Turkey Sells Power Distributor Gediz EDAS to Consortium for $1.23 Billion

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Researched by Industrial Info Resources (Sugar Land, Texas)--Turkey's Privatization Agency (PA) sold Gediz EDAS, the power distributor in the Aegean cities of Izmir and Manisa, to the Elsan-Tumas-Karacay consortium, which gave $1.23 billion in today's privatization tender in Ankara.

With this privatization, the consortium--which also operates in the neighboring cities of Aydin, Denizli and Mugla, with a different entity Aydem--will have a 7% slice of the total power electricity grid market. The Gediz grid supplied about 13,000 gigawatt-hours (GWh) to 2.5 million subscribers last year.

"We have the business plan and made the necessary feasibility to improve Gediz EDAS with new investments," Aydem Chairman Ceyhan Saldanli said after the privatization tender. "Currently, we're in the negotiation process with banks to finance the acquisition. We'll choose between the different payment methods, which includes a cash payment."

According to privatization rules, the Privatization Agency gives the winning investors a three-year payment term after a 40% cash payment in advance.

"We have to double our investments in Gediz EDAS to improve the power grid," Saldanli said. "We're planning to invest $335 million in coming three years' period." He added that they also plan to participate in privatization tenders of Ayedas, which is a power grid that operates in Asian side of Istanbul, and Toroslar EDAS, which is planned for February 19, 2013. Ayedas currently serves 2.3 million customers.

While a dozen participating companies/consortiums revised their bids for Gediz EDAS, the Cengiz-Kolin-Limak consortium quit the tender and did not increase its bid.

Last week, Cengiz-Kolin-Limak gave the winning bid for Bogazici EDAS, which serves more than 4 million subscribers in the European side of Istanbul, with $1.96 billion. For additional information, see December 18, 2012, article - Turkey's Biggest Grid BEDAS Attacts $1.96 Billion in Privatization Tender.

Currently, the consortium also owns the grids of Uludag EDAS and Camlibel EDAS, while the Akdeniz EDAS grid is in the process of approval from the Privatization Board of Turkey. With four grids, the consortium has 28% of the total electricity grid market. Market watchers also said that if the consortium gives the highest bids to win Gediz EDAS, the privatization may not be approved by the Turkish Competition Board. The board forbids more than 30% market share due to competition regulations.

The winning consortium is expecting to get the necessary approvals for privatization in the first quarter of 2013. Turkey is selling the electricity grids to draw private-sector investment for infrastructure and prepare the ground for a more liberalized power market.

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