TURKEY'S TUPRAS REFINERY COMPANY PRIVATIZATION -

UNCLAS ANKARA 003258

SIPDIS

DEPT FOR EB AND EUR/SE
USTR FOR LERRION
TREASURY FOR INTERNATIONAL AFFAIRS - MILLS AND CPLANTIER
USDOC/ITA/MAC/DAVID DEFALCO DEPT PASS EXIM FOR MARGARET
KOSTIC

SENSITIVE

E.O. 12958: N/A
TAGS: EINV EPET EFIN TU
SUBJECT: TURKEY'S TUPRAS REFINERY COMPANY PRIVATIZATION -
MAYBE?

REF: ANKARA 269

SENSITIVE BUT UNCLASSIFIED. PLEASE HANDLE ACCORDINGLY.


1. (U) Summary: There is significant foreign and domestic
interest in the privatization of Turkish state refinery
company (TUPRAS),reportedly including a U.S. company. The
petroleum labor union, which successfully battled the last
tender attempt (to Russian Tatneft),is gearing up a public
campaign against the prospective sale of one of Turkey's
crown jewels to private -- possibly foreign -- owners. End
Summary.


2. (U) According to a June 8 Reuters report based on
Privatization Administration (PA) sources, 12 parties have
applied to receive the "tender specification" document for
TUPRAS (Turkish state-owned Oil Refineries)- slated for
privatization in 2005. According to the report, there were
four national and eight foreign companies interested in the
bid for the 51 percent block sale of TUPRAS. The tender
bidding deadline is September 2. Reuters reported that the
interested parties included :Repsol -Spain; PKN Orlen -
Poland; IOC - India; ENI - Italia; OMV - Austria; Shell -
British/Dutch; Petrol Ofisi (POAS) - Turkey; OYAK - Turkey;
OPET- Turkey;and Zorlu Holding - Turkey. Reuters also
reported that an unnamed U.S. company was a partner in one
joint bidding group (Note: Embassy has no confirmation of
this. End note.)


3. (SBU) Project Group Head for the TUPRAS Privatization at
the PA, Arzu Atik, told Econ Specialist that the PA has not
yet made an official announcement about the bidders, but
noted that the deadline to obtain the tender
"prequalification" document was June 22. Similar to other
block sale privatizations, he explained that acquiring the
tender specification document would not guarantee that a
bidder is qualified to bid. He said the companies or joint
bidding groups that would receive the prequalification
documents would be made public shortly after June 22.
However, Atik added that most of the reported names were
correct.


4. (SBU) While the PA is striving to adhere to its TUPRAS
privatization calendar, the union of public sector petroleum
workers, Petrol-Is, is actively opposing the privatization
of TUPRAS (and the petrochemical company PETKIM.) The union
sponsored newspaper advertisements and posted a prominent
billboard advertisement near the President's home in Ankara,
proclaiming that "Tupras is our future, it cannot be sold."
The photo depicts a young Anatolian girl with a gold
necklace (a traditional store of value) representing
"Tupras", at risk as another of Turkey's "crown jewels" to
be snatched up by mysterious buyers (holding a greedy
gasoline pump). The ad also goes out of its way to link the
privatization to the IMF: it makes the (highly questionable)
case that selling Tupras would yield fewer financial
benefits to the state than would derive from the future
stream of Tupras earnings, which would enable the state to
pay off its debt to the IMF.


5. (SBU) Comment: Despite the GOT's apparent determination
to sell TUPRAS, the privatization will more than likely be
challenged again by labor unions, or some other anti-foreign
investment interest group (see Reftel). Anti-foreign
ownership sentiments have been growing in Turkey, especially
after recent announcements of acquisitions in the Turkish
financial sector. Another key pending privatization, Turk
Telekom, may also attract similar nationalist fears and ire.
The Privatization Administration is marshalling new
legislation to limit judicial appeals, but the grounds for
the previous TUPRAS sale cancellation (sale in conflict with
public benefit) could still conceivably be just as
successfully pushed.

Moore