Today’s Zaman, Turkey
May 31 2008

Turkish petrochemical manufacturer Petkim meets its new owners

After several ill-fated attempts at its privatization, Turkey has
finally managed to complete the sale of giant petrochemicals
manufacturer Petkim, transferring ownership to the SOCAR-Turcas-Injaz
joint venture yesterday at a well-attended signing ceremony in Ankara.

The Azeri group submitted the second highest bid in the tender on July
5 for the block sale of a 51 percent state-owned stake in Petkim.
Kazakhstan’s TransCentralAsia Petrochemical Holding consortium offered
a higher bid, $2.05 billion — later rejected by a commission
overseeing the privatization of Petkim because one of the Kazakh
group’s partners had close relations with the Armenian diaspora. The
Azeri group made a $1.02 billion down payment to the Treasury for the
purchase of Petkim on Wednesday but later decided to increase the
amount to $1.66 billion. The remaining payment will be made within
three years. The group borrowed $625 million from Akbank and Garanti
Bankası.

Finance Minister Kemal Unakıtan, Privatization Administration
(Ã-Ä°B) President Metin Kilci and the acting president of the
Social Security Institution (SGK), Fatih Acar, were all present at the
signing ceremony of the contract transferring ownership. The
consortium was represented by State Oil Company of the Azerbaijan
Republic (SOCAR) Chairman Rövnag Abdullayev and Turcas Chairman
Erdal Aksoy.

Petkim was established in 1965 under the leadership of the Turkish
Petroleum Corporation (TPAO). It initially decided to establish the
Yarımca petrochemical complex and started up ethylene, chlorine
alkali, VCM, PVC and LDPE plants in 1970. To meet soaring demand, it
opened its new facilities in the AliaÄ?a district of
Ä°zmir.

Today it has 14 manufacturing plants, eight other plants that it
shares with the private sector, one electricity generation facility,
one recycling unit and a port. It also owns and runs Güzelhisar
Dam. The company is a major provider of more than 50 products for the
construction, automotive, agriculture, electricity, electronic and
packaging industries.

Speaking at the ceremony, Unakıtan said the Petkim sale will be
a fresh start for the Turkish petrochemicals business and that the
company will soon become a major player in the world petrochemicals
market. Privatizations are not conducted to earn money, he said,
adding that each sale is indeed a structural reform.

Almost all countries, the Iron Curtain countries of the past included,
have completed the sale of their inefficiently run state-owned
properties, but Turkey has dragged its feet for years for ideological
reasons. "Privatization is done for the sake of competitiveness and to
give the economy more dynamism," he noted.

He also expressed pleasure over a company from "Turkey’s brother
nation, Azerbaijan," having purchased Petkim.

Aksoy noted in his speech that they aim to increase Petkim’s
production capacity. They will not lay workers off, he added.

Meanwhile, according to the contract signed by the parties, the
Treasury will hold the golden share, giving it expanded rights in
management despite its minority share in the new ownership structure
of the company.