Lights Could go out on Turkey if New Law is Not Overturned

LONDON, January 17, 2011 /PRNewswire/ -- The lights could go out in Turkey as early as 2019 unless new tax on wholesale electricity companies is scrapped, the energy markets expert ICIS Heren warns.

Turkish energy watchdog EMRA has decided to slap a TRL 750m (Turkish Lira) levy on all wholesale companies to cover grid losses and theft.

"There is a genuine fear among Turkish energy companies that wholesale companies would either lose important margins or be wiped out completely as a result of the regulation," said Aura Sabadus, Turkish energy market specialist at independent news and price publisher ICIS Heren, London, GB. "Much needed investments in new capacity would also be jeopardised."

The new tax, branded theft tax in Turkey, will end up on consumers' bills alongside other existing costs linked to distribution, transmission and raw energy.

The rules will also prevent wholesale companies offering competitive discounts to their customer. Smaller companies fear their margins will either be reduced to a bare minimum or that they might lose their customers entirely.

"EMRA is right in the sense that there is a need to recover the losses on the grid," said Aura Sabadus. "However, from our experience in covering European energy markets there may be other options available. The UK, for instance, takes a two-pronged approach. On the one hand it operates a system of incentives to distribution companies to minimise the loss of capacity on the grid and on the other hand it requires suppliers to buy more capacity in order to cover for losses," she added.

The electricity wholesale and grid sector represents up to 4% of the Turkish GDP. Turkey earns as much as TRL 20bn from the Turkish power market alone.

TEIAS, the Turkish grid operator, predicts the country needs 17.2GW of additional capacity within the next eight years to meet demand which is surging on average 7% per year.

ICIS Heren is an information service provider for gas, liquefied natural gas, power, carbon and coal market intelligence. We publish a suite of tailored reports providing news, analysis, benchmark price assessments and indices. Through our reports we aim to bring liquidity and transparency to power and gas hubs, helping you analyse the sector and make informed business decisions.

For more information visit http://www.icis.com/heren

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    For further information please contact:

    Aura Sabadus
    ICIS Heren
    t: +44-20-7911-1853
    e: aura.sabadus@icisheren.com
    http://www.icis.com/heren