ECONOMY

Relative unknown is top bidder for majority stake in refinery

ANKARA – A little-known firm with Russian links made the highest bid at about $1.3 billion in the tender for a majority stake in Turkey’s state-run oil refiner Tupras, privatization officials said yesterday. Analysts welcomed the result, saying it beat expectations, which had ranged between $770 million and $1.1 billion despite Tupras’s market capitalization of some 3,150 trillion lira ($2.4 billion) according to January 9 closing share prices. Market participants say German-based Efremov Kautschuk GmbH, the top bidder in the flagship privatization, represents the interests of Russia’s sixth-largest oil firm Tatneft. «Even if the price is somewhat lower than Tupras’s last closing price, the market was expecting an offer in this range at the tender,» said Muhittin Kuley of Dis Investment. The tender was for a 65.76 percent block sale of Tupras, which controls 87 percent of Turkey’s refining market. Efremov Kautschuk has agreed to form a 50-50 joint venture with Turkey’s Zorlu Group to run Tupras. Zorlu is active in durable goods, energy, banking and textiles. Kuley said a small sell-off could still come in Tupras shares when trading resumes today. Trade in the refiner’s shares was suspended ahead of the tender due to regulations. Investors are eager to see the sale completed after Turkey’s $4 billion privatization program sputtered in recent months, Kuley said. The government has yet to complete a single key sale, despite its pledge to the International Monetary Fund to raise $4 billion from privatizations to help pay down its massive debt burden. State asset sales were worth just $893 million in 2003. «Canceling the tender or postponing it would create greater anxiety in the market,» Kuley said. «If this is the price Tupras attracted today, it won’t sell for more at a future date.» Final approval pending Turkey shelved the results of a tender for state cigarette and spirits manufacturer Tekel in November after bids failed to meet government and market expectations. It will attempt to sell Tekel again early this year, officials have said. The Privatization Administration (OIB) said technical work has now been completed in the Tupras sale, but the high board must still approve Efremov’s offer for the sale to become final. The head of OIB, Metin Kilci, told reporters the tender’s results would be sent to the high board for approval. An Efremov representative said they had presented the OIB with two options for payment. All of the cash may be paid up front or half of it paid now and the rest in yearly installments. Tupras has sought to cut its dependence on volatile Middle East supplies and buy more crude on the Mediterranean spot market and under long-term deals with Russia. «We are pleased that the Tupras tender has come to us,» said Zorlu Group President Ahmet Nazif Zorlu after the tender. «We will use our know-how at Tupras, and no one should have any doubt that we will do what’s necessary for production and in our country’s name,» he told reporters. Zorlu also indicated there were no plans to sack employees at the oil refiner, an apparent gesture to ease concerns among labor groups. A labor union chief said his group would open a lawsuit to cancel the tender soon after the results were