITIONAL NON-BANK FINANCIAL SERVICE PROVIDERS, GLOBAL INVESTMENT HOLDINGS HAS EVOLVED INTO A DYNAMIC INVESTMENT VEHICLE.
Global Investment Holdings (GIH) is a diversified conglomerate with investments in a number of businesses - port infrastructure, energy generation, compressed natural gas distribution, mining, real estate development, brokerage and asset management. GIH focuses on maximizing shareholder value by diversifying investments in its operational areas and executing agile investment strategies. Since 1990, the year the Group was founded as a brokerage firm, GIH has transformed into a dynamic investment vehicle. The Holding focuses on a variety of nascent business sectors and traditional non-banking financial service providers that offer high growth potential with "first mover" advan- tages. GIH functions as an umbrella to manage key issues, such as investment, financing, organization, and management, of its affiliates by participating in their capital and management
Over the last 14 years, GIH has grown its total assets by 29 and total equity by 11-folds, transforming from a brokerage firm into a diversified conglomerate. As of end-2019, GIH reported total assets of TL 7.1 billion and total equity of TL 1.5 billion.
Global Investment Holdings is registered with the Capital Market Board (CMB). GIH's shares have traded on Borsa Istanbul (BIST) since May 1995 (GIH stock formerly traded under the company name Global Men- kul Degerler A.Ş. from May 1995 to October 1, 2004). Currently, 99.99% of the Holding's shares are traded on BIST. GIH completed its first IPO
abroad, on London Stock Exchange, in May 2017 with its affiliate Global Ports Holding Plc.
At this time, Global Investment Holdings Group operates in four key business areas:
STRATEGIC FOCUS: PORT INFRASTRUCTURE, CLEAN ENERGY & ASSET MANAGEMENT
Going forward, the Group's new strategy is to develop regional and global enterprises only in select core businesses: port infrastructure, clean energy and asset manage- ment. This focus will allow GIH to target its resources more efficiently and expand more rapidly in these strategic, high-growth areas:
GIH AIMS TO STAY FOCUSED ON ITS STRATEGIC SECTORS, WHILE SELECTIVELY PURSUING NEW INDUSTRIES
Global Investment Holdings aims to become a leader in its operations, to initiate new and innovative projects with growth potential and to become a pioneer in developing and evolving the business environment around the world.
The Holding is committed to developing a portfolio of competitive companies, within the sectors in which it operates, with strong and healthy growth prospects in conformity with global standards. The Holding is also responsible for updating strategies for its subsidiar- ies, along the lines of the changing local and global environment, as to ensure their quick adaptations to changing business conditions and help their continuous growth.
- Identifies attractive investment opportunities in rapidly growing industries
Global Investment Holdings Group in Summary
GIH focuses on maximizing shareholder value by diversifying investments in its operational areas and executing agile investment strategies.
GLOBAL INVESTMENT HOLDINGS' SHAREHOLDING STRUCTURE
As of December 31, 2019, GIH's issued capital amounted to
TL 325,888,409.93 with an authorized capital ceiling of TL 650,000,000. The authorized capital ceiling permit given by the Capital Markets Board is valid for the years 2018 - 2022 (five years). Global Investment Holdings' shareholder structure is as follows:
Share Buyback Program Continues with an Additional TL 100 Million
Pursuant to the Board of Directors' resolution dated March 1, 2018, Global Investment Holdings bought back 34,072,330 nominal shares (10.46% of share capital) at an average price of TL 3.40 per share, and at a total consideration of TL 115,958,909.87, while the maximum share price stood at TL 4.47. The Board of Directors resolved to continue the share buyback program to complete the TL 150 million allocated maximum fund, which was announced on March 1, 2018; while announcing an additional maximum fund of TL 100 million maximum funds, both to be completed by De- cember 31, 2020. Once completed, this effort will yield shareholders total proceeds of TL 334 million inclusive of previous share buybacks.
Strong and Committed Shareholder Structure
Turkcom Tourism Energy Construction Food Investments Inc.*
Lansdowne European Equity Master Fund Limited
Going forward, global ınvestment holdıngs develop regional and global enterprises in core businesses: port infrastructure, clean energy and asset management.
For further information www.globalyatirim.com.tr
The world's largest independent cruise port operator, with 21 ports, including two commercial ports, in 13 countries
c.14 million passengers annually with an established presence in the Caribbean, Mediterranean, and Asia- Pacific
Listed on the London Stock Exchange
Málaga Cruise Port
One of Turkey's leading players in industrial minerals with ~ 1.5 million tons feldspar annual production capacity
Co/tri-generation with 54.1 MW installed capacity
Biomass power plants with an installed capacity of 29.2 MW at three separate facilities
2 solar power plants with 16.8 MWp installed capacity - 10.8 MWp already in operation and 6 MWp scheduled to become operational in 2020
6.0 MWp solar power plant (under development)
54.1 MW capacity at eight different points in Turkey
Developing and operating real estate projects
Consolidated total gross leasable area 84,797 m2
Retail gross leasable area 63,502 m2
Office gross leasable area 21,295 m2
Compressed Natural Gas Sales and
Turkey and Europe's leading CNG (Compressed Natural Gas) distributor in terms of station infrastructure and bulk sales volume
Controls c.20% market share in Turkey's total non-piped natural gas market
10 bulk CNG plants, 3 auto-CNG stations, 296 CNG road tankers and 47 industrial-scale compressors. All facilities and equipment established and used by the company conform to international standards and regulations.
One of the leading independent
players in the market serving domestic,
investors with its innovative product
securities and derivatives trading and
Trading volume of TL 80.4 billion
For further information www.globalyatirim.com.tr
Consolidated Balance Sheet (TL million)
Total Liabilities and Shareholders' Equity
Consolidated Income Statement (TL million)
Net Profit/(Loss) for the Period
GIH's main target was to maintain and improve the positive results it had achieved while the Group placed greater importance on being efficient, competitive and profitable in the core businesses.
For further information www.globalyatirim.com.tr
mıllıons of passengers through
Global Ports Holding Plc is the world's largest independent cruise port operator with an established presence in the Caribbean, Mediterranean, Asia-Pacific regions, including extensive commercial port operations in Turkey and Montenegro.
GPH was established in 2004 as an international port operator with a diversified portfolio of cruise and commercial ports. As an independent cruise port operator, the group holds a unique position in the cruise port landscape, positioning itself as the world's leading cruise port brand, with an integrated platform of cruise ports serving cruise liners, ferries, yachts and mega-yachts. The group also offers commercial port operations that specialise in container, bulk and general cargo handling.
A portfolio of award-winning ports and terminals allows GPH to transfer best practices to its subsidiaries. With a strong focus on operational excellence, enhanced security practices and customer-oriented services, GPH aims to contribute to the development of the cruise in- dustry.
GPH serves the needs of the world's cruise lines, ferries and mega yachts through a strategically located network of 19 cruise ports in 13 coun- tries. We offer our customers and their passengers top quality service that address specific requirements, and that are delivered with premium standards of safety, security and performance worldwide.
GPH's Cruise business model is focused on delivering both organic and inorganic growth. Organic growth focuses on increasing passenger volumes over the medium -term and deploying the portfolio of services to grow the revenue yield per PAX. The inorganic strategy is to expand the network through the selective acquisition of strategically chosen ports. GPH invests in them and applies the global best practice to maximise their full po- tential, increase passenger capacities and generate strong returns.
We welcomed 5.3 million cruise passengers to our consolidated and managed portfolio in 2019, a very pleasing growth rate of 17.7%. While at all ports including Venice, Lisbon and Singapore, our equity accounted for associate ports we welcomed 9.3 million* passengers, an 8.5% increase over the previous year. Over the year, our Cruise ports business generated 53.5% of the Company's revenue and 53.2% of our segmental EBITDA.
GPH operates two strategically located ports that handle commercial business. Port Akdeniz-Antalya, located on southern Turkey's Mediterranean coast, is one of Turkey's leading container export traffic ports. We are also the majority owner of the Port of Adria in Montene- gro, a vital link in the chain of inter- modal transport in the Balkans.
* 2018 Venice passenger volumes used in calculation due to unavailability of Q4 2019 data. 9M 2019 data implies modest YoY growth.
Global Ports Holding at a Glance
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The table below shows the percentage ownership that GPH holds in our ports.
THE SUCCESSFUL DELIVERY OF OUR STRATEGIC OBJECTIVES IN CRUISE WILL TRANSFORM
Our Commercial business generates most of its revenue from handling goods for export and import through our two dedicated ports, Port Akdeniz and Port of Adria. Each is focused on introducing new services and revenue streams to drive revenue and EBITDA growth, while also seeking new cargo volumes to further diversify their business mix.
These two ports together handled around 199 thousand TEU and 743
During 2019, we were successful in expanding the global reach of our portfolio. We grew our network in the Caribbean, winning the cruise port concessions for Nassau Cruise Port in the Bahamas and Antigua Cruise Port, in Antigua. We also added to our presence in Asia, with a management contract for Ha Long Bay in Vietnam. And our 50:50 JV successfully acquired the operator of La Goulette Cruise Port, Tunisia.
MÁLAGA CRUISE PORT
tons of throughputs in 2019. They generated 46.5% of the Company's revenue and 46.8% of its segmental EBITDA in the reporting year.
GPH's portfolio of cruise and commercial ports has been carefully and deliberately built over more than a decade, since our very first oper-
We onboarded the Caribbean ports into GPH's systems and approach in Q4 2019, and the investment phase has begun at both ports, the other two ports will be onboarded in H1 2020.
We look forward to transforming the passenger experience at these ports and increasing the volume of
Added four new ports to the portfolio in Nassau, Antigua,
Ha Long Bay and La Goulette
ation began in Ege Port Kuşadası, Turkey in 2004. With the strategically located network of 21 ports in 13 countries GPH serves the needs of the world's cruise lines, ferries and megayachts through interests in a strategically located network of cruise ports in 13 countries, as well as operating 2 strategically located commercial ports.
passenger numbers in the years ahead.
Global Ports Holding at a Glance
A year of 'marquee' additions to the portfolio and a good Cruise performance, but challenges in the Commercial segment.
A record number of passengers passengers (including Equity Accounted Investee's passenger)
A year of marquee additions to the portfolio and good cruise per- formance, but challenges in the Commercial segment. Our physical reach grew with the addition of our second and third Caribbean cruise ports in Nassau and Antigua and towards the end of the year; we added interests in cruise ports in Vietnam and Tunisia.
A CORNERSTONE OF OUR STRATEY IS TO ADD CRUISE PORTS TO THE PORTFOLIO WHERE WE CAN CREATE VALUE FOR SHAREHOLDERS AND ADD VALUE FOR ALL STAKEHOLDERS.
* 2018 Venice passenger volumes used in calculation due to unavailability of Q4 2019 data. 9M 2019 data implies modest YoY growth.
A Portfolio Mapped for Success
Málaga Cruise Port
For further information www.globalyatirim.com.tr
A globally diversified port network, with operational and management synergies
For further information www.globalyatirim.com.tr
WELL ESTABLISHED STRUCTURAL GROWTH TRENDS
Cruise lines and cruise brands The global cruise industry continues to be dominated by just four major groups: Carnival Corporation (41.8% of passengers worldwide), Royal Caribbean Cruise (23.8%), Norwegian Cruise Lines (9.0%) and MSC (8.6%). Between them, they
der books. And significantly, major brands are entering the fray for the first time, attracted by the strong fundamentals and returns. In 2020, Virgin Voyages and The Ritz-Carlton Yacht Collection cast off for the first time.
This ever-widening choice will be a major driver of growth for destina-
This activity can range from direct marketing to the cruise lines' itinerary planners through to working with local airport operators to deliver flight schedules that can help a port become a homeport. We help to develop destinations, supporting local stakeholders to offer a wide range of attractions that ensure a cruise passenger's stay is full of ad-
Source: D. Kolic & F. Kurtovic University of Rijeka, Croatia.
The global cruise industry continues to be dominated by just four major groups: Carnival Corporation, Royal Caribbean Cruise, Norwegian Cruise Lines and MSC.
hosted 83.2% of total worldwide cruise passengers in 2019.
This 'big four' dominance, howev- er, does not mean a lack of choice for the passenger. All the groups operate a portfolio of differentiated cruise brands across the world, enabling them to target passengers across different source markets, be that by geography, demographics, life stage and the particular type of cruise experience they're looking for.
This means that a constant reinvention of 'the cruise' is giving customers a broader choice than ever be- fore. New ships, brands, concepts, food, design and a transformation in on-board entertainment are all attracting new passengers. With product and brand segmentation playing a critical part in this process, a cruise holiday is no longer a homogenous product.
The major groups' success in this endeavour is creating ever-broader customer bases, consistent levels of growth and returns and, inevita- bly, more competition. Smaller cruise lines are accelerating their plans to increase the size of their fleets, as evidenced by the shipyards' or-
tions in the years ahead. However, it could also fundamentally change the dynamics of the industry.
As the market continues to evolve established market shares are expected to fragment, as new entrants and smaller cruise lines outgrow the more established lines. This new market structure is disrupting the status quo in the relationship between cruise lines and cruise destinations could fundamentally change.
The market share of any cruise region and destination is driven by a range of factors. They include the proximity to source markets, the perceived attractiveness of a destination as well as the practical issues of seasonality, weather and direct flights to homeports. Although many of these factors are beyond our control, Global Ports Holding works tirelessly in the mutual interest of helping our cruise destinations to drive new demand. We believe this activity will become increasingly important as market shares fragment.
Like other travel sectors, the cruise industry's impact on the environment is being increasingly scru- tinised, particularly given its forecasted growth. We welcome this and it is pleasing to see a real determination across the industry to reduce environmental impact. According to the Cruise Lines International Association's (CLIA) most recent Environmental Technologies and Practice Report, 44% of new- build capacity will use LNG as its primary fuel, with two such ships entering service in 2020. This will rise to 67% of LNG-fuelled capacity in 2026.
Using LNG reduces sulphur emissions by 100%, nitrogen oxide emissions by 96 -100%, nitrogen oxide by 85% and CO2 by 25%. Of the new-build ships that do not use LNG, 75% of them will be fitted with Exhaust Gas Cleaning Systems (EGCS). These 'scrubbers' significantly reduce emissions.
The industry is also taking small but important steps such as banning single-use plastic, not only onboard but along the cruise supply chains. There is also a continued focus on new technology in areas such as wastewater treatment systems, solar energy, fuel cell technology and efficient lighting.
Perhaps one of the most significant developments will be the increase in shore power. Being able to plug into the local power grid while in port will significantly reduce emissions from cruise ships. According to CLIA, 88% of new-build ships will be equipped with shore-side power capabilities.
On the ground, the cruise industry has a positive economic impact on its destinations. But as the sector grows, so will its demands on local social and environmental eco-systems and infrastructure. While cruise tourism often only represents a small percentage of the total number of tourists in a destination, the size of the ships means the industry can receive a disproportionate amount of attention.
We are sensitive to the impact of cruise tourism in our local commu- nities. We work with local stakeholders to minimise the impact on the local environment, for example by taking steps to manage the passenger flow and encouraging a wide dispersal of passengers by alerting them to the full range of attractions on-shore.
GPH takes its responsibility to the environment and our local ecosystems seriously. Most of our ports have been awarded one or more accreditations, including ISO 14001 (Environmental Management Sys- tem) and/or the EcoPort certifica- tion. Our goal is for all our ports to be EcoPort certified and where this is not possible, we are committing to running our operations in line with the EcoPort Certification and our HSE manual.
Industry Sector Report and Outlook
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THE CRUISE SHIP ORDER BOOK CONTINUES TO BE SUPPORTIVE OF FUTURE GROWTH, WITH 115 SHIPS CURRENTLY ORDERED FOR DELIVERY OVER THE NEXT DECADE.
Resilient growth in cruise tourism Cruise tourism is an extraordinary success story, rising from 230 ships and 10.3 million passengers in 1998 to today's 300 ships and nearly 30 million passengers. But as importantly, it has proved to be exceptionally resilient, with a passenger base that has grown despite headwinds such as Gulf wars, SARS, Asian Flu, the financial crisis and terrorism.
A key driver of this resilience in passenger growth is the long lead times for cruise holiday bookings, which means that holiday plans have often been decided long before a given crisis starts to impact
bution and, when required, dynamic pricing. With ships sailing full, new cruise ships coming on stream effectively generate their own growth.
The cruise ship order book continues to be supportive of future growth, with 115 ships currently ordered for delivery over the next decade. This supply of new vessels indicates that by 2027, passenger capacity will have grown to nearly 41 million - and this could be a conservative estimate.
Most established shipyards are working at capacity for the foreseeable future, and with such sound industry fundamentals it is
No matter which demographics or destinations the ships ultimately serve, the combination of increased build capacity and the options to order additional ships means that industry capacity is likely to grow beyond the current cruise ship order book.
But this cruise industry growth will come with challenges. With more ships in the water, and with a trend towards increasing sizes, destinations must look hard at their cruise port infrastructure. Being ready for today's buoyant market is not enough; they need to be looking now at the demands of the next 10-20 years.
P & O Cruises UK
The impact of Covid-19 and the subsequent introduction of significant travel restrictions is going to test the industry's previous high levels of resilience. However, while there may be uncertainty as to when things will return to normal, the attractions of the industry to tourists is likely to remain.
Perhaps most importantly, the business model of the cruise lines revolves around managing occupancy levels. Historically, when demand falls, promotions and pricing are used to stimulate demand and
not surprising that new ship building capacity is beginning to enter the market. In turn, this could allow some cruise lines to accelerate their ship building, plans and itineraries.
In 2019, the first ocean-going cruise ship to be built on the Chi- nese mainland entered production, at a new shipyard backed with an investment of more than USD 260 million. The ship, with a capacity of 5,246 passengers, is due for delivery in September 2023, with a second due the following year and with an option for a further four.
For many destinations, that will mean investing in their port infrastructure to expand their capacity and improve the passenger expe- rience. While tendering passengers to shore has previously allowed some ports the flexibility to handle more people than their infrastructure allows, the capacity of the newest ships means that tendering is not realistic. A failure to invest now and future-proof their infrastructure will risk being left behind.
We believe Global Ports Holding is well-positioned to be a key enabler of the infrastructure investment, not
Cruise ports need to be more than just a facility to embark or disem- bark. Passengers increasingly expect a well-designed and well-invested cruise terminal, with tailored services, contemporary and locally -focused food and drink, and exciting retail outlets. And their expectations do not stop30 there.
The experience beyond the port is also important, whether its tasting local food specialties, visiting special heritage sites and ancient ruins or going snorkeling and scuba diving - they're looking for adventure. In addition, when they call at a port, whether that is touring ancient ruins or going scuba diving. In some destinations, these adventures are readily available, but in others coordination between all stakeholders is needed.
Longer term, this growth is driven by a combination of the cruise lines' business model and the shipyards' order books. The model dictates that cruise ships almost always sail full, driven by long booking patterns, global source markets, strong distri-
made cruise ship building a major objective of its "Made in China 2025" programme. With China now the second largest source market in the world for cruise passengers, much of the increased cruise ship building capacity could be used to accommodate demand sourced from China.
just for today's demands but tomor- row's passenger volumes, tastes and needs.
CRUISE TOURISM IS AN EXTRAORDINARY SUCCESS STORY, FROM 230 SHIPS-10.3 MILLION PASSENGERS IN 1998 TO 300 SHIPS AND 30 MILLION PASSENGERS.
For further information www.globalyatirim.com.tr
Industry Sector Report and Outlook
2009-2018 PASSENGER TRAFFIC SNAPSHOT GLOBAL OCEAN CRUISE PASSENGER (MILLION)
2020 = 32 Million Passengers expected to cruise
Global Ports Holding's all stakeholder
Through our all stakeholder approach we believe we are well-positioned to help stakeholders manage the growth in their passenger volumes.
By combining significant investment into ports with our global expertise, we are not only maximising the passenger capacity at ports by enabling them to handle the world's largest cruise ships but, as importantly, we
Source: CLIA - State of the Industry 2019
Key drivers include the globalisation of cruising as a holiday option; low penetration in the main source markets; and new ships and products for wider demographic groups.
a great experience for cruise passengers, but it also ensures cruise tourism benefits the local businesses and local people.
• help the cruise lines to manage the
growth in their passenger volumes;
• show destinations how to plan and
be future-ready in their infrastruc-
with our global expertise, maxi-
mising passenger capacity by en-
abling ports to handle the world's
understand how to deliver an ex-
cellent cruise port experience that
bring stakeholders together to en-
sure the cruise port experience for
passengers extends to the desti-
are also aiming to improve the experience that each passenger has at both the port and destination.
We work closely with all our stake- holders, creating new and dynamic services that elevate the passenger experience in the port but also bring stakeholders together to ensure the cruise port experience for passengers extends to attractions, excursions and services in the destination.
Global Ports Holding's all stakeholder approach ensures a great experience for cruise passengers, but it also ensures cruise tourism benefits the local businesses and local people and that ports and destinations are well prepared to meet the cruise
GLOBAL ORDERBOOK/TOTAL SHIP CAPACITY '000 PAX
Source: 2020 State of the Industry and Future Forecast Annual Report 33rd Edition;
cruise tourism benefits the local
We believe that we are well-positioned to help the cruise lines manage the growth in their passenger volumes while helping destinations not just is future-ready in terms of their infrastructure but to also be ready to meet the wider needs of not just today's cruise passengers, but also the cruise passengers of tomor- row.
passengers of today and tomorrow.
MARKET SHARE OF CRUISE LINES BY WORLDWIDE PASSENGERS 2019
Source: 2020 State of the Industry and Future Forecast Annual Report 33rd Edition; Cruise Industry News
Cruise ship order books have scaled record highs globally, and are set to register substantially in terms of cruise passenger volumes.
A very popular tourist destination in Turkey
As we reported last year, projections pointed to a slow 2019 for cruise port activity, and so it proved. Nevertheless, Antalya's allure still attracted some 11 million visitors as land-based tourism increased, and it continues to rank as the fourth most visited city in the world. Cruise tourism tends to lag behind land- based visits, both into and out of any downturn in volumes, but the fundamentals of Antalya remain strong. We continue to work with the tourism ministry, cruise lines and tourism agencies
GPH AND ANTALYA CRUISE PORT
Antalya Cruise Port falls under Port Akdeniz, our commercial port. GPH acquired a 40% stake in Port Ak- deniz, Antalya in 2006, thereafter increasing its share to 99.9% in July 2010. In order to sustain a steady rise in both commercial and cruise operations, GPH has made significant investments in port capacity.
Maximum Ship Dimensions for Berthing
Total Berthing Lines Length: 510 m
Distances/Transportation City Centre: 20 km Airport: 30 km
A marquee port in the Eastern Caribbean
GPH welcomed Antigua into our portfolio in Q4 2019, when we signed a 30-year concession agreement, with a right to extend for a further 10 years, for St. John's cruise port in Antigua & Barbuda.
This initial period, under the direction of a new General Manager, has been focused on laying ambitious plans for the development of the port, embedding our culture and working practices, and working closely with all stakeholders to improve aspects of the port and the port experience.
Maximum Ship Dimensions for Berthing
Total Number of Berths: 5 Total Berthing Line Length: Approx. 1904m incl. dolphins Quay Depth: 9 - 11 m
Tidal Movement/Range: 0.7 m- negligible
Bar was successful in maintaining the significant increase in passengers it achieved in the prior year. The port's status and profile continue to rise within the cruise industry as we work with all stakeholders to promote this compelling destination. The plan to develop a small terminal and retail area, first planned for 2019, remains under consideration.
GPH AND BAR CRUISE PORT
Bar cruise port falls under the commercial port, Port of Adria. Global Ports Holding acquired the operating rights of the Port of Adria through privatization in 2013. GPH owns a majority stake in the port, and the acquisition marked GPH's first overseas acquisition investment.
Maximum Ship Dimensions for Berthing
Total Berthing Lines Length: 490 m
Quays Depth: 10.5 m -12 m
Distances/Transportation City Centre: 1 km
Airport: Podgorica 68 km/ Tivat 56.9 km
Maximum Ship Dimensions for Berthing
Draught: Up to 8 m (Barcelona Pier)
Up to 12 m (Adossat Pier)
Another remarkable year where we helped more than 2 million passengers enjoy this vibrant city.
But the year was also significant for the redesigned, refurbished and re- launched immersive travel retail offering in two of the terminals.
The passenger experience has been completely transformed, with floor designs inspired by the artwork of Antoni Gaudí, and goods displayed in an open market style.
This has translated into a significant uplift in sales.
GPH holds a 62% stake in Creuers through Barcelona Port Investment (BPI), established in partnership with Royal Caribbean Cruises Ltd (RCCL), one of the world's leading cruise line operators. Creuers holds 27-year port operational rights for four cruise terminals at Barcelona Cruise Port, and an annual operating license contract for a fifth cruise terminal.
Total Berthing Lines Length: 2,350 m
Quays Depth: Up to 8 m (Barcelona), up to 12 m (Adossat Pier)
Distances/Transportation City Centre: 2.5 km Airport: 12 km
Barcelona Cruise Port GPH Acquisition Date: 2013-2014
End of Concession* : 2026 (WTC wharf), 2030 (Adossat wharf)
Maximum Ship Dimensions for Berthing
A quiet year, as expected, with the effects of previous geopolitical issues in the Eastern Mediterranean continuing to be felt. We appointed a new General Manager in Janu- ary 2019 which invigorated the marketing of both the port and the destination to the cruise industry. In addition, we ramped up marketing activity to the super- and me- ga-yacht sectors.
The port was also proud to attain EcoPorts certification, the highly respected international environmental initiative.
GPH AND BODRUM CRUISE PORT Bodrum Cruise Port was originally tendered by the State Railways, Ports and Airports Construction Administration in September 2003 through a build-operate-transfer (BOT) agreement. In April 2007, GPH acquired a 60% stake in the port's operator. The other shareholders in Bodrum Cruise Port are Setur Turis- tik Servis A.Ş., a duty-free operator owned by the Koç Group of Turkey (10%), and Yüksel Çağlar, a local entrepreneur (30%).
Total Berthing Lines Length: 680 m
Quays depth: 8 m - 22 m
Distances/Transportation City Centre: 1.5 km Airport: 36 km
Passenger volumes continue to improve
During the year we welcomed the major cruise lines to Cagliari for familiarisation trips, so that they could see first-hand what the city and region have to offer them and their passengers. These experiences were highly successful; almost all of the operators who visited then added Cagliari to their schedules for 2020. Separately, we were pleased to see growing revenues from our Guest Information Centres (GICs), driven by new products and services.
GPH AND CAGLIARI CRUISE PORT
Global Ports Holding has operated the port since 2016, when we obtained the majority of indirect shares in Cagliari Cruise Ports, along with other Italian ports located in Catania and Ravenna.
Maximum Ship Dimensions for Berthing
Total Berthing Lines Length: 1,250 m
Quays depth: 8 m - 11 m
Distances/Transportation City Centre: 500 m Airport: 7 km
The port welcomed a strong increase in passenger volumes, reflecting the awareness campaign conducted in recent years to raise the profile of Catania within the in- dustry. We also continued to make improvements: despite a delay in extending the cruise terminal (due to a management change at the port authority) we still succeeded in increasing the retail area within the current terminal footprint.
GPH AND CATANIA CRUISE PORT
Global Ports Holding acquired the majority stake in Catania Cruise Terminal Srl in 2016, along with other Italian ports located in Ravenna and Cagliari.
Maximum Ship Dimensions for Berthing
Total Berthing Lines Length: 1,600 m
Quays Depth: 10 m -13 m
Distances/Transportation City Centre: 500 m Airport: 5.3 km
* Potential extension being discussed with Port Authority
Passenger volumes start to recover
It is always pleasing to see a projected recovery materialise, and 2019 brought an increase in passenger numbers of over 30% at Kuşadası. The jewel in the crown of Turkey's cruise ports, it welcomed not only numerous visitors but attracted all the major cruise lines.
Another significant milestone was Ege Port becoming the world's first cruise port to receive the EcoPorts certificate.
GPH AND EGE PORT KUŞADASI
In July 2003, as a result of privat- ization, the operation rights of the Port of Kuşadası were transferred to Global Ports Holding. RCCL holds a 27.5% stake.
Maximum Ship Dimensions for Berthing
Total Berthing Lines Length: 1,297 m
Quays Depth: 9 m - 19 m
A GATEWAY TO CRUISE VIETNAM
Towards the end of Q4, we welcomed Ha Long International Cruise Port into the portfolio when we signed a 15-year management agreement. It is the first purpose -built cruise port in Vietnam, having recently benefited from a USD44 million investment. Ha Long is capable of accommodating the world's largest cruise ships and handled c. 75,000 passengers in 2019.
Maximum Ship Dimensions for Berthing
Total Number of Berths: 2 Total Berthing Line Length: Approx. 924 m incl. dolphins Quay Depth:
Vary from 10 m -14 m Bus Capacity: 30
a dısrupted year ın havana
During 2019, the number of cruise ships travelling to Cuba declined.
Our management agreement is focused on us advising the port on best practice for cruise port oper- ation, and GPH has not invested in the port. We continue to monitor the situation and remain engaged with all stakeholders.
Maximum Ship Dimensions for Berthing
Length: B1 275 m - B2 220 m
Width: B1 no limit - B2 35 m
Draught: B1 9 m - B2 7 m
Total Number of Berths: 2 Total Berthing Lines Length: 200 m
Distances/Transportation City Centre: 5 km
La Habana Cruise Port GPH Acquisition date: 2018 End of Concession: 2033
At the end of Q4 2019, Goulette Cruise Holding Ltd, our joint venture with MSC Cruises S.A. ("MSC"), completed the acquisition of Goulette Shipping Cruise, the company that operates the cruise terminal in La Goulette, Tunisia. The concession to operate the cruise port was awarded to Goulette Shipping Cruise in 2006 on a 30-year basis, with a right to extend the term for an additional 20 years.
Maximum Ship Dimensions for Berthing
Total Number of Berths: 3 Total Berthing Line Length: C1 & C2 = 657 m
1BIS berth of approx. 100 m consisting of 2 dolphins and two access bridges
Priority on 400 m in the existing port authority berth (Quays 1 to 7)
Quay Depth: Vary 5.1 m - 10 m
Maximum Ship Dimensions for Berthing
Once again, the port was recognised by the World Travel Awards as the Best European Port.
During the year the Port was successful in increasing the number of events it hosts at the terminal. We welcomed a number of high-end events but we also welcomed a number of events that aligned the Port with local stakeholders.
On the ancillary services side, we introduced new ship-focused services such as refurbishment and scrubber installation, while for disembarking passengers we introduced self-check-in desks for Lis- bon Airport. Unfortunately, a new café area opened during the year, failed to capture the expected footfall and closed in December 2019.
GPH AND LISBON CRUISE PORT Lisbon Cruise Port (LCP) is a privately -owned company holding exclusive operational rights for the cruise terminals of the Port of Lis- bon. Established by Global Ports Holding PLC, Grupo Sousa SGPS, Royal Caribbean Cruises Ltd and Creuers del Port de Barcelona, LCP commenced operations in August 2014. GPH holds a 46.2% stake in Lisbon Cruise Port, of which 40% is held directly and 6.2% indirectly through GPH's 62% stake in BPI's 100% holding in Creuers Del Port de Barcelona.
Total Berthing Lines Length: 1,425 m (With a Possible Further 900 m)
Quays Depth: (-8.3) Zh Till (-12) Zh
Distances/Transportation City Centre: 500 m Airport: 8 km
Maximum Ship Dimensions for Berthing
Much of the focus in 2019 was on developments that will start to bear fruit in 2020. Most importantly, we successfully concluded discussions with Autoridad Portuaria de Malaga (Malaga Port Authority) to purchase their 20% shareholding in Malaga Cruise Port. The financial close was reached in early Q1 2020.
GPH AND MÁLAGA CRUISE PORT Established in 2008 as part of Creuers del Port de Barcelona, Málaga Cruise Port manages all three cruise terminals of the Port of Málaga. When Global Ports Holding acquired Creuers del Port de Barcelona in 2014, it also obtained a controlling 80% stake in Mála- ga Cruise Port, the operating con- cession. At the beginning of 2020, Creuers Del Port de Barcelona SA
("Creuers") has completed the purchase of Autoridad Portuaria de Malagas's (Malaga Port Authority) 20.0% holding in the Malaga cruise port concession for EUR 1.5 million. This increases Creuers ownership of the Malaga cruise port concession to 100% and GPH's effective ownership to 62% from 49.6%.
Total Berthing Lines Length: 1,350 m
Quays depth: 11 m - 17 m
Distances/Transportation City Centre: 500 m Airport: 8 km
Málaga Cruise Port GPH Acquisition Date: 2013-2014
End of Concession*: 2038 (Levante), 2041 (Palmeral)
* The extension of the current concession is 2050 and 2054 respectively. The process is ongoing.
Marking a key milestone in the development of the Group, we welcomed Nassau into the portfolio in Q4 2019. Nassau Cruise Port Ltd ("NCP"), a consortium comprising GPH, the Bahamas Investment Fund and the Yes Foundation, signed a 25-year concession agreement, with an option to extend for a further 15 years, with the Government of the Bahamas for the Prince George Wharf and related areas, at Nassau Cruise Port.
Operationally, we immediately focused on embedding our culture and working practices into the port, while financially we have concentrated on finalising details of the planned USD 250 million infrastructure investment, including securing financing.
Maximum Ship Dimensions for Berthing
Total Berthing Lines Length: 2,230 m
Quays depth: 8.9 m - 12.5 m
Distances/Transportation City Centre: 500 m Airport: 22 km
Becalmed and waiting for action
As we reported last year, the positive momentum and growth generated since we acquired the port came to a halt in 2018 due to an inadequate dredging programme by the port authority. This issue resulted in most cruise lines cancelling all calls, and with the problem unresolved, 2019 remained a challenging year for the port.
GPH AND RAVENNA CRUISE PORT GPH welcomed Ravenna into our portfolio in 2016, upon acquiring a majority holding in Ravenna Terminal Passeggeri.
Maximum Ship Dimensions for Berthing
Total Berthing Lines Length: 600 m
Distances/Transportation City Centre: 14 km Airport: 75 km
Once again Singapore welcomed a record number of passengers in the year, however, the most significant development during the year was the extension of the concession out to 2027. This extension was part of the initial concession agreement, but it was still pleasing to have the extension confirmed at what is one of the foremost cruise ports in the region.
GPH AND MARINA BAY CRUISE CENTRE SINGAPORE Singapore's cruise port is the Marina Bay Cruise Centre Singapore (MBCCS). As part of GPH's acquisition of Creuers del Port de Barcelo- na in 2014, we hold a 24.8% stake in SATS Creuers, the terminal operator of MBCCS. The remaining stake is held by SATS Ltd., Asia's leading service provider to the aviation in- dustry, and a supplier of non-aviation catering.
Maximum Ship Dimensions for Berthing
Length: Max 360 m at Berth 2
Total Berthing Lines Length: 695 m
Quays Depth: 11.3 m - 11.5 m
Distances/Transportation City centre: 3 km
Marina Bay Cruise Centre, Singapore
Valletta performed strongly in 2019, with strong growth in homeporting passengers leading to record passenger volumes and EBITDA. This very welcome growth in homeport- ing did, however, bring some detriment to our retail operations. During the year, we renewed the leases across most of the food and beverage outlets within the port area and finalised our plans for investment in operations in 2020.
GPH AND VALETTA CRUISE PORT In 2015, Global Ports Holding completed its acquisition of a 55.6% stake in Valletta Cruise Port (VCP). VCP took over the cruise and ferry terminal in 2001 after winning a 65-year concession from the Government of Malta and is engaged in port operations and the leasing of office, catering and retail outlets.
Maximum Ship Dimensions for Berthing
Total Berthing Lines Length: 2,166 m
Quays depth: 10.5 m - 11 m
Distances/Transportation City Centre: 1.5 km Airport: 6 km
In 2019, Venice Cruise Port once again performed in line with expectations and Venice itself remains one of the must see destinations in the Mediterranean.
GPH AND VENICE CRUISE PORT
In 2016, GPH joined a consortium to acquire a stake in VTP, adding to our portfolio the preeminent gateway for cruising into the Adriatic and the Eastern Mediterranean.
Maximum Ship Dimensions Length: 340 m Width: No limit Draught: Up to 9.1 m Turning basin: Up to 340 m
Total berth: 7 up to 12 (1 for river cruises)
Total Berthing Lines Length: 3,400 m
Distances/Transportation City Centre: 500 m Airport: 13 km
We welcomed Zadar into the portfolio in Q4 2018, so 2019 was spent embedding our culture and practices while also learning more about the port and its place in the com- munity. With a new GM appointed mid-year, we initiated a workflow on community engagement, profile -raising and working with all stakeholders to developing a cruise tourism strategy.
In September, we were delighted when Zadar won Port of the Year 2019 in the Seatrade Cruise Awards. A considerable achievement just a year after we signed the concession agreement.
GPH AND ZADAR CRUISE PORT GPH welcomed Zadar into its portfolio in 2018, when awarded the 20-year operating rights for the Ga- zenica cruise port in Zadar.
Maximum Ship Dimensions for Berthing
Total Number of Berths: 5 Total Berthing Lines Length: 180 m - 375 m
Maritime transport is, a barometer of the health of world trade, and over the last three decades, seaborne trade has grown significantly, driven by global economic growth, cost-efficiency and unrivalled versatility.
OVERALL OUTLOOK FOR COMMERCIAL SHIPPING IS UNCERTAIN
Around 80% of global trade, and 70% of its overall value, is loaded onto a ship at a port.
In turn, this modality serves, directly or indirectly, virtually everything we take for granted in daily life. From clothes and household appliances; to food and pharmaceuticals; to the computer screen, or paper and ink, that's bringing you this report. At some point in the chain, vessels and ports enable most of what we use and need.
Maritime transport is, therefore, a barometer of the health of world trade, and over the last three de- cades, seaborne trade has grown significantly, driven by global economic growth, cost-efficiency and unrivalled versatility.
A central driver of demand has been manufacturers off-shoring their operations to countries with lower production costs. This results in increasing volumes of intermediate and finished goods needing transportation to their country of final purchase.
But maritime transport has also benefited from the liberalisation of international trade policies, new trading partners, access to new markets and growing trade and co-operation agreements. Alongside this, we have seen the opening of major economies; in particu- lar, China. And this is reflected by the
carrying capacity of the world fleet: it has more than doubled since 2000, having been largely static for the preceding 20 years.
Some of the key factors that had previously driven growth in maritime trade combined to slow the sector down in 2019. Notably, there were new trade tensions and trade tar- iffs, particularly between the US and China. This was exacerbated by the Chinese economy experiencing its slowest growth rate since 1990.
Demand from China is critical to the global dry bulk and containerised trade. In the past decade, it has accounted for close to half of global maritime trade growth; indeed glob- ally, imports from China account for around 25% of all seaborne trade.
Despite this Chinese slowdown, maritime trade is still forecast to grow, albeit at a considerably reduced rate. The United Nations Conference on Trade and Development (UNCTAD) now expects growth averaging 3.5% between 2019-2024, down from a projected 3.8% growth out to 2023.
The shipping consultancy Drewry concurs. In its Global Container Terminal Operators Annual Review and Forecast 2019, it is now forecasting world container port throughput to increase by 3.3% in 2020. Although higher than their estimate of 2.3% for 2019, it is notably less bullish than the 4.0% growth for 2020 they were forecasting in Q3 2019.
Although GPH has very little direct exposure to the USA, China is an essential market for our Commercial ports, particularly Port Akdeniz. During 2019, our ports experienced a significant slowdown, with con- tainerised marble volumes to China being particularly weak. We believe much of this stems from the trade tensions and their direct and indirect impact on demand for marble. There were signs of stabilisation in volumes in Q4, but it would be premature to read this as a new dawn. We, therefore, remain vigilant for any further weakness.
Despite the headwinds globally, there is still room for optimism. According to Drewry, containerised and dry bulk volumes are expected to grow at 4.5% and 3.9% per annum respectively, between 2019- 2024.
Key developments in the container market
The container market is currently experiencing various market trends and developments.
On 1st January 2020, every vessel in mainstream maritime transport came under the new IMO 2020 regulations. These new global stan- dards, imposed by the International Maritime Organisation, introduced a 0.5% cap on the sulphur content on fuel oil for all ships, compared to 3.5% previously.
During 2019, this caused a reduction in capacity globally as ships were drydocked and retrofitted with exhaust cleaning systems to ensure compliance with the new measures. The new standards are expected to lead to increasing costs which could, in time, hurt trade volumes. However, we welcome regulations that are having such a positive impact on the environmental footprint of the industry.
TURKEY AND GPH SITS AT THE VERY HEART OF TRADE BETWEEN EUROPE, ASIA AND THE MIDDLE EAST.
Global Ports Holding takes its responsibility to the environment and our local ecosystems seriously. Both of our Commercial ports have been awarded a range of certifications related to our environmental poli- cies, from ISO 14001 Environmental Management through to ISO 45001 Occupational Health and Safety. We remain committed to upholding the highest levels of environmental stan- dards.
Port Akdeniz, which generates over 95% of our Commercial EBITDA, is predominately an export port. It is, therefore, more tied to the fortunes of the Chinese economy (and attendant global trade tensions) than the health of the Turkish economy.
These dynamics aside, the inherent strengths of the Turkish maritime industry remain undiminished. Turkey, and therefore GPH, sits at the very heart of trade between Europe, Asia and the Middle East. Its geostrate- gic location, between the Mediterranean and the Black Sea and with an 8,000+ kilometre-long coastline, provides clear advantages for sea- borne trade.
The country remains rich in marble resources, located on the Alpine-Hi- malayan belt, and as and when marble export volumes recover, Port Akdeniz stands ready to benefit. Turkey also has one of the largest agricultural sectors in the world and the port is located in one of the country's key growing regions. Indeed, exports of fresh fruit and vegetables from An- talya represent around 20% of the country's total. Exporters in this market are increasingly looking to make
maritime their transportation mode of choice, moving away from road and air. We hope to play a central role in developing this export trade, which is supported by the Govern- ment's stated aim of Turkey ranking among the top five food producers globally by 2023.
Further potential demand comes from the construction industry. Turkey has an abundance of the resources needed to manufacture cement and clinker, and the growing construction markets in China, the Middle East, North Africa, the western Mediterranean and the Black Sea all need to be served. Interestingly, Port Akdeniz is well located for some potentially significant hydrocarbons deposits in the Mediterranean and could act as a support services provider.
The impact of Covid-19 on the global commercial shipping industry remains as yet, unclear. There are signs that the Chinese economy is beginning to the process of returning to normality. However, how the measures being taken elsewhere around the world will impact global trade over the remainder of 2020 is at this stage not clear.
Port Akdeniz: a key focus for 2020 will be continued diversification of our cargo volumes.
Port of Adria: with our RORO services now live, we aim to continue to attract new volumes to the port, aided also by the port's block train service and the upcoming motorway connection.
The year was a challenging one for the port, with global trade wars and the introduction of trade tariffs having a negative impact on blocked marble volumes to China. Cement volumes also suffered, due to manufacturers in the port's hinterland losing market share. While some General & Bulk volumes were lost to the neighbouring Free Trade Zone, these were not considered to be significant. During the year the oil services contract came to an end, although this is expected to recommence once the drilling program returns to the waters near Antalya.
During the year the Competition Authority of the Republic of Turkey notified the Group that it had opened an investigation into Port Akdeniz. It alleges a breach of Article 6 of the Law on the Protection of Competition (Law No. 4054) relating to excessive pricing on certain services. We believe the allegations to be unfounded, but the matter is not expected to be concluded until 2021.
On a more positive note, we started hazardous liquid handling as planned.
In early 2020, GPH entered into exclusive negotiations over the potential sale of Port Akdeniz.
GPH AND PORT AKDENİZ
Global Ports Holding became the sole owner and operator of Port Ak- deniz, Antalya, in July 2010.
A frustrating year but positives ahead
Despite marketing activity throughout the year to attract new cargo volumes, the port was negatively impacted by a change in the relationship between commercial lines and feeder services. We also continued to work with our partners to increase the frequency of the block train to Sremska Mitrovica. The planned launch of our new RORO operation, scheduled for 2019, was slightly delayed by our customer until early 2020..
GPH AND PORT OF ADRIA
Global Ports Holding acquired the operating rights of Port of Adria through privatization in 2013. GPH holds a majority stake in the port, and the acquisition marked its first
ENERGY GENERATION from renewable resources wıth
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by 2030. However, the oil should continue to play a major role in the world's energy mix, with expanding demand driven by commercial transportation and the chemicals industry.
High growth energy market Over the past 15 years, Turkey has ranked among the world's fastest -growing energy markets, due to its population, urbanization, industrialization and economic growth.
IN TURKEY, PER CAPITA CONSUMPTION IS 3.7 MWH, WHEREAS THE OECD
HUMAN ACTIVITY IS HIGHLY DEPENDENT ON ELECTRICITY. GLOBAL ELECTRICITY DEMAND IS FORECAST TO RISE BY 60% BY 2040, LED BY A NEARLY DOUBLING POWER DEMAND IN NON-OECD NATIONS.
Energy is essential for modern life Easy access to a reliable energy source is closely linked with improvements to the quality of life. Over the next few decades, an expanding population and rising prosperity will increase demand for homes, businesses and transportation as well as the energy that powers them.
Global energy needs projecting to rise 20%, led by non-OECD nations
By 2040, the world's population is expected to reach 9.2 billion, up from 7.4 billion today. Over the same period, global GDP is forecast to double. As a result, per capita GDP is projected to rise significantly. In turn, global energy demand will expand,
Electricity demand nearly doubles in non-OECD countries Human activity is highly dependent on electricity. Global electricity demand is forecast to rise by 60% by 2040, led by a nearly doubling power demand in non-OECD nations.
Global energy mix shifts to lower-carbon fuels Renewables and nuclear energy are expected to see strong growth, contributing some 40% of incremental energy supplies to meet demand growth. One of the fastest -growing segments should be electricity from solar and wind, together with expanding about 400%. The combined share of solar and wind in global electricity supplies is likely to triple by 2040, enabling CO 2 intensity of delivered electricity to decline more than 30%. Natural gas is set to record the highest
Decarbonization of the world's energy system will accelerate As the world's economy doubles by 2040, energy efficiency gains and a shift to less carbon-intense energy sources should contribute to a nearly 45% decline in the carbon intensity of global GDP. Global energy -related CO 2 emissions are expected to peak by 2035 at about 5% above the 2019 level.
Turkey has a booming energy market with expansive industrial and household energy demand, mostly due to the growing Turkish economy.
The government has pursued long- term liberalization and an incentive program in the energy market to attract private investment in order to meet projected demand.
Low per capita consumption Turkey's electricity consumption per capita is significantly less than the European average. In Turkey, per capita consumption is 3.7 MWh, while the OECD average is 8.8 MWh, implying considerable growth po- tential.
Turkey's economic development has lifted the population's welfare and boosted access to technology, which will ultimately drive consumption rates upward. Per capita, electricity consumption in Turkey has risen steadily, with the exception of 2009 and 2019, when the sector faced negative effects of domestic and global economic activity. Electricity demand grows in direct proportion to the increase in population and is closely associated with the growth rate of the country's gross domestic product (GDP).
reflecting its fundamental link to growing prosperity and better living standards for a growing population worldwide. Despite efficiency gains, global energy demand is expected to increase by nearly 20%. The majority of energy growth will be in non-OECD countries, where demand is forecast to increase over 35%, or about the same amount of energy consumed in the Americas today. Global energy consumption continues to shift proportionally to emerging markets where population and economic growth both outpace the global average.
The non-OECD share of global energy demand will climb to about 70% in 2040, as efficiency gains and slowing economic growth in OECD nations help keep their energy demand relatively flat.
growth of any energy type, reaching one-quarter of all demand. Oil is forecast to play a leading role in the world's energy mix, with growing demand driven by commercial transportation needs and feed- stock requirements for the chemicals industry. Coal use is expected to remain significant in parts of the world while losing substantial share amid the global transition to lower emissions energy sources.
Oil plays a leading role in facilitating mobility and modern products
The proliferation of electric cars and efficiency improvements in conventional engines is expected to lead to a peak in liquid fuel use by the world's light-duty vehicle fleet
The liberalization process and sector -specific regulations introduced by EMRA (Energy Market Regulatory Authority) with the ultimate objective of fostering a free energy market have led to more competitive and efficient market structures.
While capacity expansion remains a priority in light of rising electricity demand, Turkey's government also aims to boost energy security and reduce reliance on imported fossil fuel resources. Increased investment in renewables is actively encouraged as thermal power plants rely on local fossil fuel sources such as lignite.
ELECTRICITY CONSUMPTION PER CAPITA (MWH PER CAPITA)
Brazil Mexico China World Turkey Poland
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DEVELOPMENT OF TURKISH POWER PRODUCTION AND CONSUMPTION (TWH)
Turkey has recorded the fastest expansion in electricity demand
SUPPLY - DEMAND DYNAMICS… Supply and demand figures in the Turkish electricity market have demonstrated significant progress as a result of an expanding user base and rising electricity consumption per user.
Turkey has recorded the fastest expansion in electricity demand among OECD members, posting average annual growth of 5.0% since 2002. Gross electricity consumption in the country was 304 TWh in 2018; this figure remained flattish in 2019. Recent gross electric-
among OECD members, posting average annual growth of 5.0% since 2002.
The number of household electricity users has increased due to the growing Turkish population. Meanwhile, the industrial consumer base has expanded due to the rising number of factories, SMEs and other manufacturing and services companies, along with the growing Turkish economy.
ity consumption has lost pace and underperformed GDP and industrial production growth, mainly due to slowing growth in energy-intensive industries (e.g. iron-steel, textile and cement), the rising share of the lower electricity consuming service sector in the overall economy and increasing energy efficiency.
New capacity investments have expanded…
Private producers have ramped up new capacity investments significantly since 2008. This momentum is driven by supply security concerns based on demand projec- tions, as well as the availability of long-term financing and government incentives.
and multi-fuel power plants, which could no longer compete with highly efficient newer facilities. The capacity of coal PPs, on the other hand, slightly increased (+1.3 GW) due to new large scale PPs coming online. Meanwhile, the uptrend in renewable power plant capacity was sustained in 2019 (+1.9 GW), supported by state buyback guar-
Solar power recorded the largest capacity increase of 2019, expanding 18%.
EVOLUTION OF GENERATION, VS. DEMAND-GDP
In 2019, energy demand and electricity generation remained unchanged
Turkey's installed capacity has posted a CAGR of 7.4% since 2008, with demand growth of 3.8%. Over the past five years, a total of 21.7 GW in new capacity has been commissioned (after taking into account plant closures), accounting for about 24% of the current installed capacity of 91.3 GW. This implies a CAGR of 6.7% in installed capacity in the country over the past five years.
As of end-2019, Turkey's installed capacity rose to 91.3 GW, a net increase of 2.7 GW (after taking into account plant closures during the year), or 3.1% growth year-on-year. Despite the fact that a new large- scale NGPP came on stream, the capacity of natural gas-based power plants slightly contracted (-0.5 GW) due to the closure of old, small-scale, inefficient natural gas
antees. During the year, Turkey's power plant numbers rose to 8,589, up 1,166 year-on-year; of these, 1,078 were small-scale unlicensed producers.
Solar power recorded the largest capacity increase of 2019, expanding 18%. The total installed capacity of unlicensed and licensed solar power plants jumped to 5,995 MW by year-end.
The total installed capacity of unlicensed and licensed solar power plants jumped to 5,995 MW.
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Renewables expanded faster than non-renewables
on renewable energy resources has soared in recent years. Renewable
As of end-2019, Turkey's installed
At year-end 2019, Turkey's installed capacity breakdown was as follows: 31.2% hydroelectric power, 29.1% natural gas, 22.2% coal, 8.3% wind, 6.6% solar energy, 1.7% geothermal energy, and 0.9% biomass energy re- sources.
Fully utilizing domestic renewable energy resources and incorporating them into the economy are crucial to achieve resource diversity and decrease the economy's import de- pendency. For this reason, increasing the share of renewable energy in electricity generation and utilizing renewables as a heating source are objectives in the Turkey Strategic Plan 2015-2019. The country's electricity generation capacity based
energy power plants accounted for 48.7% of the total installed capacity in 2019. The growing share of renewable energy is desirable as it reduces dependency on natural gas and coal, even though maintaining coal and natural gas-based power plants is critical to ensuring supply security. High dependence on imported fuels such as coal and natural gas raises concerns over pricing and availability.
PERCENTAGE OF RENEWABLE ENERGY POWER PLANTS IN TOTAL INSTALLED CAPACITY
capacity rose to 91.3 GW, a net increase of
DEVELOPMENT OF RENEWABLES IN INSTALLED CAPACITY
HISTORICAL INSTALLED CAPACITY BREAKDOWN BY SOURCE (GW)
The government's share in total capacity is declining…
A breakdown of electricity installed capacity per ownership reveals that EUAS is the largest single player in the market. However, as part of governmental policy, EUAS share has decreased with ongoing privatizations for its generation portfolio to boost the market's competitiveness and bolster overall productivity of power plants in Turkey using private companies' financing and technical capability. This situation results in ultimately reducing Turkey's energy costs. The share of state-owned generation company EUAS in Tur- key's total installed capacity has down trended over the past de- cade, falling to 21.5% in 2019.
During the year, the share of IPPs
along with unlicensed power plants rose to 74.6%. Power plants operated under the build-operate-transfer (BOT) and transfer of operating rights (TOR) schemes together constitute 3.9% of total installed capacity in the country. The output of these plants, mostly natural gas facilities, distort the industry's cost- curve as they have a higher priority in the merit order, despite having higher marginal costs than coal-fuelled power plants and NGPPs, with greater efficiencies. The govern- ment's purchase guarantees for the majority of these power plants will expire during the 2019-2020 period.
Fully utilizing domestic renewable energy resources and incorporating them into the economy are crucial to achieve resource diversity and decrease the economy's import dependency.
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Renewables' share of total generation continued to grow in 2019
and rehabilitation of privatized lignite power plants. At year-end 2019, Turkey's generation breakdown was
THE SHARE OF THE STATE- OWNED GENERATION
U N L I C E N S E D
Turkey recorded electricity generation of 304 TWh in 2019, unchanged year-on-year and below the net capacity increase of 3.1%. Renewables' share of total generation continued to expand during the year, climbing to 43.9% and driven by capacity additions. Meanwhile, thermal power plants' share of total generation decreased to 56.1% due to falling CUR, the closing of a few old NGPPs
as follows: 29% hydroelectric power, 19% natural gas, 387% coal, and 15% other renewables including wind, solar energy, geothermal energy and biomass energy resources.
Independent power producers' share in Turkey's total electricity generation continued to rise and accounted for 74% of Turkish energy generation at end-2019.
as follows: 29% hydroelectric power, 19% natural gas, 387%
IN TURKEY'S TOTAL INSTALLED CAPACITY HAS DOWNTRENDED OVER THE PAST DECADE.
HISTORICAL STATE/PRIVATE CAPACITY BREAKDOWN (%)
GENERATION BREAKDOWN BY TYPE AND SOURCE (%, 2019)
W I N D + S O L A R +
G E O + B I O M A S S
U N L I C E N S E D
H Y D R O
coal, and 15% other renewables including wind, solar energy, geothermal energy and biomass energy resources.
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The bulk of the new planned capacity is composed of
A strong investment pipeline ensures that renewables will outpace non-renewables…
Turkish Electricity Transmission Company (TEIAS) runs two scenarios for installed capacity projections based on completion rates of on-going constructions. Completion
The net capacity increase is likely to materialize below these pro- jections. Less efficient NGPPs may be closed in this period, and short delays to certain projects may be experienced. However, this might be partially offset by new fast track renewable PP projects during the
renewables - 69% of total investments. In addition, 85% of the investment is being undertaken by the private sector.
rates of 10% and 15% are used for the scenarios; the plants are expected to come online gradually until 2022.
TEIAS estimates total new capacities of 14.0 GW and 12.6 GW coming online by end-2022 under scenarios 1 and 2, respectively. Projected capacity increases imply a CAGR of 4.9% and 4.4% until 2022 under these two scenarios.
These capacity increases translate into a reliable production CAGR of 3.6% and 3.1%, respectively, versus TEIAS's growth projections of 4.2%
period. The actual capacity expansion in 2019 was 2.8 GW, below TEIAS's expectations of 3.4 GW and
3.1 GW based on scenarios 1 and 2 respectively, due to the short delay to certain projects.
The bulk of the new planned capacity is composed of renewables
% share in total installed capacity
SHARE IN TOTAL INSTALLED CAPACITY IN SCENARIO 1
for base demand and 3.6% for low demand. Note that reliable capacity growth estimates are lower than those of installed capacity, given the rising share of more variable renewable capacity during this period.
These new capacity projections indicate that a sufficient reserve margin will meet demand during the same period.
% share in total installed capacity
TOTAL NEW CAPACITIES OF 14.0 GW AND 12.6 GW COMING ONLINE BY THE END OF
SHARE IN TOTAL INSTALLED CAPACITY IN SCENARIO 2
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TURKEY'S TRACK RECORD OF COAL TENDERS
BO & BOT plants sell their entire output at predetermined USD-based prices to state-owned generation company, TETAŞ (via Take or Pay Agreement). These facilities fully reflect hikes in NG costs to their electricity sales price with the "pass-
Source: the Republic of Turkey, Ministry of Energy and Natural Resources
through" clauses in the agreements signed, along with supply guarantees from state-owned natural gas pipeline company BOTAŞ. The majority of these contracts were terminated as of end-2019, while BO power plants (6.1 GW installed capacity) became IPPs, and working at much lower CURs, thereby having a positive impact on the demand -supply balance.
Nuclear energy to be added to
To reduce energy import dependency and combat climate change, Turkey has taken major steps to introduce nuclear energy into its energy mix. Turkey has signed two in-
production is projected at 109,164 GWh from hydropower, 32,000 GWh from wind power, 29,500 GWh from solar, 5,000 GWh from geothermal power, and 4,533 GWh from bio- mass. Gross electricity production
Turkey's parliament passed the Renewable Energy Law in 2005; the legislation was amended in 2010 to provide enhanced sup-
Term Targets for the Energy
Despite being surrounded by coun-
The Energy Ministry has drawn up
tries with large natural gas reserves,
Turkey aims to boost the share of
a road map (2015-2019 Strategic
Turkey has reserves of only 18.5
domestic coal in electricity gener-
Plan, based on 2013 data) for en-
bcm and low gas production, meet-
ation by transferring coal reserves
ergy as part of the government's
ing less than 1% of the country's an-
to the private sector with the re-
nual consumption. Natural gas sup-
quirement to build and operate
2023 - the centennial of the Turkish
ply is a critical factor for Turkey. More
coal-fired power plants in the vicin-
Republic. The two central themes
than 99% of its natural gas needs
ity. Turkey boasts significant coal
of this strategy are the security of
are imported, which widens Turkey's
energy supply and energy efficien-
current account gap. To address the
and composed mostly of lignite.
cy. Strong and reliable energy in-
situation, the Ministry of Energy and
Among these reserves, the Afşin-El-
Natural Resources has set strategic
bistan reserve alone has 4.8 billion
diversity are the major goals of the
targets. These include reducing the
tons of lignite resources, some 28%
first theme. Optimum energy usage
usage of natural gas in power gen-
of Turkey's total lignite reserves. The
and improved capacity for energy
eration to below 30% by end-2023.
reserves to be tendered with auc-
This target was already achieved as
tions bear 6.0 GW of installed gen-
ing and monitoring, a regulatory
of year-end 2019 as the country's
natural gas use fell to 19%. The Min-
public awareness and new tech-
istry also aims to build natural gas
nologies) are the key goals of the
storage capacity to meet 20% of
annual natural gas consumption by
plans to shift to cheaper sources of
natural gas, such as Northern Iraq
and Israel, while reducing the coun-
try's reliance on Russia as the larg-
est exporter of natural gas to Turkey.
tergovernmental agreements - one with the Russian Federation in 2010 and the other with the Japanese government in 2013 - to construct two nuclear power plants with 4,800 MW and 4,480 MW capaci- ties, respectively. Technical evaluations and assessments for a third nuclear power plant are ongoing. The share of nuclear energy in power generation is targeted at 10% in the medium term in Turkey.
Use of domestic renewable energy resources…
Turkey's government aims to gradually boost the share of renewables in total installed capacity to 53.7 GW by 2022. The objective is 32.3 GW of hydropower, 10.4 GW of wind energy, 8.9 GW of solar energy, 1.3 GW of geothermal and 0.8 GW of biomass source capacity. Turkey also aims to meet 10% of its transport sector's energy needs via renewable resources.
using renewable energy sources will total nearly 180,197 GWh. This quantity is 50% of the projected electricity consumption for 2022 (360 TWh).
To support the strategy, the Turkish government is incentivizing renewable energy power plants commissioned in the 2005-2020 period by offering guaranteed prices (feed-in- tariff) for a 10-year period.
In May 2019 via Presidential decree, the upper limit for installed capacity at renewable power plants that are eligible to operate without an EMRA license was increased from 1 MW to 5 MW. Distribution companies are obliged to purchase energy generated by unlicensed plants in accordance with the Renewable Energy Support Mechanism.
port. The Renewable Energy Law provides incentives for renewable energy sourced power plants commissioned between 2005-2020 through guaranteed purchase prices (feed-in-tariff) for a 10-year pe- riod. Additional price incentives are also available for use of local equipment at these plants, applicable for the first five years. As a result, the approved feed-in tariffs for hydro and wind (USD 0.073 per kWh) were comparable to the MCP (market clearing price). Meanwhile, the tariff for geothermal (USD 0.105 per kWh) and tariffs for biomass and solar (USD 0.133 per kWh) were significantly higher than the MCP.
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A total of 21.9 GW installed capacity will
FEED-IN TARIFF (USD CENT/KWH) *
Max. FiT for Use of Domestic Equipment
As a result of weak electricity prices prevailing on the spot market and significant depreciation of the Turkish lira since 2014, a record increase has occurred in the installed capacity of renewable energy plants participating in YEKDEM, the Turkish Renewable Energy Resources Support Mechanism implemented by Ministry of Energy. This situa-
tion has provided the opportunity to sell electricity at much higher prices than prevailing free-market prices of recent years. In 2018, a public announcement stated that YEKDEM would not be continued under the same conditions after December 31, 2020. There has not been any additional and clear statement regarding what regulation will take effect after 2020.
ergy tenders in a new form - called mini YEKA tenders - are planned for nearly 40 provinces in Turkey with capacities ranging from 10 MW to 50 MW.
GLOBAL INVESTMENT HOLDINGS IN THE INDUSTRY…
Global Investment Holdings' total installed capacity amounts to 100.1 MW, of which 46.0 MW is from renewable sources. GIH has a co/ tri-generation capacity of 54.1 MW,
YEKDEM PLANTS' SHARE IN TOTAL INSTALLED CAPACITY
with an additional 29.2 MW in bio- mass. Additionally, GIH has two so-
YEKDEM Plant's Share in Total Installed Capacity
lar power plants totalling 16.8 MWp, of which 10.8 MWp was fully commissioned at the start of 2020 and 6 MWp is under development and planned to be operational during the year.
Source: Energy Market Regulatory Authority (EMRA)
A total of 21.9 GW installed capacity will benefit from the feed-in-tariff mechanism in 2020. Hydro plants with a total capacity of 12.4 GW account for a majority share, while wind power plants make up a total of 7.0 GW.
POWER GENERATION CAPACITY CLIMBING TO 300 MW, WHILE EXPANDING INTERNATIONALLY…
GIH's strategy is to develop green energy projects with attractive long-termfeed-in tariffs and innovative energy efficiency solutions. In the coming years, Global Investment Holdings plans to establish
B I O M A S S
S O L A R
H Y D R O
Renewable Energy Resource Area (YEKA)…
The Ministry of Energy and Natural Resources holds tenders to transfer certain geographic areas to investors for electricity generation from renewable energy resources on the condition that domestically made equipment is used in these generation operations.
In 2017, tenders were held for a 1,000 MW solar power plant and a 1,000 MW wind farm. YEKA tenders continued in 2018. On June 21, 2018, a tender for a 1,200 MW offshore wind farm project was announced but postponed due to a lack of sufficient demand. During 2018, an announcement stated that January 2019 would be the deadline for applications in Tur- key's second-largest solar power
plant tender. This tender incorporated three separate biddings: one for 500 MW of installed capacity in Viranşehir, Şanlıurfa; one for 200 MW in Erzin, Hatay; and one for 300 MW in Bor, Niğde. However, in Janu- ary 2019 an announcement stated that the tender was cancelled.
The YEKA-2 wind farm tenders were held on May 30, 2019. The tenders covered wind farms with an installed capacity of 250 MW each in Balıkesir, Çanakkale, Aydın and Muğla.
The Ministry of Energy and Natural Resources has held three successful YEKA tenders over the last two years. The YEKA SPP-2 tender was announced to be held in the form of smaller tenders in the first half of 2020. The launch of new solar en-
a diversified and balanced power generation portfolio, both in terms of resources and geography. GIH is also looking at developing and/ or acquiring additional renewable energy projects in a variety of re- gions, especially in the Caribbean by leveraging local relationships of its Ports business. GIH aims to boost its current 100.1 MW combined installed capacity in renewable energy and energy efficiency investments to 300 MW within the next couple of years.
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Global Investment Holdings in the sector…
Global Investment Holdings is Tur- key's leading biomass power producer from residues and waste from agricultural fields, forests, and livestock, with a total installed capacity of 29.2 MW at its Aydın-
imports and thereby contribute to the national economy. The Compa- ny's efforts also promise significant regional employment opportunities. These clean and domestic resourc- es, which are collected and converted from the field in an environmentally conscious manner, are a
Global Investment Holdings is one of very few companies
Biomass based power generation in Turkey is a newly-emerging field, accounting for less than 1% of total electricity generation today. Global Investment Holdings intends to capitalize on this significant potential.
Biomass sector at a glance…
As a major agricultural producer, Tur- key's non-food crops, farm residues and waste present a significant untapped potential for biomass ener- gy, the Renewable Energy General Directorate estimates Turkey's annual biomass potential at 50 million tons. The country has the potential to install more than 5,000 MW of biomass-based power capacity. Biomass based power generation in Turkey is a newly-emerging field, accounting for less than 1% of total electricity generation today.
Global Investment Holdings intends to capitalize on this significant po- tential.
Production of energy from biomass is expected to gain traction in the near future. Significantly, the harnessing of this energy source will reduce the country's dependence on imported non-renewable resources such as natural gas. Biomass energy generation is also expected to make the agricultural activity more efficient.
Biomass can be obtained from a variety of agricultural residues. These include, but are not limited to corn and cotton stalk, sunflowers, wheat, rice husks and hazelnuts, all of which have high calorific value. Biomass in the form of manure can be obtained from livestock farms.
Unlike widespread programs in more developed countries, biomass resources have no common economic use in Turkey. Farmers or producers either remove and burn the residue, despite legal prohibitions and damage to soil efficiency, or else mix the residue with soil, incurring additional costs. Livestock farms face greater difficulties and higher costs with respect to compliance with environmental regulations in handling animal waste.
Biomass resources have a relatively high calorific value - ranging up to 4,000 kcal/kg - in comparison to alternative fuel types that can be produced locally, such as lignite. How- ever, establishing a sustainable and economic supply chain, in addition to storing biomass in large volumes, are vitally important in terms of power plant feasibility.
The Renewable Energy Law sets the purchase price for electricity produced by a biomass power plant at USD 0.133 per kWh for the first 10 years of production. An additional tariff incentive of up to USD 0.056 per kWh is applicable for the first five years of operation as long as certain specified components of those biomass power plants are manufactured within Turkey.
Söke (12 MW), Mardin-Derik (12 MW) and Şanlıurfa-Haliliye (5.2 MW) power plants. These facilities generate about 200 kWh of electricity per annum, meeting the electricity requirement of over 80 thousand households; they are subject to the Renewable Energy Resources Support Mechanism (YEKDEM), selling electricity at USD 0.133 per kWh.
Offset Paper 80g The facilities are located in close proximity to key supply areas where biomass is collected from diversified sources with its own equipment and personnel, in