PRIVATIZATION SPARKS NATIONALIST UPROAR
ÝbrahÝm Turkmen Ýstanbul
Today’s Zaman, Turkey
July 7 2007
Heavy opposition from nationalist-leaning political parties erupted
when the Privatization Authority (OÝB) sold Turkey’s largest
petrochemicals producer, Petkim on Thursday.
The Kazakh and Russia-partnered TransCentralAsia Petrochemical Holding
joint venture won the bidding war in the privatization of Turkey’s
51 percent stake in Petkim with a $2.05 billion bid against the Azeri
Socar&Turcas-Injaz consortium.
Main opposition Republican People’s Party (CHP) leader Deniz Baykal
claimed the privatization tenders were conducted without the necessary
legal infrastructure, in a hasty manner and with much controversy. "A
comprehension of ‘sell and get money’ is emerging nowadays," he said.
In a broadcast on Thursday on Kanalturk, Baykal said Petkim was
extremely important for Turkey’s economy. "Even the identity of
the winners has not yet been clarified exactly. Completing the
privatization of such an important company just two weeks ahead of the
elections without discussing it deeply with the public and in a way
open to many legal debates is quite a worrisome event," Baykal noted.
Vice General Secretary of the CHP Oðuz Oyan announced yesterday they
will immediately halt the sale process of Petkim and do whatever they
can to stop the transfer of the company. In a written statement,
Oyan accused the sale of being a dubious and suspicious operation
with respect to its timing. "The privatization just two weeks before
the general elections reflects the government’s rush as if they
were trying to salvage things from the fire. The transformation of
privatization into alienation shows the government is lacking the
concept of strategic business," he said.
Faruk Bal, vice general secretary of the Nationalist Movement
Party (MHP) claimed in a written statement that the sale of such
a strategically important facility was a mistake. He said the sale
of Petkim in the final leg of the Justice and Development Party’s
(AK Party) term in office had cast suspicions. President of the
Turkish Health Workers Union (Saðlýk-Ýþ) Mustafa Baþoðlu said one
of the businessmen who won the Petkim auction is a Russian citizen
of Armenian origin. "It must be investigated whether this man has
ever provided support to the Armenian diaspora," he insisted. In
a written statement yesterday Baþoðlu said the tender process must
be immediately halted and called on civil society institutions to
arrange massive demonstrations against the sale. Turkey is involved
in a serious dispute with Armenia over its claims that Turkey had
deliberately committed genocide and ethnic cleansing during incidents
in 1915. Besides genocide claims, Turkey’s relations with Armenia
are bitter due to its occupation of a section of Azerbaijan.
The Union of Petroleum, Chemicals and Rubber Workers (Petrol-Ýþ) filed
a lawsuit yesterday in the Council of State, asking for the annulment
of the privatization deal of Petkim. Petrol-Ýþ President Mustafa
Oztaþkýn claimed the tender was by no means serving the interests
of the public. "The sale is obviously not in compliance with the
economic rationale, even not with productivity concerns," Oztaþkýn
said in the statement when they announced their lawsuit to the court.
Minister of Economy and chief negotiator with the EU Ali Babacan
evaluated the sale of the Petkim, saying, "It is very pleasant to see
the interest of many business groups, especially from around the world,
despite such a noisy environment in Turkey just before the elections."
In a live broadcast on Kanal A on Thursday evening, Babacan welcomed
the sale with and pointed out that the final price in the auction was
well beyond the market value of the company as calculated with respect
to the value of its share already traded on the Ýstanbul Stock Exchange
(ÝMKB).
Turkey has been going through an extraordinary period in the last
two months and it is experiencing such developments, which nobody was
expecting to face just before then, he said. "Still, despite all these
resentments in the domestic political arena, interest of foreigners
[in Turkey] hasn’t waned," he said.
The TransCentralAsia Petrochemical Holding Joint Initiative Group
announced on Thursday they were planning to make more investments
in their refinery, port and power plants in Turkey, in addition to
investments to further increase Petkim’s production capacity.
"These investments are an indication of the trust of Kazakh and
Russian investors in the Turkish economy. We also believe the deal will
contribute much to the development of the commercial relations among
Turkey, Russia and Kazakhstan," the group said in a written statement.
Petkim’s shares in the ÝMKB hit the premium ceiling at the early
trading session and rose as high as YTL 10 after a 11.1 percent rise.
But they were sold off by investors who wanted to realize their
profits. Analysts point out that the privatization value of Petkim
corresponds to a YTL 25.4 per unit share. But since the winner will
not use its call option, the shares will not climb to those levels
in the short term, they say.
Erhan Ýpek from Tera Equities said a psychological effect may arise
since the bid is four times higher than the actual value. But the
increase in the price of shares will be contained, he added.
Analysts expect the markets will initiate another upswing to break
new records due to the "great result" of the Petkim auction, after
three consecutive days of extraordinary rallies. Petkim’s shares were
temporarily withdrawn from trade on the ÝMKB on Thursday until the
auction’s details was settled. But the markets retreated contrary
to positive expectations. This was largely because investors were
worried about another deadlock in the presidential elections as
the Constitutional Court rejected the applications of President
Ahmet Necdet Sezer and the CHP to nullify a package amending the
Constitution.
The amendment package, which allows popular elections of the president,
will be given to the public via a referendum on Oct. 21.
Gukhan Uskuay, financial strategy director of Turkish Investment,
predicted the markets will preserve their upward trend unless the
benchmark index (ÝMKB-100) falls below 49,400 points.
The TransCentralAsia consortium consists of Kazak oil company
Caspineft, Kazak-dominated Russian group Investment Industrial
Eurasia and Russia-based Troika Dialog investment bank. Consortium
representative Haluk Ulusoy announced they would immediately start
refinery investments. He also said the consortium will actively use
the company’s seaport, which is one of the largest in Turkey. The
consortium said they had not devised a payment plan yet.
Former managers of Petkim Uður Yuce and Kemal Colakoðlu welcomed the
price given to the company. "It is a good price, we would feel sad
if the company’s [total] value had remained below $3 billion," Yuce
said. Colakoðlu added the price was reasonably fair and he believed
the new owner would boost the company, although he did not know much
about them. However, one of the former managers, Ali Nail Kubalý,
claimed the price would have been higher had Petkim been sold in
pieces rather than a block sale.
The final decision of the committee for tenders on the privatization
deal will go to the Competition Board. After it is approved by the
board, it will return to the OÝB. Metin Kilci, president of the
OÝB, said the entire process will take three or four months until
completion. Kilci also added that the deal requires the winner to
make investments to increase capacity, but not employment. "There are
big expectations that employment will increase at Petkim after it is
turned over to the winner, however. Still, if the existing workers
lose their jobs, they will be placed in other public institutions. It
is impossible for them to become unemployed.
Petkim meets 30 percent of Turkey’s $6 billion demand for
petrochemicals and has great potential since it also one of the
largest such company in the region.
Petkim produces 3.2 million tons of petrochemicals a year and sells
1.9 million tons abroad, which is not enough to meet current demand.
Petrochemical trade is now almost 6 percent of total global trade,
and it is estimated to reach 10 percent by 2010. The company announced
a $180 million loss in 2003, but by 2006 the company posted profits of
$136 million despite high oil prices. Petkim made a YTL 50.1 million
net profit in the first quarter of 2007.
Of the 51 percent ownership sold in the auction, 44 percent belong to
the OÝB and the remaining seven to the Pension Fund (Emekli Sandýðý).
In addition, 38.5 percent the stakes are being traded on the Istanbul
Stock Exchange (ÝMKB).
In June 2003, an 88.86 percent share of the company had been auctioned
off to the Uzan family for $605 million; however, the deal was
unilaterally cancelled two months later after the Uzan family failed
to satisfy the requirements due to financial woes. A second tender
was held in August 2003 for the block sale of the same share, but
that also failed due to lack of investor interest. In April 2005,
34.5 percent of the company’s shares were opened to the public,
which in return raised $267 million.
–Boundary_(ID_6rDY2N9Y6GBGhxQyoiil0A)–
From: Emil Lazarian | Ararat NewsPress
