Erdoğan hints at public offering as part of new toll roads tender

Erdoğan hints at public offering as part of new toll roads tender

ISTANBUL – Hürriyet Daily News
Erdoğan hints at public offering as part of new toll roads tender

Hürriyet Photo

The unprecedented decision to cancel the $5.7 billion privatization of Turkey’s toll roads was made due to the offer being way below the government's expectations, Turkish Prime Minister Erdoğan said Feb. 23 before departing from Istanbul to the United Arab Emirates where he will deliver a speech at the Government Communication Forum. Erdoğan also hinted that a public offering might be organized as part of the new tender. 

“The number we are expecting is a lot more [than the previous offer]. There is an upmost number, a middle number and a minimum number. However, we might not sell the toll roads as a whole [package]. We might [decide to make] a public offering after we finish the technical works,” he said. 

The Finance Ministry canceled the $5.7 billion toll roads privatization tender, which included two suspension bridges over Istanbul’s Bosphorus on Feb. 22, just weeks after Erdoğan criticized the bid total as being too low.

The highways and bridges were sold in a December 2012 tender to a consortium of Koç Holding, the largest conglomerate in the country, Gözde Girişim with links to local food giant Yıldız Holding and Malaysia’s UEM Group Berhad. Koç and Gözde hold 40 percent and 20 percent stakes in the consortium respectively, while UEM Group holds a 40 percent equity stake. 

The consortium was granted the total rights to and revenues from toll roads, including the Edirne-Istanbul-Ankara highway and the Bosphorus and Fatih Sultan Mehmet bridges that connect the European and Asian sides of Istanbul, for 25 years.

The tender was the second highest privatization tender in Turkish history.

Finance Minister Mehmet Şimşek said in a written statement Feb. 22 that the ministry and the Privatization High Council (ÖYK) had jointly decided to cancel the deal. 

Turkey earned about 800 million Turkish Liras ($445 millions) from 350 million vehicle crossings on toll bridges and highways in 2012, according to figures published by the General Directorate of Highways (KGM) last month.

Figures from last December indicate that the 28,678,753 vehicles that crossed the bridges and used toll roads generated 62,831,761 liras that month.

The country is planning to build a third bridge over the Bosphorus to ease the traffic load and support a new airport project in the north of the city.

Turkey is raising high hopes for large energy privatization projects this year after several failed attempts at natural gas and electricity grid sales.

Many deals were canceled due to bidders’ financing problems.