Prime Ministry Privatization Administration Privatization in Turkey Ahmet Aksu June 11, 2010

Prime Ministry Privatization Administration

Privatization in Turkey

Ahmet Aksu

June 11, 2010

www.oib.gov.tr

Introduction Approximately $ 40 billion has been accrued since 1985

There are currently 13 companies in the privatization portfolio in addition to other entities in the program; whose privatization implementations are undertaken by the Privatization Administration

Major privatization implementations are ‘electricity distributions, generation, and natural gas distribution projects in 2010.

Turkish privatization program did not halt due to the global economic crisis.

2

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Almost 80% of all privatization revenues were accrued between 2004-2009

29 131486 244 423 568 412 515 292 466

1,020

38

2,717

120536

187

1,283

8,2228,096

4,259

6,296

2,274

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

1985–1988

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

(US$m)

%

21

$8.2 billion $30.4 billion

%

793

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Major Companies and Entities in the Privatisation Portfolio

Percent of share belonging to Privatization Administration

Administration leads

privatization of key enterprises

in Turkey

1 License will be granted to operate the national lottery games2 PA currently leading the privatization without owning the shares3 Privatization studies undertaken under law 406SOURCE: Privatization Administration

Companies under the Administration Program

Banking Sugar industries Electricity distribution

Retail Turkish Airlines Maritime transportation

Tobacco and salt production

Copper mines Floor tiles & cement pipes

Petrochemical Sugar industries Natural gas distribution

75 100 100

100 49 100

100 100 56

10 10 80

Companies to be privatized under

special legislation

National lottery games1

Toll motorways2

Telecoms3

Electricity generation2

TCDD Ports2

32

xx

4

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COMPANY METHOD REVENUE

BANDIRMA PORT TOR 175.500.000 $

SAMSUN PORT TOR 125.200.000 $

TTA İZMİR KONAK IMMOVABLE ASSET SALE 4.994.000 $

TTA AYVALIK SALT PLANT BLOCK SALE 6.000.000 $

TTA ÇAMALTI SALT PLANT BLOCK SALE 76.660.000 $

TTA ANKARA IMMOVABLE TOR 20.000.000 $

TTA İZMİR KARŞIYAKA IMMOVABLE TOR 24.534.000 $

OSMANGAZI DISCO BLOCK SALE (TOR) 485.000.000 $

TOTAL 926.354.897 $

Major Closed Privatization Implementations, 2010

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Ongoing Privatization Implementations - I

25.03.201025.03.2010

6

NAME IMMOVABLE /SHARE BIDDING DEADLINE

Sümer Holding A.Ş. -Balıkesir Immovable 25.06.2010

(TCDD) State Railway

-Mersin/Kemalpaşa Immovable

-Denizli/Koyunaliler Immovable

-İstanbul/Başakşehir Immovable

-Balıkesir/Akçay Immovable

25.06.2010

Treasury of Finance-Muğla/Bodrum Immovable

-İstanbul/Maltepe Immovable 25.06.2010

State Supply Office -İzmir/Konak Immovable

-İstanbul/Üsküdar Immovable

25.06.2010

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Ongoing Privatization Implementations - II

25.03.201025.03.2010

7

NAME IMMOVABLE /SHARE BIDDING DEADLINE

Boğaziçi El. DisCo % 100 Share 22.07.2010

Dicle El. DisCo % 100 Share 22.07.2010

Gediz El. DisCo % 100 Share 22.07.2010

Trakya El. DisCo % 100 Share 22.07.2010

Iskenderun Port TOR for 36 years 04.08.2010

Başkent Natural Gas Distribution %80 Share 19.07.2010

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Due Recievables - I

Tender Date Bid Price Buyer Status

Group C Portfolio Sugar Factories 08.12.2009 606.000.000

AK-CAN Şeker Sanayii

Negotiations are finalized. Stay order decision

Aras El. DisCo 25.09.2008 128.500.000Kiler Alışveriş

HizmetleriTender process is finalized.

Stay order decision.

Çoruh El. DisCo 06.11.2009 227.000.000 Aksa Negotiations are finalized.

Çamlıbel El. DisCo 18.02.2010 258.500.000 KOLİN Negotiations are finalized

Yeşilırmak El. DisCo 06.11.2009 441.500.000 Çalık Negotiations are finalized.

Fırat El. DisCo 18.02.2010 230.250.000 Aksa Negotiations are finalized

Uludağ El. DisCo 18.02.2010 940.000.000 LİMAK Negotiations are finalized

Vangölü El. DisCo 18.02.2010 100.100.000 Aksa Negotiations are finalized

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Due Recievables - II

Tender Date Bid Price Highest Bidder Status

TTA Immovable Istanbul/ Paşabahçe

15.06.2009 202.067.000

Hasan Sever JVG

PHC Decision in place- Additional time given for

the SPA

TTA Immovable Izmir/ Alsancak

18.03.2009 8.704.119 İzmir JVG

Negotiations are finalized. Stay order

decision due to change in land registry

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Due Recievables - III


Derince Port 12.09.2007 195.250.000 Türkerler JVG Council of State opinion on the concession agreement has arrived

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Due Recievables - IV


(TCDD) State Railway

İzmir/Konak Immovable

24.02.2010 12.280.000 $ Konya Yıldızı Un Gıda İnşaat

Alüminyum San. Ve Tic. Ltd. Şti.

The agreement will be signed in June 2010.

Treasury of Finance

Karaağaç Immovable

08.03.2010 3.300.000 $ Şah Gayrimenkul Yatırım İnşaat Tic. Ltd. Şti.

PHC Decision awaited.

Sümer Holding A.Ş. Adıyaman Immovable

02.04.2010 1.267.000 $ Abuzer Canan Dereci

PHC Decision awaited.

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Due Recievables - V

Group Tander date Highest Bidder Bid Price ($) Status

Group 1İznik-Dereköyİnögöl-CerrahM.K. Paşa-Suuçtu

04.05.2010 Kent Solar Elek. Ür. San. Tic. A.Ş.

6.600.000 Negotiations are finalized.Competition Board decision awaited

Group 3Kayaköy

05.05.2010 Nema Kimya-Espe OGG 17.411.500 Negotiations are finalized

Competition Board decision awaited

Group 9Kayadibi

06.05.2010 İvme Elekt. Elektromekanik Ot. Sis.

San. ve Tic. Ltd. Şti.

7.644.000 Negotiations are finalized


Group 14BayburtÇemişkezek Girlevik

07.05.2010 Boydak Enerji Üretim ve Tic. A.Ş.



Group 15EsendalIşıklar-Visera

10.05.2010 Demistaş Doğu Elk. Mak. İnş. San. Ve Tic. A.Ş.



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Due Recievables - VI

Group Tander date Highest Bidder Bid Price($) Status

Group 19Arpaçay-TelekKiti

11.05.2010 Kisan İnş. Müh. San. ve Tic. A.Ş..

14.700.000 Negotiations are finalizedCompetition Board decision awaited

Group 2Taraklı-HendekPazarköy-AkyazıBozüyük

12.05.2010 Sarar Giyim Tekstil San. Tic. A.Ş.


Group 5Turunçova-Finike

12.05.2010 Fides Reklam Enerji Hiz.Lojis.

Tur. San. Tic. A.Ş..


Group 17AdilcevazAhlatMalazgirtVarto-Sönmez

12.05.2010 Er-Bu İnşaat ve Tic. Koll. Şti.. Ercan Tunç-Burhan Çetin


Group 4 Kovada- I Kovada-II

12.05.2010 Aksu Enerji ve Ticaret A.Ş..


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Due Recievables - VII


Group 10BünyanÇamardıPınarbaşıSızır

13.05.2010 Kayseri ve Civarı Elekt. T. A.Ş..


Group 7BozkırErmenekGöksu

14.05.2010 Fırat Enerji Üretim A.Ş. 86.400.000 Negotiations are finalizedCompetition Board decision awaited

Group 6AnamurBozyazıMut-DerinçaySilifkeZeyne

17.05.2010 Seba Ortak Girişim Grubu 13.520.000 Negotiations are finalizedCompetition Board decision awaited

Group 16 Çağ-ÇağOtlucaUludere

18.05.2010 Nas Enerji A.Ş. 40.800.000 Negotiations are finalizedCompetition Board decision awaited

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Due Recievables - VIII


Group 18EngilErcişHoşapKoçköprü

20.05.2010 Nema Kimya-Espe O.G.G.


Group 13BesniDermeErkenekKernek

21.05.2010 Kayseri ve Civarı Elektrik T. A.Ş.


Group 8Dereİvriz

24.05.2010 Seba Ortak Girişim Grubu


Group 11DeğirmendereKaraçayKuzuculu

03.06.2010

Group 12KoyulhisarLadik-Büyükkızoğlu

03.06.2010

TOTAL 3.770.800.000 $

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0

10

20

16

Timing

Privatization

method

Assets

3 regions privatized by the Privatization Administration was handed over in 2009, 1 region was handed over in in 1H2010.

7 regions are waiting for hand-over 4 regions in tender process. Remaining regions to be tendered within 2010

TEDAS- The Holding Company for state owned regional distribution companies Block sale of 100% of shares of the regional companies which have operational rights of the electricity

distribution network Regulated tariffs with targets for distribution loss and operational costs Future network investments to be earned back through tariffs

Number of Regions

Already private Stay order decision

Aras

Total

Başkent

Sakarya

Meram

Osmangazi

ÇoruhYeşilırmakVan GölüFıratÇamlıbelUludağ

The tenders for the privatization of Turkey’s electricity distribution continue

Waiting Approval

154

4 6 1

Tender proses BoğaziçiDicleGedizTrakya

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80% of the shares of the Baskent Natural Gas Distribution Company will be privatized by PA

Timing

Privatization

method

Assets

The tender was annaounced in May and the bidding deadline is 19.07.2010.

Block Sale of %80 shares

License for monopolistic distribution in Ankara till 2037 2nd largest natural gas distribution company in Turkey 2.1 billion m3 of natural gas sales volume in 2009 1.2 million subscribers as of 2009 High growth potential – ~ 100.000 newcomers per year Fixed tariffs in US$ terms until 2017 The majority of collection through pre-paid system (85%)

96184

436

865

1,182

101

-

200

400

600

800

1,000

1,200

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Thou

sand

s CAGR:13%

Number of Subscribers

Privatization Administration

Greater Municipality of

Ankara20%

80%

Capital Structure Location

17

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Important port on the Mediteranean Sea

Important gateway to the Middle East

140.000 tonnes/year container capacity

General cargo,dry and bulk cargo

Transfer of operational rights

36 years

The tender was announced in May and the bidding deadline is 04.08.2010

İskenderun Port will be privatized in 2010

Timing

Privatization method

Assets

18

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• The holding company has 57 % of market share in Turkey

• Total sugar production capacity per year: ~2 million tonnes

19

PA aims to privatize the Company’s 25 factories / plants in [6] regional packages

Majority stake in two affiliated companies were already successfully sold off Portfolio B (Malatya, Erzincan, Elazığ ve Elbistan plants) was in tender. Bidding

deadline was 21.01.2010 but has been intercepted by court decision The tender for portfolio C (Kastamonu, Kırşehir, Turhal, Yozgat, Çorum ve

Çarşamba plants) has been intercepted by court decision

The state owned sugar conglomerate Turkseker is beeing privatized gradually

Timing


Assets

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Total lenght of tollroads subject to privatization is 2.021 km• 2 Bosphorus Bridges

Sales [2009]: $ 402 million Vehicle number (2009) : 315 million

20

To be privatized by Transfer of Operational Rights

An amendment in law is necessary Tender may be commenced in 2010 (depending on financial circumtances)

The whole motorway network of Turkey incl. Bosphorus Bridges will be privatized in the near future

Timing

Privatization

method

Assets

www.oib.gov.tr

12,52416,349

21

Almost 40 % of the current installed capacity in power generation sector will be privatized shortly

Timing

Privatization

method

Assets

In 2008 PA has privatized as a pilot project 9 small power plants (ADUS) with a total capacity of 140 MW for 510 million USD to Zorlu Group.

52 run-on river plant have already been tendered in 19 groups. 613 bids were recieved and the total size of the privatization is approximately 440 million $

The rest of the assets will be privatized as portfolios starting 2H2010

9 Portfolios were formed ranging from 2,795MW to 356MW in size 3 thermal-only portfolios, 2 mixed thermal and hydro portfolios, 4 hydro-only

portfolios

Total capacity of EUAS23,976 MW

Number of plants

1483,677

Thermal

18

Hydro

27

Run-on river

56

Total

101

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To be privatized by Transfering of Operational Rights & Built - Operate - Transfer model

The whole region should be developed by building a cruise terminal, a five stars hotel, shopping malls and free shops

Preparatory studies ongoing

Largest cruise port of Turkey Total project area is c. 100,000 m2

The most important cruise terminal of Turkey will be privatized by BOT / TOR model

Timing


Assets

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THANK YOU FOR THANK YOU FOR YOUR ATTENTIONYOUR ATTENTION

REPUBLIC OF TURKEYPRIME MINISTRY

PRIVATIZATION ADMINISTRATION

www.oib.gov.trwww.oib.gov.tr

Documents

Prime Ministry Privatization Administration Privatization in Turkey Ahmet Aksu June 11, 2010