Turkey's power market struggling amid financial crisis

Turkey’s power companies, which were once a darling of foreign investors, are weighed down by debt restructuring talks with banks, amid a tumbling lira and rising energy costs, Reuters news agency reported.

Many Turkish companies, including power firms, are seeking to restructure their debt after the country’s currency 40 percent since the beginning of the year due to concerns over an ongoing diplomatic row between Washington and Ankara. 

Austrian energy company OMV, which started operating its power plant in Turkey in 2013, is one of many power companies throwing in the towel on Turkey, the agency said. The company has sold off its Turkish plant for barely half of the 600 million euros it initially invested.

“Turkey no longer fits our product portfolio,” Reuters quoted a OMV spokesperson in Vienna, who described the Turkey investments as “a disappointment,” as saying.

As power companies fight to keep cash flows stable and struggle to find buyers, Reuters noted, the outlook for the Turkish economy and the still heavily state-regulated electricity market in the country is becoming darker.

A total of $95 billion of investments have been poured into the Turkish electricity market over the past 15 years, largely funded by cheap credit and around $50 billion is yet to be repaid, according to a report by Boston Consulting Group and Turkish business group Tusiad.

With the government still holding 25 percent of total installed power supply and natural gas market largely under state control, Reuters said, power plants fed by natural gas have been the hardest hit.

“Our margins have evaporated. There is no predictability or visibility in the market, which makes it even more difficult for restructuring. And that jeopardizes the financial stability of these companies,” Reuters quoted Selim Guven, Commercial Director of Acwa Power in Turkey, as saying.

Furthermore, certain government measures, such as incentives for power plants to use domestic coal to help reduce a $37 billion energy import bill, have done further damage by doing away with price predictability.