Turkey's Akdeniz Grid Attracts $546 Million Privatization Tender

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Researched by Industrial Info Resources (Sugar Land, Texas)--After a couple of setbacks, Turkey is trying to re-energize the privatization tenders in its energy sector. The Privatization Administration of Turkey (OIB) held a tender in Ankara recently for Akdeniz Elektrik, a power grid serving 1.6 million customers in the southern cities of Antalya, Isparta and Burdur. A consortium, Cengiz-Kolin-Limak, placed the highest bid of $546 million.

The company has 1.6 million subscribers with a consumption of 5.4 gigawatt-hours (GWh), according to the Privatization Administration filing for tender. The loss-illegal rate for Akdeniz grid is 7.5%, which is the lowest among Turkish power grids. The Akdeniz Elektrik tender was one of three tenders cancelled in 2011, after winning bidders experienced difficulties in providing payments.

In televised comments after the tender, Limak Enerji Chairman Ismail Ergunes said that the consortium plans to invest up to $400 million in a three-year period to upgrade the facilities in the power grid. "The investments will include underground power lines," he said. He also said that the highest bid in an initial tender held two years ago for Akdeniz Elektrik, which was $1.165 billion, was irrational.

"The result of the tender is fair enough," said Osman Nuri Sahin, former general manager of Turkiye Elektrik Iletim AS (TEIAS), the state-owned power grid, after the tender results. "The winning parties can invest more freely than in the earlier tenders, because of the extended payment terms from 10 to 15 years. The margins for electricity distribution rose to 3.49% from 2.23%. This improvement in margins increased the interest for the power grid privatizations."

Bidders included the firms Genpa Telekomunikasyon (Istanbul, Turkey) and Alarko Alsim, a parent company of Alarko Holding (Istanbul, Turkey), as well as the Elsan-Tumas-Karacay consortium.

Although most of the privatization tenders of the power grids failed, the OIB collected approximately $220 million. In 2010, Turkey sold off rights to operate nearly 20% of its power grids, raising more than $5 billion through tenders. Analysts recently forecasted Turkish privatization volume to reach $10 billion between 2013 and 2014.

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