Turkish government rakes in $3.5 bln in power grid tenders

ANKARA - Hürriyet Daily News

The latest auction completed the last stage of a full privatization of the electricity distribution sector.

Turkey has raised $3.5 billion by selling its four remaining electricity grids, completing the last stage of a complete privatization of the electricity distribution sector.

The final negotiations on the privatization of four electricity distributor companies – Ayedaş, Toroslar, Van Gölü and Dicle – that took place on March 15, put $3.457 billion in the state’s cash box, almost $3 billion of it coming from Enerjisa, which won the tender for the two largest grids.

Enerjisa, evenly owned by Turkey’s second-largest company, Sabancı, and German energy giant E.ON, has placed the highest bids for the largest of the two grids: AYEDAŞ, which operates on the Asian side of Istanbul, and Toroslar Elektrik, operating in the Adana region in southern Turkey. The company’s offer for AYEDAŞ was $1.22 billion and $1.72 billion for Toroslar Elektrik, for a total of $2.94 billion. 
Enerjisa raised the number of its grids to three after today’s sales, as it is already the operator of Başkent Elektrik, the electricity provider of a region comprising seven cities including the Turkish capital of Ankara.

Istanbul’s electricity distribution service is divided into two regions and AYEDAŞ offers services on the Asian side of the city, where around 2.4 million people reside. The illegal electricity usage rate is one of the lowest in Turkey, at around 8 percent.

Three years ago, an attempt to privatize AYEDAŞ along with Istanbul’s European-side grid, Boğaziçi Elektrik, fell flat when MMEKA, a joint-venture between Mehmet Emin Karamehmet and Mehmet Kazancı that pledged $4.8 billion to the privatization tender of the two grids, failed to pay the agreed amount. That time, the winning offer for AYEDAŞ was $1.81 billion. 

Enerjisa also placed the highest $1.7-billion bid for the privatization of grid operations in the Adana region in southern Turkey. Toroslar is the second-largest grid among the ones privatized on the same day, providing services to over 2.8 billion people living in Adana, Gaziantep, Hatay, Mersin, Osmaniye and Kilis. The loss and leakage rate in the region is on par with general Turkish levels at around 11 percent.

Enerjisa had previously said if it would fail to win any distribution regions that it would seek opportunities by acquisition.






Illegal electricity usage problems

Meanwhile, the İşkaya Doğu joint venture has placed the highest bid for the privatization of Dicle Elektrik, the electricity distributor operating in Turkey’s southeastern provinces, with a $387-million proposal.

Dicle Elektrik provides electricity for 1 million subscribers living in the southeastern cities of Diyarbakır, Şanlıurfa, Mardin, Batman, Siirt and Şırnak.

In a 2010 privatization tender for the grid, Karavil-Ceylan İnşaat won with a $228-million bid, but due to disputes aroused by high loss and leakage rates in the region – the highest in Turkey at 70 percent – the transfer of rights was canceled.

The company plans to solve illegal electricity consumption issues by cooperating with the local community and non-governmental institutions, said Cezmi Menekşe, the technical consultant to the winning joint venture.

“We shouldn’t say illegal but we can say mis-used. If you say 70 percent of local people use illegal electricity it would be unfair to them,” Menekşe said.He also added that the venture finds the price high but aims to provide quality electricity for the region.

Finally, construction company Türkerler won the tender for Vangölü Elektrik with a $188-million offer. During the auction stage, where the İşkaya Doğu joint-venture was also one of the short-listed bidders, Türkerler won the tender with the largest bid. 

Vangölü distributes electricity to 458,971 residents living in Van, Bitlis, Hakkari and Muş. The leakage and loss rates there are the second-highest in Turkey at 52 percent.