An agreement providing a sovereign guarantee for funding of $450 million to support the Izmir light rail (metro) scheme was signed by the treasury and banks on 18 February. The construction contract for the scheme was signed between Izmir municipality and a venture of Sweden's ABB Traction and the local Yapi Merkezi in January 1993.

The venture was selected for the scheme in the summer of 1992 (MEED 3:7:92). Political and other developments have held up the signing of the funding agreement since then. Observers say that Izmir's mayor, Yuksel Cakmur, has put pressure on central government to get the project started before the local elections at the end of March.

The venture's chief financial adviser is Nordic Investment Bank, which is leading a group of about 10 institutions involved in putting together the package. Of the $208 million supporting civil engineering, $80 million will be export credits, $50 million will be a government-to-government loan, and the rest will be commercial financing. Germany will supply $60 million of the export credits and Sweden $20 million. The rest of the financing package, composed mainly of Swedish and UK export credits, will support the supply and installation of mechanical and electrical equipment, including rolling stock.

The 9.3-kilometre line will run from Fahrettin Altay to Basmane through the central Konak district, and will have 10 stations.

Work is expected to start in March, for completion in 1996. Full capacity of 36,000 passengers an hour will be attained by 2000. The contract calls for the supply of an initial 35 cars with an option for another 45.