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9 January 2007 - Turkey will delay the sale of electricity distribution grids until after parliamentary elections that must be held by November, according to Energy Minister Hilmi Guler.
Turkey told the International Monetary Fund in November that the sale of the power grids would head the 2007 program of asset sales planned under a $10 bn loan accord. Turkey is seeking to reduce the role of the state in the power sector and draw in foreign investment to narrow a widening current account deficit.
"It wasn't seen as suitable to hold such an important distribution tender before the election," Guler told a news conference in the capital Ankara.
"This could complicate relations with the IMF,'' Tim Ash, an economist at Bearn Stearns in London, said in a note to investors. "It will also raise something of a concern over balance of payment financing in 2007, given the wide current account deficit.''
Turkey is scheduled to accept initial bids for the sale of three power grids on 19 January. The government also plans to sell a further 17 grids.
"A statement will be made by the privatization administration later today on whether the three tenders will be delayed or cancelled,'' Guler said.
Enel of Italy is bidding on the power distribution grids together with Turkish construction company Enka Holding Yatirim AS. Germany's Eon and Bilbao and Spainish-based Iberdrola have also expressed interest in the sales.
The sale of power companies may lead to an increase in electricity prices and voters would blame the government, the Referans newspaper reported on 5 January, citing Prime Minister Recep Tayyip Erdogan.
Turkey is seeking to attract foreign investment to help finance a current account gap that widened to $28 bn in the first ten months of last year, surpassing a record $23.2 bn in 2005. The lira lost 15 per cent against the euro last year, partly on concern that the current account was becoming unsustainable.
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