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Strategies & Market Trends : The Thread Formerly Known as No Rest For The Wicked -- Ignore unavailable to you. Want to Upgrade?

To: kendall harmon who wrote (53739)	8/18/1999 7:58:00 AM
From: kathyh	Read Replies (2) \| Respond to of 90042

ANALYSIS-Fire seen to taint Turk sell-off plan Reuters Story - August 18, 1999 07:16 By Servet Yildirim ISTANBUL, Aug 18 (Reuters) - A fire raging through Turkey's biggest refinery since Tuesday's earthquake has dealt a blow to one of the country's most potent economic symbols and may hamper efforts to speed up privatisation vital to financial reform. The International Monetary Fund (IMF) sees privatisation of key enterprises as an essential step to cut Turkey's huge public debt and open the way for a stand-by loan this year. Turkey appointed Salomon Smith Barney as an adviser for the sale of Tupras, Turkey's largest company in 1998 with a total sales value of $3.7 billion. However, the fire which erupted at the company's refinery in Yarimca after an earthquake measuring 7.4 on the Richter scale has clearly eroded the value of Tupras, one of the jewels of the stalled privatisation programme. The government hopes to raise $1.5 billion this year by sell-offs and some $4 billion in 2000. Yarimca, the biggest of Tupras's four refineries, accounts for 41 percent of total output capacity of 27.6 million tonnes a year and 36 percent of Turkey's entire capacity. "Turkey would have raised some $1 billion through a partial offering or block sale in the first 2000 quarter," said an economy official. "The fire will probably change plans for the sell-off." The Privatisation Administration which owns 96 percent of Tupras was planning to offer 15 to 20 percent of Tupras domestically and internationally by end-March. Tupras began to make profit following years of losses after the government adopted a price flotation system in 1998 -- the automatic mechanism under which prices are determined in line with Mediterranean CIF (cost,insurance and freight included) quotations. The government move had increased the chance of success for the sell-off. Fears of an explosion forced the evacuation of the Yarimca plant on Tuesday after teams failed to bring the fire under control. On Wednesday smoke and flame belched from the complex. Some 1,200 people work at the refinery, built on U.S. technology. Tupras has spent around $1 billion to modernise its plants and increase production since 1989 under a 14-year master programme of $1.8 billon. Almost a third was spent on Yarimca. "By Mediterranean standards Yarimca is a relatively large, medium complexity refinery. Major process units in the refinery include three crude, three vacuum, two catalytic reforming, two kerosene/diesel hydro-desulphurisation, one isomerisation and one asphalt production unit," a senior Tupras official said. The refinery, set up in 1961, produces fuels and petrochemical feedstocks primarily for consumption within Turkey -- LPG, petrochemical naptha, gasoline, jet fuel, kerosene, diesel, heavy vacuum gasoil, heating oil, fuel oil and asphalts. "Its replacement value is $2.5 billion. Moreover, it takes at least four years to set up a refinery like Yarimca," the official said. The plant is insured by the Turkish Gunes Sigorta. Gunes officials did not disclose the name of the international insurer. The earthquake which struck a wide area in western Turkey has killed more than 2,000 people. Tupras officials said the fire which started at naptha tanks threatens the safety at nearby plants in the industrial region. "Tupras shares have a major impact on the Istanbul stock exchange index," Metin Turkes, an analyst at Kent Securities said. Portfolios of many domestic and foreign investors included Tupras shares. "For this reason the fire may trigger strong sales and have negative impact on the market," he said. The Istanbul exchange suspended trade for a second day on Wednesday. Goknur Karabiyik of Halk Securities said the fire may create a shortage of unleaded petrol in the Marmara region in which the Yarimca refinery acts as the major supplier. The region includes Turkey's commercial capital of Istanbul. Copyright 1999 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.