Cablegate: Tupras and Other Privatization News

This record is a partial extract of the original cable. The full text of the original cable is not available.

230909Z Jan 04





E.O. 12958: N/A

B. ANKARA 6165

1. (SBU) On 16 January EconCounselor and EconOff met with
Privatization Authority (PA) President Meltin Kilci to review
recent events in the Tupras sale (Ref A) and discuss upcoming
events. Kilci was clearly relieved finally to have an
(apparently) successful tender in a major privatization, and
did not expect any difficulty obtaining approvals from the
Competition Authority and Privatization High Council. In
local press reports, Finance Minister Unakitan expressed
similar confidence, describing the sale price as "reasonable"
and predicting that it would be finalized "soon." However,
Reuters has reported that the Competition Authority will not
permit the winner to establish an oil distribution company --
news which, if true, could complicate or derail the sale,
since Parliament recently enacted legislation permitting such
vertical integration, specifically in order to induce bidders
to increase their bids on Tupras (Ref B).

2. (SBU) Kilci dismissed questions concerning Zorlu's
belated participation (Ref A), claiming that this was a
private matter between Tatneft and Zorlu that had no impact
on the bidding process. Regarding the losing bid placed by
the Anadolu Consortium (which includes the controversial
Cukurova Holding (Ref A)), Kilci said that while the PA had
the authority to reject an unqualified bidder, Cukurova was
not unqualified since it had agreed to a debt repayment plan
with BDDK. That said, Kilci also admitted he was glad that
Anadolu lost, as this averted another possible Petkim
disaster. Kilci dismissed Anadolu's attempt to force another
round of bidding, noting that all bidders had agreed at the
outset that the sealed bids would be the final bids.

3. (U) Kilci also advised that GOT's privatization target
for 2004 was USD 3 billion in contracts (1.2 - 1.5 billion in
cash). He reported that, since the beginning of the year, PA
had completed five tenders worth USD 400 million, which when
added to the USD 1.3 billion Tupras deal, meant that GOT
already was more than half-way to its target. (To date,
however, no payments have been received on any of these

4. (U) Regarding other significant privatizations, Kilci
reported that the PA continues to eliminate workforce
redundancies at Tekel. The Tekel retender should occur in the
first half of the year, and the sale should be finalized
before year end. The PA and Energy Ministry are engaged in
discussions about Energy's proposed strategy for
privatization of the energy sector. Bids in the Petkim
retender are due at month-end.


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