Kozuva Group has become the 45th contractor in Turkey selected to receive payments from the government budget under public-private-partnership (PPP) arrangements, local news portal T24 reported on August 16.

Favori Airports, launched in 2012 by Kozuva Group, is the operator of Cukurova Airport, which was opened on August 10.

Kozuva Group, which grew out of a grocery shop that opened in 1955, is owned by Suleyman Kozuva. He stood as the ruling Justice and Development Party (AKP) candidate in the town of Cerkezkoy in European Turkey's northwestern Tekirdag province in the 2019 local elections.

Creative destruction

The new airport is located between the cities of Adana and Mersin on Turkey’s southern Mediterranean coast.

To ensure demand for the airport, Adana Sakirpasa Airport was shut down on the same day as it opened.

A similar policy was applied to Ataturk Airport in Istanbul after the opening of Istanbul Airport, a mega airport operated by IGA Havalimani Isletmeleri.

The runways at Ataturk Airport were dug up to make way for a hospital during the COVID-19 pandemic. That had the effect of putting an end to any hope that the airport could at some point reopen.

The hospital in question was built in just a few months during the pandemic. On August 4, the roof of the hospital collapsed and a newborn baby was killed.

To assist Zafer Airport, Usak Airport was shut down.

The Erdogan regime has also applied the same closure policy to help newly built city hospitals. Hospitals in proximity to where they were built by shut down. 

Can of worms

In 2011, the government held the first tender for the construction of Cukurova Airport. 

In 2014, Kocoglu Insaat, the winner of that tender, filed for bankruptcy. All the infrastructure investments were carried out by the Turkish Airports Authority (DHMI).

The airport is located on wetland in an agricultural area. Problems encountered with building groundworks on such ground were also observed at the Istanbul Airport.

In 2020, Kozuva won the ninth and last tender.

Kozuva Group is to operate Cukurova Airport, which has an annual capacity of 8mn passengers, for 25 years. It is supposed to pay a total of €297mn plus value-added tax (VAT) to DHMI in rent payments, while it has an income guarantee of €126mn provided by the Turkish Treasury.

The location of the new airport is interesting. It is far away from Adana and Mersin. Thus, transportation to the airport from the two cities is another source of income.

Off the book liabilities

Turkey’s government has provided a total of $153bn in income guarantees to PPP projects, including $78bn for city hospitals (to be paid from 2021 to 2045), $35bn for the Akkuyu nuclear plant project (2021-2035) being built by Russian contractors, $32bn for highways and bridges (2021-2042) as well as $7bn for airports (2021-2042), according to calculations made by Ugur Emek of Baskent University.

Under PPP schemes, Turkey is to build or have built a total of 20 airports and 18 city hospitals in addition to 102 electricity plants, 46 highways, 20 marinas and one railway, along with hotels, ports, mines and other kind of infrastructural facilities.

Tax-free

In July, T24 reported that the regime was planning to collect TRY 557mn ($17mn) in additional tax income by hiking the tax rate for contractors of public-private-partnership (PPP) projects to 30% from the current 25%.

A total of 44 highway, bridge and city hospital construction contractors would be affected by the change.

At the same time, in its 2024 budget, the government allocated TRY 162bn in payments to the contractors in question.

The figures were shared by the government when its latest tax bill was sent to the parliament.

Later media reports suggested that 37 of the 44 contractors in question report no profit. So, the additional TRY 557mn will have to be collected from the remaining seven.

Also in July, Turkey’s finance ministry confirmed in a written statement that of the 2,815 large companies in Turkey, 735 always state a loss in their tax filing.

“Gang of five” or 45, or 735..?

Kemal Kilicdaroglu, the former leader of Turkey’s main opposition Republican People’s Party (CHP), dubs the Erdogan-affiliated leading group of Turkish contractors the “Gang of five”.

The five he refers to are Cengiz Holding (owned by Mehmet Cengiz), Limak Yatirim Holding (owned by Nihat Ozdemir), Kolin Insaat, Mapa Group (owned by MNG Group) and Kalyon Holding.

There are actually more than five Erdogan-affiliated businessmen but Kilicdaroglu’s “Gang of five” term has become a common idiom in Turkey for all the businessmen thought to be part of the group.

It is notable that the CHP’s new post-Kilicdaroglu management never speaks of Kilicdaroglu’s "Gang of five". The media that are pro-CHP, meanwhile, presently broadcast advertisements for "Gang of five" companies.

In addition to the PPP contractors, there are also companies that receive government contracts under exemptions in Turkey’s public tender laws.