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08 February 2019

Foreign Investor is in close follow up for Energy

1520424685_Deloitte_Elif_Dusmez_Tek ????????????????????????????????????Foreign investor is in close follow-up in energy. Deloitte Türkiye Enerji ve Doğal Kaynaklar Endüstrisi (Turkey Energy and Natural Resources Industry) Elif Düşmez Tek stated: With the devaluation of the Turkish lira, we can say that the energy sector assets are attractive for foreign investors and many foreign investors follow the market. We consider that investors from the Far East and the Middle East are closely following gas and renewable power plants and electricity distribution regions. We expect the sale of some assets in the sector come to fore in 2019 due to exchange rate stabilization. With the possible stabilization in the exchange rates, we expect a dollar-based tariff to re- implement in the production plants from the second half of 2019 onwards..

Deloitte Türkiye Enerji ve Doğal Kaynaklar Endüstrisi (Turkey Energy and Natural Resources Industry) Elif Düşmez Tek stated, the exchange rate in the second half of the year thanks to the increase in the assets of the energy sector has become attractive to foreign investors, and said: “We consider that investors from the Far East and the Middle East are closely following gas and renewable power plants and electricity distribution regions. We expect the sale of some assets come to the fore in the sector in 2019 due to exchange rate stabilization.

Tek evaluated the energy sector in 2018 and the possible developments in 2019 to AA reporter. Stating that there is a slowdown in electricity and gas consumption this year, Tek stated that the installed power in the supply side reached 88 thousand 400 megawatts by the end of November and this capacity will reach 90 thousand megawatts with the power plants that have reached the end of the construction.

Tek who foresees that electricity will continue to face downward pressure because excess supply has been occured during the last 10 years told that; There was a serious risk of contraction in the electricity markets, especially when large consumers in the industrial sector wanted to switch to regulated tariffs. And in order to prevent this, the Last Source Supply Tariff was put into operation as of April.

“DISTRIBUTION REGIONS WITH 15 THOUSAND MEGAWATT CAPACITY ARE IN TROUBLE “

Tek said that the tariffs applied to gas-fired power plants with the effect of Price increases in spot markets and dollar exchange rate and international petrol prices which realized more than 30 percent of Turkey’s gas consumption with electricity and gas tariffs, increased by more than 100 percent this year:

“In spite of this increase, we realize that the profit margin is adversely affected by the increase in electricity prices and that these power plants, in particular with foreign currency denominated loans, are experiencing serious difficulties in paying their debts with increasing exchange rates. Due to the fact that long-term financing is based on the dollar / euro basis, we can say that the effect of the increase in the exchange rate affects not only gas plants but also other electricity generation plants such as coal, renewable energy and electricity distribution companies. Although the details of financing on investment basis are not publicly available, we estimate that the installed capacity of 15 thousand megawatts and many distribution regions suffer from financial problems in 2018.”

Within the scope of the capacity mechanism commissioned in order to support coal and gas power plants, Tekin said that all of the budget of 1.4 billion TL allocated for 2018 will be distributed to 20 thousand megawatts plant, said: This mechanism will continue to expand in 2019 for hydroelectric power plants. Including a total of 39 power plants, including 21 thousand megavat thermal and 600 megavat hydroelectric power plants. In 2019, we do not know how much budget is allocated to the capacity mechanism, but we expect the budget to be higher than this year due to the increasing need for support.

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