Turkey’s Privatisation Administration has delayed the bidding for the privatisation of some 2,000 kilometres of roads – a package estimated to be worth between $4 billion and $5 billion – including Istanbul’s two suspension bridges, said to comprise up to 80 percent of the package’s value.
Prospective bidders are now requested to submit their qualifications by January 19, 2012, with final bids to be lodged on February 16, 2012. The original deadlines were November 18 to submit qualifications and December 15 for final bids.
The delays may worry interested investors if they are indicative of further postponements down the line. That’s because Turkey’s Privatisation Administration, which launched the tender for the privatisation in late August, stipulated that bidders must pay a $200 million bond to participate in it.
One interested bidder described the bond price as “crazy”, adding that its “never that high”, whilst an advisory source with experience in Turkey stated that it might constitute “a strong pressure element” for the eventual preferred bidder, since the government will have about $200 million of its money to use as leverage in the final negotiations. The advisory source went on:
“On the other hand, this means the public authorities have to develop a reliable bidding process. They have to be quick, because no one wants to have a $200 million bridge loan hanging on its balance sheet for long.”
Local banking sources defended the high bond price, highlighting failed privatisations where the preferred bidder then failed to honour its final bid – a point the advisory source also acknowledged.
Initially touted in mid-2008, the tender process was ultimately aborted due to the impact of the global financial crisis, as it was considered too big for cash-strapped European banks and their developer clients to digest comfortably.
To find out more about the $5 billion roads package, don’t forget to read our in-depth article published in the October 2011 issue of Infrastructure Investor magazine.