US embassy cable - 05ANKARA3258

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