It is clearly indicated in various reports and action plans of the related official institutions and sector specialists that it is necessary to invest in the wastewater treatment sector in Turkey. In our country, water and wastewater infrastructure projects are under the responsibility of the Municipalities, however, the necessity to comply with the environmental protection laws, increasing population, and developing industrial production increase the demand for the sustainable and environment friendly wastewater services adding to the investment obligations of the Municipalities in this field. The issues that the municipalities face in regards to the wastewater treatment activities, are not only limited to the new investment requirements. The limited budgets and inadequate technical means of many local administrations give rise to technical and financial difficulties in the operation of the existing wastewater treatment facilities, rendering impossible the operating of these facilities in a manner that would protect public health as well as the ecological balance. The need to overcome these issues of national scale being experienced in wastewater treatment services and finding new financing sources for the investments to be made in the field has made it necessary for the national and international stakeholders in the sector to act in close cooperation, while various consultation studies to establish a new and comprehensive policy have been initiated. In this process Public-Private Sector Partnership (“PPP”) model has surfaced as a strong alternative solution regarding the wastewater facility investment requirements of Municipalities. To be able to understand the issues that Municipalities face in the field of wastewater treatment services and the necessity for the alternative financing models that could only be achieved with the participation of private sector; we should briefly touch upon the current status of the sector. According to the up-to-date data provided by the Turkish Statistics Institute (“TUIK”), the number of treatment facilities in Turkey increased to 460 in 2012 from 145 in the year 2002 with an increase in capacity from 2.4 billion cubic meters to 5.6 billion cubic meters respectively. With particular thanks to the investments made in the 2000s, the population benefiting from treatment services has increased at a fast pace; however, in spite of the increase in capacity, only 58% could presently be provided with treatment services. At this rate, Turkey is ranked in the lower echelons of the list of countries issued by the Organization for Economic Cooperation and Development (“OECD”) as the average for connection of population to wastewater treatment facilities in OECD countries is around 76%. The excessive need for investments in the wastewater treatment sector reveals itself in the rate of the treatment services provided to the population governed by the municipalities. There are 1,397 municipalities in Turkey, with 30 of them being metropolitan municipalities. According to the year 2013 survey conducted by TUIK, only 43 (68%) million of the 64 million total municipal population receives wastewater treatment service. The Ministry of Environment and Urbanization targets to increase this rate to 85% in 2017 and 100% in 2023. The need for investments to be able to realize these targets has been indicated in detail in the National Environment Action Strategy document of Turkey that has been prepared within the framework of legislative harmonization with European Union. According to the action plan that has been prepared by the Ministry of Environment and Urbanization, the total cost of initial investments and renewal predicted for urban wastewater treatment facility and network for the 2015-2023 period amounts to 12 billion Euros. The studies conducted reveal the renewal costs to be approximately at the same level as the initial investment costs. This demonstrates that a significant portion of the existing facilities in our country are old or in possession of inadequate technology. In consideration of the fact that only 58% of the total population of Turkey receives wastewater treatment services, it becomes evident that the major part of the necessary investments will be in the area of constructing new treatment facilities. The difficulties associated with the new investment requirements of Turkey in the field of wastewater treatment facilities, as well as the financing of investments and operating of these facilities come to the forefront in the Medium Term Program of the State Planning Organization (DPT) covering 2015-2017 period and Tenth Development Plan of the Ministry of Development covering 2014-2018 period. The potable water and sewage investments have been prioritized together with education and health care investments in the public investments policy of the medium term program. On the other hand in the tenth Development Plan, the investments oriented to improving the access to potable water and increasing the population receiving wastewater treatment services have been determined to be the priority targets upon determining that the necessary effectiveness could not be achieved in water and wastewater infrastructure services due to reasons such as the investment and operating costs, choice of technology and supervision. Another important issue addressed in the Tenth Development Plan has been the necessity to focus on the investments that would support the productive activities of the private sector, within the framework of the public investments to be made in the potable water and sewage services field. New investment need in the wastewater treatment and sewage services market, rehabilitation requirements of existing facilities and challenges experienced in operating the facilities as a result of inadequate technical and administrative capacities of municipalities are also being expressed in various research reports of private establishments, which are specialized in the sector. For example according to the “Turkish Water and Wastewater Treatment Market” research of Frost&Sullivan, the water and wastewater market of Turkey is on the brink of a major growth and the wastewater treatment sector shows the highest growth potential in urban and industrial sectors. According to the research of Frost&Sullivan, the fact that municipalities with weak financial resources and inadequate specialization not being able to access sufficient funds and not having the governance that will acquire the right technology substantially increases the importance of private sector financing and technical specialization. Another important forecast of the same report is that wastewater treatment facilities that have advanced energy conservation technologies especially in regions that have critical water reserves will show high growth potential. Whereas in another research report (“Pinsent Mason Water Yearbook 2013”) it is determined that Turkey is left behind other countries in the participation of the private sector in the wastewater market. According to this research, the share of the private sector in the wastewater treatment services market in Turkey is at about 10% level, and while it is forecast to increase to 25% level in 2025, this share as of today is 90% in the UK, 51% in Spain, 47% in France, 32% in Italy, and 20% in Germany, which attests to the fact as to how far behind is Turkey compared to these developed countries in this regard. In conclusion to the assessment of the situation summarized above, the difficulties encountered in municipality operations due the increasing investment needs of municipalities, alternative financing sources required for the financing of investments, and insufficient technical capacity and financial inadequacies appear as the fundamental issues and key headings in the sector. The PPP model becomes prominent as one of the most important opportunities that may be benefited from in order to overcome these issues. This model – which is defined as the realization of various public infrastructure investments over the long-term as maintenance, operation and if need be construction services by the private sector – has as its aim sustaining of public services with a long-term cooperation of public services based on mutual risk sharing. Factors such as alternative financing sources to be made available under the PPP model, transfer of the right and advanced technology to the country and providing efficient operating services through private sector are important factors that will ensure the undertaking of investments that are needed in the Turkish wastewater treatment market with the right (technical and financial) feasibilities and have them operated in a sustainable manner. PPP projects, which are successfully implemented in various infrastructure sectors in Turkey for many years and especially projects put into effect in the health sector in recent years, are of a character that also supports the applicability of the PPP model to the wastewater treatment market. It is crucial that a new and comprehensive policy be developed by the public institutions for the adaptation of PPP model in a successful manner to the wastewater treatment services. Establishing an “Umbrella Organization” in the new policy to be arranged has importance for the success of the projects. It is rather difficult for local administrations with limited technical means to manage the PPP tender and project processes that involve complex legal matters. The power and competence of the Umbrella Organization is an important factor for the success targeted in the processes such as forming appropriate feasibility for the projects, and for technical specifications to be drafted with the correct and new technologies. Another essential point of PPP projects is the guarantees to be extended to the private sector. The guarantee mechanisms to be formed should also include the income and collection guarantees that are necessary for the operating period besides the guarantees and incentives to be granted with regards to the investment period. In particular, in big wastewater treatment facility and mains projects that have high investment costs, the Assumption of Debt Guarantees with regards to undertaking foreign financing should be considered under this structure. In summary, providing the guarantee mechanisms needed, and the coordination of entire project processes and particularly feasibilities should be among the basic duties of the Umbrella Organization to be established. In the currently ongoing consultation works among the public and private sector stakeholders with regards to the formation of the PPP model, the view that Iller Bank should assume the duty of the Umbrella Organization is emphasized. In addition to Iller Bank, participation of a competent unit under the Ministry of Environment and Urbanization in the Umbrella Organization and its support of the guarantee mechanisms should be evaluated as an important matter that may render the project appealing for international investments. The PPP model, which has as its basis for success the equitable sharing of risks among private sector and public sector, availability of the legal framework in which contracts may be put in effect, and the planning of processes in an efficient manner with a central approach should also be supported in the successful application in the wastewater market, provided that the fundamental issues and needs of the market are correctly analyzed and the necessary policies and mechanisms are formed. The application of PPP model in the urban wastewater treatment services and increase of private sector share in the market will enable the use of suitable sustainable technologies in our country that are focused on the protection of the environment and energy conservation in our country by serving to meet the potential of the wastewater treatment sector in Turkey, which displays a high growth potential.