Turkey's oft-delayed roads privatisation package has, you guessed it, been delayed again, this time till summer. The package, estimated to be worth between $4 billion and $5 billion, comprises some 2,000 kilometres of roads, including Istanbul's two suspension bridges.
According to a note from Turkey’s Privatisation Administration, pre-qualification documents are now expected on June 28 with final bids, to be tendered at an auction, set for August 9. Final bids had been expected May 17.
In addition to putting back the bidding deadline, the Turkish authorities also amended the amount of collateral interested parties will have to submit in order to actually bid for the roads package. Originally, bidders were required to post a $200 million bond in order to participate in the bidding.
Now, though, bidders will only be required to post a $50 million bond. The preferred bidder, however, will have to then post an additional $150 million bond as collateral for the final close negotiations.
An interested bidder last year described the original $200 million bond requirement 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.
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.