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UPDATE 1-Akfen may bid for Istanbul gas grid-CEO

Tuesday, 9 Oct 2012 | 10:52 AM ET

(Adds further details, quotes)

By Ayla Jean Yackley and Evrim Ergin ISTANBUL, Oct 9 (Reuters) - Turkish group Akfen Holding

may bid for Istanbul's natural gas distribution network Igdas, which is slated for privatisation this year, along with a raft of other energy and transportation businesses that could go up for sale, Chief Executive Suha Gucsav said on Tuesday.

"We may bid for Igdas. Why not consider valuable assets?" Gucsav told Reuters in an interview.

The Istanbul-based company, which netted $434 million in March when it sold shares in airport operator TAV to Aeroports de Paris has already declared its interest in the government's Dec. 17 sale of Baskent, the capital Ankara's gas distribution network with 1.35 million customers.

Akfen, one of the country's biggest construction firms with sales in the first half of the year up 11 percent at 640 million lira ($354 million), could also double capacity at a gas-fired power plant that it wants to build near Mersin in southern Turkey, Gucsav said.

The 570-megawatt plant is now expected to cost $500 million with work due to begin in the middle of 2013, but funding still has to be secured, he said.

"Regarding financing, foreign banks are not lending ... so I think it will be with Turkish banks. We will find the lending, but it will take time," Gucsav said.

One option is to sell equity in the plant to a supplier, such as a turbine producer, to fund the project, he said.

Besides the gas grids and the power station, Akfen might also be interested in bidding for Russian gas import contracts the government plans to sell, Gucsav said, as well as the sale of container ports and road privatisations.

OTHER ASSETS

Meanwhile a public share offer for fast-ferry company IDO, in which Akfen owns a stake, will not be held before 2014 and may be as late as 2016 because it first wants to expand the number of lines and introduce a roll-on roll-off (Ro-Ro) service for commercial trucks traveling between Istanbul's Asian and Europen shores, Gucsav said.

A consortium of Tepe Holding, Akfen Holding, Souter investments and Sera OGG bought IDO for $861 million in 2011.

High valuations and tough funding conditions due to the euro zone crisis have forced the postponement of several Turkish privatisations in recent years.

Turkish projects seeking financing right now are valued at between $25 billion and $30 billion, Gucsav estimated.

Without investment from abroad, many of these projects won't get off the ground, but foreigners are reluctant to invest for the time being, he said.

"Foreign financing is an absolute must and it will be easier to secure foreign investment once problems with Iraq, Iran and Syria are resolved. For now, these political risks are making people wait and see," he said. ($1=1.8107 Turkish liras)

(Editing by Helen Massy-Beresford and Greg Mahlich)

((ayla.yackley@thomsonreuters.com))

Keywords: AKFEN GAS/