Turkey looks to privatisation for more energy

Jan 12, 1998 01:00 AM

The Turkish government, faced with an increasing need to import energy, sees privatisation and a radical restructuring of the energy sector as the key to meet demand which is outstripping supply.
Energy Minister Cumhur Ersumer said recently that private involvement was essential to rescue the country from imminent power cuts.
"We are in an emergency. We are in a position to mobilise our efforts to use all resources and all our capacity to remedy the situation. A key move is letting private investment do it," he said.
Turkey's energy demand is rising about 12 % a year. It has imported electricity from Iran, Georgia and Bulgaria since 1996 to meet a power deficit which is forecast at 6.6 bn kWh in 1998, up from 3 bn kWh in 1997.
It plans to produce 108.5 bn kWh this year, up from 104 bn in 1997 and will also buy energy from Turkmenistan starting this year, although the exact amount is not yet known.
The energy ministry is planning an overhaul of the sector to have an effective control over a continuing multi-billion-dollar drive to privatise generation and distribution grids.
"The purpose is to restructure the energy sector and complete the structural transformation after privatisations," said a senior official in the energy ministry.
He said work would be completed soon on a World Bank-sponsored study, started in 1996, on how the energy sector could be restructured after privatisation.
"We have been working together with foreign consultancy groups like Coopers and Lybrand and the National Grid Company of Britain," he said.
The draft suggests that a regulatory body similar to Britain's OFFER be set up to monitor the electricity market.
The regulatory board, comprising state and private sector representatives, will be autonomous and have authority over power operators.
As part of the privatisation effort, Turkey has awarded several tenders to private firms to build 5 thermal plants and concluded tenders to transfer operating rights of 8 thermal power plants and power distribution grids.
It has signed several deals including those with Iran and Turkmenistan to buy natural gas through pipelines which will feed 6 more planned power plants.
Officials point to the need for strict control of the privatised energy sector because of its strategic importance.
Coopers and Lybrand suggested to the ministry that all production and distribution systems should be privatised, but transmission should remain under the state control.
But National Grid Company officials said transmission systems should also be privatised, with the government keeping control with a golden share. They said a "pool" system like Britain's should be set up to fix price on a wholesale electricity market, as opposed to Coopers and Lybrand suggestion of centralised price fixing.
"We think that a pool system is no good for Turkey because we have a power deficit and electricity prices will rise much higher than what they are now," said the energy official.

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