February 22, 2013 / 6:36 PM / 7 years ago

UPDATE 1-Turkey cancels $5.7 bln highway tender

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ANKARA, Feb 22 (Reuters) - Turkey on Friday cancelled a $5.7 billion tender for the privatisation of toll roads and bridges over the Bosphorus because the price tag was not high enough.

A consortium including Koc Holding, Turkey’s biggest company, Turkish partner Gozde Girisim and Malaysia’s UEM Group Berhad had won the tender in December with the highest bid.

The sale had given a boost to the Turkish government’s flagging privatisation programme, which has been constrained by high valuations and tough funding conditions due to the euro zone crisis. Several sales of state assets have been postponed.

As a result, the government failed to meet its 2012 budget target of 12.5 billion lira in privatisation receipts, adding to pressure on public finances.

The High Privatisation Council, chaired by Prime Minister Tayyip Erdogan, met on Friday to assess the road and bridge sale and decided to cancel it, Finance Minister Mehmet Simsel said in an e-mailed statement, giving no further details.

Erdogan said earlier this month the result had not met expectations, but did not elaborate. On Friday, Deputy Prime Minister Bulent Arinc said the cabinet and privatisation officials had found the highest bid too low.

“The prime minister already hinted at this,” Arinc said at news conference broadcast by NTV television, when asked about the cancellation.

He said compared with the annual revenue of the bridges and highways, the amount that was offered was probably found to be too low. Taking into account the public interest, the tender was not accepted, Arinc said.

At the time of the tender, the state highway agency said the toll roads and bridges had generated revenue of 740 million lira ($412.4 million) in the first 11 months of 2012.

The roads and bridges, including the Edirne-Istanbul-Ankara motorway and the Bosphorus and Fatih Sultan Mehmet bridges linking Europe and Asia, were offered as a single package for a period of 25 years at the tender.

The Istanbul stock exchange was closed when Simsek made the statement. Shares in Koc and Gozde had fallen earlier this month after Erdogan had first expressed his disappointment in the tender.

$1 = 1.79 Turkish liras Reporting by Orhan Coskun and Ayla Jean Yackley. Editing by Jane Merriman

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