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Tuesday, 12 December 2017

Yilport Holding’s Official Statement About Puerto Bolivar

On November 27, 2017, representatives of the province of El Oro requested that the public-private partnership (PPP) between Yilport Holding and the Government of Ecuador be reexamined after ongoing protests from banana producers.

Robert Yuksel YILDIRIM, the Chairman of YILPORT Holding, and President & CEO of YILDIRIM Group of Companies issued an official statement regarding the dispute.

YILDIRIM Group's subsidiary Yilport Holding secured the rights to Puerto Bolívar in Machala City, Ecuador in August 2016. The 50-year concession deal also marks the largest ever Turkish investment in Ecuador. In addition, it is not a concession that only favors Yilport Holding, but also the public, because the project is created on a public-private partnership (PPP) model. We will be paying the concession fee, and we will share profits with the Ecuador government. Spread over to 50 years and the government will receive a few billion dollars from this business. Keep in mind that Puerto Bolívar was losing money every year, and was not serving Ecuador's future growth plans in its underdeveloped condition.

We committed to invest USD 750 million in the expansion and modernization of the port as long as there is continuous growth. The investment is outlined to be completed in 5 phases. We will invest USD 230 million in the first phase, which will take 3 years. Our primary goal here is to create the container terminal, while keeping the existing bulk banana services. Also this new container terminal will provide more options to shippers and banana exporters, and will create an advantage on shipments from Southern Ecuador.

However, we have not started this project yet. According to the PPP agreement, the Ecuador government should help us in certain issues. The most important of them is the long delayed expropriation issue. We have developed the project with the most prestigious company in the world. We are on the stage to launch the project. However, we could not get the land to start the construction. The government should complete the expropriation of the land, which is also stated in the PPP agreement. The entire soul of this project is expropriation.

The second issue with the delayed construction is the licenses. As of December 2017, all of the permits to develop the container terminal have not yet been collected. We are committed to create the most modern, world-class port facilities in Ecuador, exactly how we have done in other parts of the world, where we operate state-of-the-art terminals. For this reason, we fulfill all the license obligations by global high standards, such as the environmental impact assessment (EIA) taking into account the extra conditions stated in the concession. These requirements are indispensable to our commitment to port operation of highest worldwide standards.

We have employed over 100 new people in both our port in Puerto Bolívar and head office in Guayaquil. We also kept operators of the port, who were providing services before the takeover. During the takeover period, we conducted more than 300 interviews (white and blue collar positions) and gave the priority to the citizens of Machala as well as El Oro region. Once our investment starts, many local workers (around 300-500) will be hired in the first construction phase. After phase 1 is completed, and all cranes and equipment are installed, we will again be hiring operations personnel.

We can only achieve success in Puerto Bolívar together with honest, efficient and productive workers. We do not have a chance to develop the most advanced state-of-the-art container terminal on the Pacific coast of Latin America, as we promised, with people who do not want to work and only cause harm and delays at the port. In 7/24 port operations, a vessel berths on time, and departs on time without a minute of delay. That is why we want to work with a team that will bring us success. When the operational activity starts at the terminal, Puerto Bolívar will also create business around the neighboring district. New job and business opportunities in neighboring hotels, restaurants, accommodation, transportation, logistics, custom brokers and agents will boost El Oro's urban economy.

Eventually, this port will become the largest and the most advanced state-of-the-art container terminal on the Pacific coast of Latin America. Puerto Bolívar will also boost the foreign trade volume of Ecuador. In order to achieve this, the world's largest container vessels must access the port. The existing 6-10 meters of draft needs to be deepened to 14 and 17 meters in two phases of dredging. This is the draft requirement for these vessels all over the world. In addition, this was in the concession agreement between the government and Yilport. We can bring gantry cranes to Puerto Bolívar on vessels, only after the dredging is finished. Without the draft, the crane carrying ships cannot berth and we cannot install the necessary equipment.

In the EIA permits, it is clearly stated that dredging project will not affect shrimp farms and there would be no damage to the 40,000 hectares of shrimping area. Permission for the project was granted under current conditions. As Yilport, we are as sensitive to that issue as shrimp farmers, because they are our customers. We will do exports with them and serve their logistics needs. That is why our goal is not to fight them or stop them but support them and help their business grow, exactly like we want Puerto Bolívar to grow. Seafood industry of Ecuador will be our second best customers after banana exporters.

Our entire operations and conducts are legal and all of our revenue is officially submitted in Ecuador, as it is the case in every country Yilport operates. We work completely transparent, honest and clean. We never undertake any wrongdoing, illegal conduct or take part in bribing. We expect the same from other parties we deal in business with. We are bringing the World Bank, International Finance Corporation (IFC), Inter-American Development Bank (IDB) and many more financial institutions to Ecuador. We are investigated and screened thoroughly in compliance, and we pass know your customer (KYC) examinations. Yilport conforms to the principles of KYC, and will also apply its own KYC compliancy check to our customers in Ecuador. Banana, seafood and mineral industry in Ecuador will have to pass our KYC process. If they are not clean, if they deal in contraband or illegal drug trafficking, they will be stopped, banned from the port, and turned over to authorities. We will cooperate with law enforcement authorities, and equip the terminal with X-ray and gamma ray technology to fight drug trafficking. Our aim is to uphold Ecuador's global image and prestige.

Regarding the port tariffs, we must stress that the tariffs are already in our PPP contract with the government and port authority. We did not increase tariffs unlawfully. Everything was predetermined and all tariffs were written in the contract. However, there was a dispute on the new tariffs, so we revised the tariff for the first year of our operations. We lowered the tariff even though it was much higher in the official deal. We cannot understand unfair protests and complaints. In addition, the banana exporters already owe Puerto Bolívar a lot of money, and they are yet to clear their debts. We are not obliged to tolerate this, and if they do not pay, we are not obliged to serve them without payment. They should be honest and pay their invoices to receive service from our terminal.

On a side note, Puerto Bolívar's tariffs are cheaper than ports in Guayaquil. It is a free market if the banana exporters want to go to Guayaquil. However, it will be extra burden on them because they will have to pay extra land transport fees. They are threatening to go, but it will hurt both Puerto Bolívar and the industry. We did nothing wrong and they are our number one customers. We support them as we put hundreds of millions of dollars into this terminal. We are not competitors to banana producers. We are their stakeholders and service providers. We want to make Puerto Bolívar the best banana exporting port in Ecuador.

We understand concerns of El Oro's National Assembly representatives, and we are ready to cooperate with them. However, we hope they visited us before talking to the media. Unfortunately, there is a smear campaign against Yilport in El Oro, and there are many protests going on against our terminal development project. It is beyond suspect that the unrest is fueled by certain parties with little knowledge about our cause. They are using people of El Oro to march against us, and make noise without meaning. Yilport always works close with labor unions and associations. We work side by side, listen to each other, and find common ground in every country we operate. Ecuador must not be an exception.

We came to Ecuador all the way from Turkey to serve this country, invest and build infrastructure. This dark image of Yilport, painted by some parties is absolutely incorrect and not acceptable. Bear in mind that Rome was not built in a day. We proved ourselves in many cities of Norway, Sweden, Malta, Spain, Portugal, Turkey, Peru, Colombia, and France. We have strong references from many countries. We never ever had such problems in another country. At the end of the day, everybody thanks us and is happy with Yilport's conduct. Ecuador is no exception. We will not yield and we are committed to Puerto Bolívar's development.

Press Release Date 11 December 2017 by Yildirim Group

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