Ankara natural grid to be privatized for $1.16 million

ISTANBUL - Hürriyet Daily News

Turkish privatization authorities, bidder companies are seen at the Privatization Board’s center in Ankara before a tender for sell-off of the city’s gas grid. AA photo

Turkish food company Torunlar Gıda placed a $1.16 million offer on Jan. 25 for Turkey’s second biggest natural gas grid, Başkent Doğalgaz, suggesting that authorities’ long quest to finally sell the grid might finally end in success.

Seven companies, including giants Zorlu and Akfen, participated in the tender, which ended in the fourth round with Torunlar Gıda’s victory.

“We will iron out the existing problems in time after the handover transaction is completed,” said Torunlar Gıda Chairman Mehmet Torun, adding that he foresaw no hike in prices.

Başkent Doğalgaz, the natural gas provider for Ankara, possesses 1.4 million subscribers. The grid has a sales capacity of 2.3 billion cubic meters and a distribution capacity of 3.6 billion cubic meters.

Three failed tenders

Authorities sought to sweeten the pot for Başkent Doğalgaz after three unsuccessful tenders. The main concern for companies had been the 20 percent stake that Ankara Metropolitan Municipality held in the grid.

The municipality’s share was not included in the tender but, through a regulation, the tender has been expanded to cover 100 percent of the shares in order to relieve companies.

Until today, $207.6 million in tender guarantees had been wasted in tenders for the grid. In the first tender, Global Investment failed to pay its offer, $1.6 billion, wasting a $50 million guarantee, while the controversial Karamehmet-Kazancı partnership failed to pay the $1.2 billion contract price in another tender, resulting in a loss $107.6 million in guarantee fees. According to Turkish media reports, Iran’s state-run NIGC company was set to enter the tender, but it ultimately did not table a bid.

Torunlar Gıda is a family company that has been operating in the food sector for almost 30 years. After expanding in the industry through acquisitions, the company diversified into real estate and construction sector by establishing the Torunlar Real Estate Investment Trust (REIT).

Torunlar REIT’s shares are currently trading on the stock exchange, and its market share has surpassed $900 million. Torunlar REIT also acquired the land on which the Paşabahçe Tekel Factory sat last year with a bid of 355 million Turkish Liras.