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Important Notice
This document has been prepared by Garanti Yatrm Menkul Kymetler A.. ("Garanti Securities) and Nomura International PLC (Nomura) (together referred as Financial Advisors) which has been assigned as exclusive advisor by the Republic of Turkey, Prime Ministry, Privatisation Administration (the PA), at the direction of and from materials and information supplied from Bakentgaz Doalgaz Datm A.. (Bakentgaz or the Company) and the sector in accordance with the instructions given by PA, in connection with the privatization of 80% of shares of Bakentgaz through sale method. This document is solely produced for informative purposes and may not be reproduced, retransmitted or further distributed to any other person or published directly or indirectly, in whole or in part, by any medium and in any form for any purpose or under any circumstances. No reliance may be placed for any purposes whatsoever on the information contained in this document or on its completeness, accuracy or fairness. The information is subject to updating, completion, revision and amendment and such information may change materially. None of the Company, or Financial Advisors is under any obligation to update or keep current the information contained herein, and any opinions expressed herein are subject to change without notice. Accordingly, no representation or warranty, express or implied, is or will be made by the Company, PA, the Financial Advisors, their respective advisors or any such persons directors, officers or employees, or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this document, and any reliance you place on them will be at your sole risk. Without prejudice to the foregoing, the Company, its advisors and any such persons directors, officers or employees do not and will not accept any liability whatsoever, in negligence or otherwise, for any loss howsoever arising, directly or indirectly, from use of this document or its contents or otherwise arising in connection therewith.
Ankara Capital of Turkey Turkeys second most populated city with 4.8 million population Turkish Natural Gas Market Rapidly growing natural gas consumption; with a CAGR of 17% since 1988 High growth potential; relatively low per capita consumption (495 m3) compared to EU average (920 m3) Consumption Volume Second largest natural gas distribution company 1.3 million subscribers with additional 500 thousand subscriber potential with completed infrastructure investments Sales and supply volume increase by 52% and 29% respectively (between June 2010 and 2011) Annual distribution volume to reach 3 billion m3 p.a. (after the inclusion of Baymina CCGT and eligible customers in February 2011) Number of Subscribers
7% (Thousand)
1,182 1,252 1,294 938 1,026 1,112
17%
Fast growing natural gas market with further growth prospects Annual distribution volume to reach 3 billion m3
Sales Volume
(mn m3)
2,075 1,7051,826 1,759 1,658
52%
736 1,121
2006
2007
2008
2009
2010
06.2010
117
(TL / Thousand m3)
gda
Bakentgaz
Agda
Baheehir
Bursagaz
Esgaz
New Favourable Tender Conditions Introduced instalment payment option Debt settlement protocol with Ankara Municipality Incremental distribution volume of 1.3 billion m3 from Baymina CCGT and other eligible customers Fixed Distribution charge threshold 3
Supply Volume
(mn m3)
1,802 1,746 1,831 1,5241,740
29%
1,379 1,070
2006
2007
2008
2009
2010
06.2010
zgaz
2006
2007
2008
2009
2010
06.2011
06.2011
06.2011
Bakentgaz Overview
Business Description
Established in 2007 Second largest national natural gas distribution company Exclusive distributor of natural gas within its assigned region covering an area of c. 50 km in radius in Ankara, capital of Turkey Serves over 1.3 million subscribers (June 2011) Holds a 30-year natural gas distribution license, valid until 2037 Owned by the Turkish Privatization Administration and Ankara Metropolitan Municipality and its affiliates (80% and 20% shareholding respectively) Regions covered by the network
Ankara
Population: 4.8 mn (6.5% of Turkey)
1,921
1,658 542 1,121 951 736 1,379
Distribution Network
Distribution Network
Wide distribution network with 8,625 km of infrastructure, including primary and service lines Operates 11 RMS-A, above 50 RMS-B and over 1,000 RMS-C stations Distributes natural gas to non-eligible subscribers under low pressure (75 100 mbars) following its decompression in RMS-C regional stations Utilizes a flexible ring system enabling distribution of natural gas to a destination through alternative pipeline routes
(km) 5,991 1,924 6,373 2,097 6,767 2,243 7,247 2,380 2,487 2,634 2,714 2,785 7,837 8,245 8,456 8,625
5,460 1,749
3,913
4,278
4,484
4,592
4,681
954 2007
1,072 2008
1,127 2009
1,151 2010
1,159 06.2011
Service Lines
Network Topology
40-70 bars RMS-A Main transmission lines X52 Steel Pipes (radius: 150-600 m) 12-19 bars RMS-B Stations RMS-B Industrial Stations 1-7 bars RMS-C Industrial Stations 0.1-2 bars Subscriber RMS-B Stations 12-19 bars 1-7 bars 1-7 bars RMS-C Regional Stations RMS-C Industrial Stations 0.1-2 bars X50 Steel Pipes (radius: 80-600 mm) 75-100 mbars 21 mbar Subscribers
Polyethylene Pipes (radius: 32-125 mm) RMS-C Regional Stations 75-100 mbars
21 mbar Subscribers
Tariff Structure
Regulation and the Distribution Tariff
Baskentgaz operates under Natural Gas Market Legislation and is subject to regulations set forth by the Energy Market Regulatory Authority (EMRA) The tariff structure regulated by EMRA is composed of three components: (i) natural gas price; (ii) special consumption tax on the natural gas, applied by Ministry of Finance; and (iii) distribution charge, which is a fixed charge per m3 of natural gas distributed Based on Law No 4646, subscribers consuming over the eligibility limit set by EMRA are classified as eligible subscribers and these customers are eligible to select suppliers Two types of distribution charges; service charge (SC) is collected from captive (non-eligible) subscribers and transmission charge (TC) is applied to eligible subscribers Based on Law No 5655, Bakentgaz is secured to charge US dollar fixed SC and TC till August 31, 2017 USD / Thousand m3 SC TC 7.70 55.55
Residential and NonEligible Industrial Eligible Industrial (700,000 m3 800,000 m3) Eligible Industrial ( >800,000 m3) Natural Gas Price Special Consumption Tax Distribution Charge
Non-Eligible Tariff
Service Charge
Eligible Tariff
Service Charge
Eligible Tariff
Transmission Charge
Regulated by
BOTA
Ministry of Finance
Currency
TL
TL
Source: EMRA
Eligibility Limit
Eligibility limit is gradually lowered in line with market liberalization plan
(Thousand m /year) 1,000 800 600
3
800
TC 700 SC
TC
For 2011, EMRA set the eligibility limit at 700,000 m3 annual consumption volume Accordingly other distibution companies namely zgaz, Esgaz and Bursagaz charges their subscribers SC or TC based on this consumption threshold. On the other hand via a recent communiqu of EMRA, Bakentgaz is privileged to collect service charge from all its subscribers with less than 800,000 m3 annual consumption till August 31, 2017
SC
Bakentgaz
Source: EMRA
Contacts
Garanti Securities
aan Erkan Executive Vice President T: +90 212 384 1030 F: +90 212 352 4240 E: cerkan@garanti.com.tr
Garanti Securities
aatay Abra Senior Vice President T: +90 212 384 1036 F: +90 212 352 4240 E: cabras@garanti.com.tr
Garanti Securities
Metin zhan Vice President T: +90 212 384 1037 F: +90 212 352 4240 E: mozhan@garanti.com.tr
Garanti Securities
Akn Kozikolu Senior Analyst T: +90 212 384 1043 F: +90 212 352 4240 E: akozikoglu@garanti.com.tr