The FINANCIAL — In a move to enhance reforms in the Turkish electricity sector, the European Bank for Reconstruction and Development (EBRD) is financing electricity companies operating in the north west of the country.
The Bank is extending a US$ 134.75 million loan to the Trakya Electricity Distribution Company (TREDAŞ), the Trakya Electricity Retail Company (TREPAŞ), and to their parent company, IC İçtaş Elektrik (ICEL). As part of the loan US$ 82.25 million will be converted to Turkish lira at the time of each disbursement to help the companies manage foreign exchange risk.
The transaction is part of a US$ 700 million dual-currency financing package, which also includes parallel loans from Garanti Bank, İşbank, Vakıfbank and TSKB, according to EBRD.
The funds will enable the three companies to optimise their financing structure and implement capital investment plans for 2016-20. These include expanding and upgrading the network, enhancing metering systems, implementing environmental, health and safety improvements and increasing network efficiency.
Founded in 1995, state-owned TREDAŞ was acquired in 2011 by the diversified Turkish conglomerate İbrahim Çeçen Yatırım Holding, through its energy-sector investment arm ICEL. In 2013. when distribution companies were legally required to unbundle their retail activities, TREDAŞ separated into two units with TREPAŞ to focus solely on retail.
Since the beginning of its operations in Turkey in 2009, the EBRD has been actively promoting the liberalisation of the electricity market, including unbundling and privatisation of the players in the distribution sector. While all distribution firms have been privatised since 2013, reform is still under way and is due for completion by 2020 when all consumers will be free to choose their own energy suppliers.
Nandita Parshad, EBRD Director for Power and Energy, said: “We are pleased to further encourage the ongoing liberalisation process in Turkey’s electricity sector. This project is a great example of how the EBRD can support the modernisation of power networks following their privatisation. Our financing, alongside the loans from four local banks, will help our client implement the necessary measures to remain one of the most efficient electricity companies in Turkey.”
The EBRD will also work with TREDAŞ to draw in and develop female talent in the male-dominated Turkish power sector.
Serhat Çeçen, Chairman of the Board of İbrahim Çeçen (IC) Yatırım Holding, said: “As part of the privatisation, we have put high reliability and quality of supply, as well as improved customer services, at the very centre of our operations. This loan will serve to upgrade our network and further improve efficiency and reliability. I am confident that this transaction will also pave the way for a broader strategic partnership between IC Holding and the EBRD. I should add that the loan closing comes at a very critical juncture, and is a strong sign of the EBRD’s continued confidence in and support for our country. Furthermore, we appreciate the substantial contribution of our long-term partners, Garanti Bank, İşBank, Vakıfbank and TSKB as well, who have extended their strong support and cooperation to our various projects.”
The EBRD is a leading institutional investor in Turkey and currently operates from offices in Istanbul, Ankara and Gaziantep. To date it has invested close to €9 billion in the country through more than 200 projects in infrastructure, energy, agribusiness, industry and finance. It has also mobilised nearly €20 billion for these ventures from other sources of financing. Some 98 per cent of the Bank’s investments in Turkey are in the private sector.