The privatization process in Turkey has proved to be an important source of funds for the government and brought tangible results and progress within this philosophy. Many state-owned companies have already been privatized within this program.
The principles, procedures, authorized agencies and other issues regarding privatization are regulated in Privatization Law No. 4046, dated 1994, although the privatization program was initiated in 1983. In August 2003, Law No: 4971 has been put into effect, setting out some further regulations to accelerate privatization applications within the scope of Privatization Law. These include arrangements that have been made to accelerate the privatization process with a new method of licensing like handing out the license of games of chance and utilization of convertible bonds of Türk Telekom.
After the Law No: 4971 was put into effect in August 2003, further regulations were introduced in year 2004 and 2005 to overcome the legal conflicts arising in the privatization program and to accelerate the privatization process. The new regulations that were put into effect also aimed to prevent the discrimination between local and foreign investors who participate in privatizations.
270 state-owned companies, 22 uncompleted state-owned facilities, 788 real estates, 8 motorways, 2 Bosphorus bridges, 104 facilities, 6 ports, the license of games of chance, vehicle inspection stations comprises the privatization portfolio of Turkish Government since 1985.
The new regulations in 2004 and 2005 have dramatically increased the level and volume of privatizations in Turkey. Furthermore, general economic conditions both local and international are the key determinants of the privatization success. Thus, the recent financial turmoil, which severely affected European and US economy, has reduced the level and volume of the privatizations in Turkey.
Turkey is one of the fastest growing markets in emerging economies. Since Turkey has been implementing privatization process as a core agenda from 1984, Turkey has successfully positioned itself as an attractive and promising investment environment. Moreover, free market economy implementations and liberal incentives increases the investor confidence in Turkish Market. Privatization implementations in Turkey have gained momentum in 1986 and since then, more than 199 companies have been privatized where no more state ownership exists in 188 of these. Total revenue generated from privatization program until end of August 2010 amounts to USD 40.8 billion, including dividends and other income.
Implementing market competition in energy sector is one of the priorities of Privatization Administration. In the following years, state-owned electricity generation and distribution companies are planning to be fully privatized to private sector. In 2010, the major privatizations completed are the TEDAŞ Uludağ Electricity Distribution Company with USD 940 million, TEDAŞ Osmangazi Electricity Distribution Company with USD 485 million and TEDAŞ Çamlıbel Electricity Distribution Company with USD 258.5 million. The tenders for TEDAŞ Yeşilırmak Electricity Distribution Company and TEDAŞ Çoruh Electricity Distribution Company took place in 2009 with the highest bids of USD 441.5 million and USD 227 million respectively and the privatizations are in the closing stage as of August 2010. Morevoer, tenders for 6 electricity distribution companies owned by TEDAŞ were finalized in 2010 and these privatizations are also in the closing stage. Also, the tenders for the privatizations of the 18 group of HEPP’s were done in 2010 with a total value of USD 439.9 million and these HEPP privatizations await for the closing. Thus, energy privatizations are expected to make up for the major part of privatization level in 2010 and in the upcoming years.
PRIVATIZATION IMPLEMENTATIONS BY YEARS
