GDF Suez to Pay $549 Million for Turkish Gas Grid

By Mark Bentley

Aug. 14 (Bloomberg) -- GDF Suez SA, the world's second- biggest utility, will pay $549 million for a natural-gas distribution network in Turkey's northwestern city of Izmit.

The Paris-based utility beat out four rivals for rights to operate Izmit Gaz Dagitim AS with a bid of $232 million. It will also pay $317 million of debts owed by the grid to the treasury and state-run pipeline company Botas, according to the result of a televised auction in Izmit today.

GDF Suez, created through the merger of Suez SA and Gaz de France SA last month, plans to invest about 10 billion euros ($14.9 billion) a year through 2010 and targets profit of 17 billion euros in two years' time.

Izmit Gaz Dagitim, known as Izgaz, sold 1.1 billion cubic meters of gas last year to more than 200,000 subscribers, according to the company's Web site. Revenue totaled 298 million liras ($252 million), Turkey's CNBC-e television station reported.

Turkey is divesting energy assets in an International Monetary Fund-backed effort to encourage investment and meet demand for energy that's rising 8 percent annually. A gas grid in the capital Ankara, which last year sold 1.7 billion cubic meters of gas, was bought for $1.6 billion in April.

Turkey's antitrust regulator must approve GDF Suez's bid before the company can complete the transaction.

To contact the report for this story: Mark Bentley in Ankara at mbentley3@bloomberg.net