TURKEY: Privatisation law drafted

16 September 1994

The government was to submit a new privatisation law to parliament in the week ending 16 September, once comments were received from political parties. A compromise on privatisation was reached during inter-party talks in August, after lengthy delays in the constitutional court (MEED 2:9:94).

The bill proposes the creation of a privatisation undersecretariat and a high board of privatisation consisting of Prime Minister Tansu Ciller and three ministers. A privatisation fund is to be created that will prevent proceeds from denationalisation being used to cover budget deficits.

The bill also includes a safety net for workers who may lose their jobs when state economic enterprises (SEEs) are denationalised. This has been a critical issue for Ciller in reaching agreement on privatisation with the Social Democratic Populist Party (SHP), the junior partner in the coalition government with her True Path Party (DYP).

The government will also retain a so-called 'golden share' in SEEs in strategic sectors including energy, telecommunications and defence. Operating rights rather than outright ownership will be sold for mines.

The new law prioritises the sale of state banks, which account for half the banking system. In its letter of intent to the IMF for a stand-by facility approved in July, the government said it would denationalise some institutions by the end of 1994.

The IMF and the World Bank are concerned at the lack of progress on privatisation, a structural change underpinning the government's recovery programme. The enactment of the law will be an important step for approval later in the autumn by the World Bank of a structural adjustment facility worth around $400 million.

The law will also pave the way for deals that have been held up by opposition in the constitutional court. These include the sale of shares in the Eregli Iron & Steelworks, the Turkish Petroleum Refineries Corporation (Tupras) and refined products distributor Petrol Ofisi (POAS). The programme's largest deal, the privatisation of the telecommunications division of the posts, telegraphs & telephones administration, is slated for 1995.

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