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Turkey 2013 | ECONOMY | INTERVIEW

TBY talks to Ahmet Aksu, President of the Privatization Administration (ÖİB), on privatization in the transport and energy sectors and what the practice means for Turkey.

Ahmet Aksu
BIOGRAPHY
Ahmet Aksu was born in 1967 and studied Economics at the Middle East Technical University. After graduation, he joined the Privatization Administration (ÖİB) in 1992. During his time with ÖIB he has headed up various organizations under the same umbrella. He is currently the President of the ÖİB.

How will plans to privatize Turkish railroads affect the sector in the coming years?

As air traffic increases and highways become more cluttered, countries are reconsidering the role and importance of rail transport as a viable transportation option. Parallel to the growth of global trade, countries are working to open new and alternative transport corridors. Railways are undergoing significant structural and technical changes in order to keep up with these developments. As a result, railway networks are getting an overhaul worldwide. The aim is to open the railway sector up to competition, not only for the sector to compete with other transportation sectors, but also to allow more than one operator to benefit from Turkey's railway network.

What will privatization in the energy sector mean?

The Turkish energy sector is strong and has huge growth potential. The Turkish electricity sector is one of the biggest and fastest growing sectors in Central and Eastern Europe, the Middle East, and Africa. In line with population growth, urbanization, industrialization, and economic growth, the sector is expected to surpass GDP growth yet again. The growth potential of the sector is expected to continue for a long time yet, considering Turkey's per capita electricity consumption is still far below that of developed countries. The objective behind the privatization of the electricity sector and the creation of a competitive open market is to ensure that consumers have better quality at their disposal, as well as lower prices. With these privatizations, the efficient management of electricity production and distribution will be obtained and electricity loss and theft along distribution routes will be curtailed. Electricity distribution and trade will become more competitive, investments will be realized with private sector involvement, and regulatory changes made by the Energy Market Regulatory Authority (EMRA) will be of added benefit to consumers.

How are the ongoing port privatizations going to contribute to Turkey's aim to become a center of maritime trade in the region?

Turkey is centrally located in the middle of various trade routes, and international trade has an important place in Turkey's growth strategies. As with many other countries, maritime trade has a very important place in Turkey's international trade. That's why it's crucial that Turkey's ports are at the desired level in line with our foreign trade objectives. There is extensive investment in ports, both from the public and the private sectors. With privatizations in recent years, we have attained important successes as we have seen a huge increase in productivity in the privatized ports, and these have contributed greatly to the national economy. Besides privatization, many established firms have built ports in different areas and regions, and these facilities have experienced an important increase in productivity. In the public sector, the Filyos, Mersin, and Çandarlı Port projects are very important investment initiatives. The aim of all these investments is to create the necessary port infrastructure and capacity for Turkey to realize its trade objectives.

How has privatization been a benefit to the Turkish economy?

Until now, Turkey has earned $51.3 billion from privatizations, with $36.3 billion of these funds going directly to the treasury and other public institutions. Many companies and operations that have for many years placed a financial burden on our public finances and economy have now been turned into profit-making assets. The amount of FDI attained as a result of these privatizations stands at $18 billion. In most privatized entities, there has been an increase in production, job creation, investment, and foreign trade figures. However, the main objective of privatization isn't just profit, but also to create competition in the market, to use resources efficiently and productively, and to increase service and product quality. Scientific research has shown time and again that our privatization efforts brought about very positive developments in many different sectors.

What is your medium-term outlook for the Turkish economy?

Our privatization revenue objectives have been determined in line with developments in the international economy. Over 1Q2013, $3 billion has gone to the Treasury and other institutions. We also expect a further $7.8 billion from projects with sale and transfer agreements already signed or ratified, and another $4.6 billion from projects awaiting ratification, bringing the total amount of revenue privatization by the end of 2013 to $12.4 billion. Developments in the global markets after 2014 will directly affect our expectations regarding privatization, while the rallying of the world economy in 2012 and 2013 should lead to greater privatization revenue overall.