Turkey fails to attract foreigners for two power grid auctions
Although more than 30 Turkish and foreign companies sought details when Turkey announced the auction of power lines that serve capital Ankara and the Sakarya region two years ago, the Privatization Administration (OIB) has received 10 bids for the two grids, that will be auctioned on Tuesday, fewer than expected as the uncertainty and rising political turmoil in Turkey.
Among those to bid are Turkish conglomerate Sabanci Holding, which bid for both grids in partnership with Austria’s Verbund, Profile, and another local firm, Akenerji, which bid for both with Czech power firm CEZ.
Turkey’s top prosecutor filed a case against the Islamist-rooted AKP in March, and demanded the party’s closure, as well as a ban on 71 officials, including Prime Minister Tayyip Erdogan from political activities. The prosecutor accused the AKP of becoming the “focal point of anti-secular activities”, as the party’s harsh response and criticism against the court raised tension in the country.
Turkey, aiming to avert shortages as capacity fails to match rising demand also gives great importance to these power grids auctions so as to obtain cash to offset the country’s trade deficit estimated to widen 32 percent. Turkey’s state asset sales are aimed at easing a current-account gap, the widest measure of trade in goods and services, that may reach $50 billion this year as oil and food prices surge.
Declining foreign interest in the power grids has increases investor concern Turkey may struggle to sell power plants and its first nuclear energy license.
Government raised the price of electricity for residential use by 22 percent, and the price of electricity for industrial use by 21 recently. The price hikes, part of an overhaul of Turkey’s electricity pricing mechanism, is seen as an important step for privatizations of electricity distribution and production assets.
The government, which sold a natural-gas grid in Ankara for $1.61 billion in March, hasn’t said how much it targets for the two networks now on sale. The government promised the International Monetary Fund it will reduce the state’s more than 80 percent share of the electricity generation and distribution markets. The Ankara and Sakarya grids together have 4.2 million customers who consume a combined 18 million gigawatt hours of electricity.
Final bidding will start at 0800 GMT, followed by the Sakarya network in northwestern Turkey at 1130 GMT, in Ankara.
Dogan Holding, a Turkish media-to-energy conglomerate, will also bid in both, in separate consortia. Park Holding, part of Turkey’s unlisted Ciner group, bid alone in both.
Next up for sale are power grids covering the central Anatolian region of Meram, and Aras in the east. The grid sell-off had been due to start in 2007 but was put off until after a parliamentary election that year.
source: Hurriyet daily