Turkey appeared last night to have cancelled the sale of its state-run tobacco business for the third time since 2003.

The privatisation of Tekel, the $8 billion (£4.1 billion) cigarette maker, expected to begin this month, would be put off until the business could be restructured, according to reports.

The delay could thwart a potential $1 billion bid from British American Tobacco, in what would mean a third failure to offload the state-run business.

In 2003, Japan Tobacco offered $1.15 billion for Tekel, but the bid was rejected as the Government held out for a price as high as $2.5 billion for the world’s seventh-largest cigarette company.

A 2004 tender failed to attract any bids owing to government demands that buyers commit to using Turkish factories and tobacco.

Turkish officials said that the Government would not rush the sale, which would be held over until Tekel’s market share rose above 40 per cent. There was no indication of when the sale might take place.

A spokeswoman for British American Tobacco said last night that the company’s Turkish office had not had an official statement on the matter from the Government.

Turkey had promised the International Monetary Fund that it would sell the business this year. The sale process was expected to begin this month after an audit of the business.

BAT said in January that it was following the sale closely, while preparing a bid thought to be worth at least $1 billion.

The rival cigarette maker Imperial Tobacco was also considering a bid, but was believed to be cautious on price.

Tekel’s market share has fallen from 60 per cent in 2001, when the Government first planned a sale.

Tekel’s alcoholic beverages unit was sold off that year.

Some observers have said that preparations for the forthcoming November elections had stalled the country’s privatisation programme, which has as its centrepiece the sale of Halkbank.

The Government’s plans to increase a special consumption tax on cigarettes by 10 per cent have also been viewed as a barrier to a sale.

Paul Adams, chief executive of BAT, has said that he will not allow the Turkish Government to hold the group to ransom over price.

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