Some Turkish companies stopped power generation due to high exchange rates

Power production has come to a halt at some plants because of increasing exchange rates as natural gas prices escalate
Friday, 17 August 2018 03:08

Some Turkish energy companies have halted power production since August 9 due to the escalating power plant costs following the loss of value in the Turkish Lira amid the crisis between Washington and Ankara.

According to the Energy Markets Operations Company (EPİAŞ) data, the energy production at six power plants has stopped in recent days. This company is responsible for operating the free power market in Turkey, providing a platform for daily price offers and production capacity for energy companies.

"Increasing rates of exchange and technical malfunction at a power plant turbine," Tamer Çalışır, a director from Turkish energy company, GAMA, told BBC Turkish while talking about the stoppage of production, adding that the companies that generate power with natural gas have no arbitrariness in stopping energy production.

"We have not stopped the production until today for the security of Turkey despite the losses," he said. However, some companies could not continue to operate since Saturday due to the increasing rates of exchange and updated natural gas prices. He underlined that these companies did not opt for stopping the production but had to do so considering that they did not get the proper instructions from the energy market operator company.

"To be honest, we are just paying for ourselves while working at the moment. Don’t think that we are making the profit or we are not working because we cannot make a profit," he said.

As Russia, Iran and Azerbaijan are the top natural gas exporters to Turkey, the country’s state-owned Petroleum Pipeline Corporation (BOTAŞ) fixed the US dollar/Turkish Lira rates to 6,5 for the power plants running with natural gas. BOTAŞ hiked the price of natural gas used for electricity production by 50 percent as of August 1.

As the plants were conditioned to pay their natural gas purchases with the dollar, the record low of the Turkish Lira in recent days has also increased the power plant costs around the country.


Meanwhile, Turkey’s Union of Chambers of Engineers and Architects (TMMOB) says that the prices of natural gas were under the cost prices until August 2018 for the power plants generating electricity with natural gas, thus the private companies were backed in defiance of the public sector and extra energy expenses for the people.

The chamber’s analysis indicates that the separation of energy activities into different companies and fields like production, transfer, distribution and sales further increase the electricity prices. The engineers also say that they expected a reduction in power generation while the people’s energy bills would further increase with escalating exchange rates and natural gas prices.

“We’ve foreseen that Turkey’s power production would reduce due to the escalating natural gas costs,” Oğuz Türkyılmaz, a director from the chamber, says about the stoppage of power production at six plants.

Another TMMOB director, Yunus Yener, says that the knowledge and skills of Turkey’s energy administration are controversial, adding that particularly fossil-fuel-based plants in Turkey stand as a dead investment due to the lack of planning as such plants were built with credits while their credit debts are reflected on the public treasury or the people.

He says that anti-people policies and increases in prices would continue without abandoning liberalization, privatizations and the power production policies based on imports, without developing power generation infrastructures based on renewable sources, and without implementing production and distribution policies based on public planning and social benefits.