Turkey's Competition Board has approved the sale of state-run petrochemicals company Petkim to the second highest bidder in a July tender, the Anatolia news agency reported.

A consortium of the Azerbaijani oil company Socar, Turkey's Turcas and Saudi-based Injaz Projects had made the second highest bid of $2.04 billion (1.39 billion euros) for a 51-percent stake in the company.

The board did not give a reason as to why the tender was not awarded to the highest bidder, a consortium of the Kazakh Caspi Neft and Eurasia companies, the Russian bank Troika Dialogue and a number of Kazakh investors, which offered $2.05 billion.

Turkish newspapers reported after the tender that 65 percent of Troika Dialogue's shares belonged to a major Russian-Armenian investor described as a chief financier of the Armenian diaspora.

In mid-October the Privatization Administration put aside TransCentral-Asia Group, having an Armenian partner, in the auction to privatize Petrochemical Holding Co. (Petkim) although this consortium made the highest bid for 51 percent of Petkim's shares. TransCentralAsia Petrochemical Holding consortium submitted the highest offer with 2,050 million USD in the auction, and won the auction.

The Competition Board's decision is subject to approval by the Privatization Board for the takeover to be finalized.

Earlier in 2003, an attempt was made to sell Petkim. Five bids were received, out of which three had been shortlisted. Following an auction in June 2003, Standart Kimya Pet Dog San ve Tic AS had won the bid for the block sale of about 88.86 percent of Petkim shares.

However, due to failure of Standart Kimya to meet its obligation in time, the deal was cancelled and its $10 million deposit was forfeited. Another attempt was made to sell 88% of the company’s share without any success after which 34.5 percent share of Petkim was sold through secondary public offering in 2005.

About 40 percent Petkim shares are already listed on the stock market and Ankara was selling another 51 percent as part of a broad privatization program backed by the International Monetary Fund (IMF).

Petkim controls one-third of the petrochemical market in Turkey and employs about 4,000 people. It posted a net profit of $41 million in 2006.

Privatization is a key element in Turkey's economic program, backed by a 10-billion-dollar loan from the International Monetary Fund, as it recovers from two severe financial crises in 1999 and 2001.