Turkey to speed up privatization program under pressure from IMF
WASHINGTON – Turkey, under pressure from the IMF to speed up its stagnant privatization program, is planning to boost sell-offs next year with the sale of the tobacco and beverages giant Tekel, a senior official said. Turgut Bozkurt, head of the privatization administration OIB, compared today’s Tekel with Turk Telekom in the late 1990s, saying it was vital not to miss the boat with the Tekel sale. Turk Telekom was the star of Turkey’s sell-off portfolio until mid-2000. Some analysts at the time thought that it could bring in up to $5 billion through a partial sale. But Turkey failed to conclude the sale due to political divisions in the government and legal barriers. Telecom sector valuations have since tumbled, making a sale more difficult. Turk Telekom’s sell-off strategy is to be revised and its value is to be reassessed. The company is expected to be divided into subsidiaries and a draft law will be presented in Parliament to enable the OIB to sell each subsidiary. «Tekel could become today’s Telekom if we move too late. There is now an atmosphere in which Turkey can raise an amount close to the maximum that could be raised in an ideal situation,» Bozkurt told Reuters in an interview in Washington, where he was attending talks with the IMF. «The year 2003 can be a serious privatization year if we move ahead on the Tekel deal.» Tekel has a monopoly on imports of alcoholic drinks and a vast distribution network serving private retailers. Until tobacco laws were reformed, it had to buy up excess local tobacco production, incurring large losses. It has now been relieved of this, allowing it to run as a profit-making enterprise. The IMF last week urged Turkey, which is implementing a $16-billion loan pact aimed at overcoming last year’s financial crisis, to take concrete steps to privatize Tekel. Privatizations are among a host of reforms promised to the IMF to liberalize the economy in return for the loans. Turkey had promised the IMF it would adopt a sell-off plan by the end of September. Schroder Salomon Smith Barney, assigned as an adviser in July, is working on the strategy, Bozkurt said. «We should not miss the right time for Tekel. There is now foreign and domestic demand for the company,» Bozkurt said. There are currently 33 companies in the OIB’s privatization portfolio. In a bid to accelerate their sales, Turkey plans to ease tender and payment terms and conditions. Turkey has raised $7.1 billion since it launched the privatization program in 1986. It has generated $515 million so far this year against its 2002 target of $700 million. «We hope to bring in the rest via the deals we have announced,» Bozkurt said. Turkey plans to ask for bids for a majority share in petrochemicals company Petkim in October. It will also offer a strategic stake in state oil refiner Tupras by the end of the year.
