Sales revenues caught in red tape
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Oluşturulma Tarihi: Mart 21, 2009 00:00
ANKARA - Concession deals concerning seven privatizations currently wait approval at the Turkish Council of State due to the problems concerning the legal infrastructure of privatization. The privatizations are foreseen to bring in nearly $3 billion
The Turkish government has yet to receive a single penny from the giant privatization tenders held to boost its coffers by billions of dollars. That is because the tenders have still not received approval from the Council of State, due to cracks in the Turkey’s legal structure.
The Council of State is yet to approve third generation, 3G, concession agreements concerning the three GSM telecommunications operators in the country as well as the concession deals for the four ports whose sales tenders were held back in the past two years. Meanwhile, the Privatization Administration is awaiting the Council of State’s approval of the concession deals in order to finalize sales transactions. If approved, these seven concession deals would bring over $2.9 billion into the government’s purse.
The license tender concerning 3G technology, which offers services such as high-speed Internet access and video calls, was held at the end of November last year. Turkcell, the country's biggest mobile phone operator, received A type license while Vodafone obtained a B type and Avea, Turkey's third-largest mobile phone network, gained a C type license. The tender generated 922 million euros in terms, including value added tax.
The tenders were first approved by the Information Technology and Communications Authority, or BTK. Then, the drafts of the concession agreements to be signed with by the operators were sent to the Council of State on Dec. 5, 2008. The BTK would sign the concession agreements with the operators following State Council’s revision process, which was expected to last two months. As the next step mobile operators were expected to launch operations by establishing their facilities within the three months of signing. The license costs were also to be paid in cash, according to the articles and conditions of the bid.
The bid had many articles and conditions the mobile operators had to oblige by. For example, the software and hardware of the systems, which were yet to be established, had to consist of at least 40 percent of domestic intellectual property.
After three years, the operators with 3G licenses are required to employ 500 research and development staff. Some of the staff were to be selected among those working at the small and medium size enterprises, SMEs, while some were to be hired right out of university. That way, besides aiding to government revenue, the 3G deals would also help provide added value for the industry as well as creating new jobs.
The Council of State is said to have met BTK two weeks ago to consult on some technical issues. As 3G is a new and technical issue, the approval process of the Council of State has been prolonged, according to BTK authorities, who added that the delay had not been caused by a complication.
Ports also wait approval
Tenders held for the operating rights of Turkey’s ports are also waiting the approval of the Council of State. Among those waiting, the port of İzmir is the first and largest. A tender for İzmir port was made at the beginning of 2006, and the tender process was concluded in May 2007. The Global Yatırım-Hutchison-Aegean Exporters Association Joint Venture Group won the tender by making the highest bid of $1.27 billion. Although the Supreme Privatization Board, or ÖYK issued its decision on the privatization of İzmir port in July 2007, the State of Council has been investigating the deal for nearly 20 months.
The tender for the transfer of operating rights of Derince Port, situated in the gulf of İzmit, was made in June 2007 and then held Sept. 12, 2007. The highest bidder was the Türkerler Joint Venture Group with $195.25 million, earning the right to operate the port for the next 36 years.
The ÖYK decision concerning the privatization of the port was issued in November 2007. The concession agreement has been awaiting approval of the Council of State for approximately 14 months.
Meanwhile, the Çelebi Joint Venture Group was the highest bidder for Bandırma port in May of last year. The joint venture acquired the operating rights of the port for the next 36 years with a bid of $175.5 million.
Although ÖYK announced its decision regarding the issue in September last year, the Council of State’s revision process has been on going for the past six months.
The tender process for Samsun Port started the same date as Bandırma Port, and the port was sold for $125.2 million to Ceynak, a logistics firm. The Council of State has also been reviewing the deal for the past six months.
The Council of State is yet to approve third generation, 3G, concession agreements concerning the three GSM telecommunications operators in the country as well as the concession deals for the four ports whose sales tenders were held back in the past two years. Meanwhile, the Privatization Administration is awaiting the Council of State’s approval of the concession deals in order to finalize sales transactions. If approved, these seven concession deals would bring over $2.9 billion into the government’s purse.
The license tender concerning 3G technology, which offers services such as high-speed Internet access and video calls, was held at the end of November last year. Turkcell, the country's biggest mobile phone operator, received A type license while Vodafone obtained a B type and Avea, Turkey's third-largest mobile phone network, gained a C type license. The tender generated 922 million euros in terms, including value added tax.
The tenders were first approved by the Information Technology and Communications Authority, or BTK. Then, the drafts of the concession agreements to be signed with by the operators were sent to the Council of State on Dec. 5, 2008. The BTK would sign the concession agreements with the operators following State Council’s revision process, which was expected to last two months. As the next step mobile operators were expected to launch operations by establishing their facilities within the three months of signing. The license costs were also to be paid in cash, according to the articles and conditions of the bid.
The bid had many articles and conditions the mobile operators had to oblige by. For example, the software and hardware of the systems, which were yet to be established, had to consist of at least 40 percent of domestic intellectual property.
After three years, the operators with 3G licenses are required to employ 500 research and development staff. Some of the staff were to be selected among those working at the small and medium size enterprises, SMEs, while some were to be hired right out of university. That way, besides aiding to government revenue, the 3G deals would also help provide added value for the industry as well as creating new jobs.
The Council of State is said to have met BTK two weeks ago to consult on some technical issues. As 3G is a new and technical issue, the approval process of the Council of State has been prolonged, according to BTK authorities, who added that the delay had not been caused by a complication.
Ports also wait approval
Tenders held for the operating rights of Turkey’s ports are also waiting the approval of the Council of State. Among those waiting, the port of İzmir is the first and largest. A tender for İzmir port was made at the beginning of 2006, and the tender process was concluded in May 2007. The Global Yatırım-Hutchison-Aegean Exporters Association Joint Venture Group won the tender by making the highest bid of $1.27 billion. Although the Supreme Privatization Board, or ÖYK issued its decision on the privatization of İzmir port in July 2007, the State of Council has been investigating the deal for nearly 20 months.
The tender for the transfer of operating rights of Derince Port, situated in the gulf of İzmit, was made in June 2007 and then held Sept. 12, 2007. The highest bidder was the Türkerler Joint Venture Group with $195.25 million, earning the right to operate the port for the next 36 years.
The ÖYK decision concerning the privatization of the port was issued in November 2007. The concession agreement has been awaiting approval of the Council of State for approximately 14 months.
Meanwhile, the Çelebi Joint Venture Group was the highest bidder for Bandırma port in May of last year. The joint venture acquired the operating rights of the port for the next 36 years with a bid of $175.5 million.
Although ÖYK announced its decision regarding the issue in September last year, the Council of State’s revision process has been on going for the past six months.
The tender process for Samsun Port started the same date as Bandırma Port, and the port was sold for $125.2 million to Ceynak, a logistics firm. The Council of State has also been reviewing the deal for the past six months.