Posted by meb at May 30th, 2008

As the government received an initial $1.02 billion for the strategic petrochemicals giant Petkim, the handover of the company’s assets to buyers is expected to take place today.

Socar-Turcas-Injaz Joint Venture Group, offered $2.04 billion at the tender held in July for 51 percent public shares of Petkim, the privatization of which started in 1987. The process received mixed reactions from different segments of society.

The handover cannot take place, as the legal process is still ongoing, contested the Union of Petroleum Chemical and Rubber Workers of Turkey (Petrol-İş).

Petkim workers protested the handover yesterday by suspending work at Petkim Aliağa facilities in İzmir, reported the Doğan news agency. Standing under the burning sun for approximately an hour, the workers shouted, “No one will be able to bend the wrists of Petkim workers.”

“The Justice and Development Party (AKP) took over the country with a debt of $139 billion. Despite privatizing all national assets of the country, the AKP multiplied the debts to reach $460 billion,” said Petrol-İş Chairman Mustafa Öztaşkın, noting that “the AKP is bringing the country to a dead end.”

Petkim workers have displayed a successful struggle for the last 20 years, Öztaşkın said. “If other workers in our country had displayed consistent struggle just like Petkim workers did, privatizations could have been prevented.” Approximately 150 institutions have been privatized to date. The money obtained from those privatizations neither met debts nor satisfied the citizens, he said.

“Turkey will bear significant losses with the privatization of Petkim, which has 14 main production factories, eight additional plants, a dam of 15 million cubic meters, an energy power plant of 170 MW and a port,” said Öztaşkın.

The remaining payment

The state asset-sales agency is holding talks with Turcas and Azerbaijan’s Socar on how the remaining $1.02 billion payment will be implemented, reported Bloomberg citing a spokeswoman for the agency. Negotiations include a requirement for Turcas and Socar to provide a bank guarantee underwriting the outstanding $1.02 billion, which may be paid in as many as three installments, the spokeswoman said. The agency may waive the bank guarantee if Turcas and Socar make an additional upfront payment, she said.

“I hope we can hand over Petkim tomorrow,” the minister said yesterday. “According to the sale conditions, a bank guarantee is required for installments due over and above the initial payment. We cannot transfer the shares without this.”

Market share declines

Due to the expansion of the privatization process, Petkim’s competitive power has diminished, reported business daily Referans, citing sector authorities. Petkim’s market share in Turkey’s petrochemical sector deteriorated from 40 percent to 27 percent last year. As Turcas Petrol Chairman Erdal Aksoy had previously noted, it is planned that the investments for Petkim will total $2 billion by 2013.

Among the future plans for Petkim are a new refinery which would be established with an investment of $3-4 billion to process 6-8 million tons of crude oil annually aswell as doubling the company’s capacity. The plans include pushing the Petkim’s market share back to 40 percent. A port belonging to Petkim will also be converted into a container port to offer services to third parties.
source: Turkish Daily News