Turkey Fails to Privatize Natural Gas Distributor Baskent Dogalgaz

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Researched by Industrial Info Resources (Sugar Land, Texas)--Turkey's Privatization Authority failed to sell the 80% stake of natural gas distributor Baskent Dogalgaz Dagitim AS - Baskent Gaz (Ankara, Turkey) that is held by the government. All four participants in last week's privatization auction withdrew from bidding: Akfen Holding (ISE:AKFEN) (Istanbul, Turkey); the Aygaz (ISE:AYGAZ) (Istanbul) and Fernas consortium; STFA Yatirim Holding (Istanbul); and the Cengiz-Kolin-Limak consortium. The bidders did not meet the government's initial price of $626 million.

Ahmet Aksu, the acting chairman of the Privatization Authority, said that the auction commission will meet to cancel the privatization tender. Baskent Gaz is Turkey's second-largest natural gas distribution company, with 1.3 million subscribers and 2 billion cubic meters of annual consumption.

"The tender is canceled for the third time, I don't think Privatization Authority will succeed next time," said Gokhan Yardim, former general manager of Botas, state gas importer. "The government may downgrade its expectations for privatization income. Maybe the initial public offering of the government stake will be better, like the privatization process of the flag-carrier airline Turkish Airlines (ISE:THYAO) (Istanbul)."

In an interview with Industrial Info, he said that the companies cannot foresee the market conditions due to some legal difficulties. "The Energy Ministry of Turkey is working on a draft to revise the Natural Gas Market Law No. 4646," Yardim said. "According to the current law, which came into force in 2007, only the state-owned company Botas (Ankara, Turkey) can import natural gas. If the private sector could import natural gas, the companies also could earn profit from the gas trade. To sum up, if the private sector can import gas freely, the participants in coming tenders will rise significantly, and privatization income expectations can be exceeded."

Previously, the Privatization Authority of Turkey auctioned Baskent Gaz twice, but the winning bidders were not able to pay the amount that they offered. In 2010, Turkey sold off rights to operate nearly 20% of its power grids, raising more than $5 billion through tenders. For additional information, see April 16, 2012, article - Six Groups Interested in Turkey's Baskent Dogalgaz Privatization Tender.

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