David O'Byrne in Istanbul -
Such has been the repeated promises of successive governments, the tortuous route that Turkey has taken over the past two decades towards a fully functioning liberalized power market has been resurfaced so many times it resembles a layer cake. Now finally, with 13 of the country's regional electricity distribution companies privatised and the remaining eight slated to be sold off by the end of this year along with most of the state-owned power plants, Turkey is on track for full liberalization by 2013.
Out of all the Turkey's major conglomerates looking to supply the country's power needs, arguably none has achieved so much so quickly as Sabanci Holding. Having established its own power subsidiary Enerjisa in 1996 primarily to supply power to its own business ventures, Sabanci in 2007 sold 50% of the company to Austria's Verbund. The new partners then announced a plan for the company to establish generation and distribution portfolios accounting for 20% of the Turkish market - the maximum allowed under Turkey's 2001 Electricity Market Law - which will require some €6bn in investment by 2015.
Already that ambition has yielded a portfolio of 455 megawatt (MW) of power plants, with a further 3,200 MW either under construction or awaiting construction, points out Sabanci Group CEO Ahmed Dorduncu. And with that portfolio not yet reaching 10% of Turkey's 44,000MW of installed capacity, the company still has substantial room for growth. "We want to have 5,000 MW of operational plant by the end of 2015," says Enerjisa's chairman, Selahattin Hakman, adding that this target does not include any plants that Enerjisa may bid for in the planned sell-off of 16,000 MW of state-owned power plants. "Our targets are independent of the privatization process, and we already have a further 1,200 MW of projects we are thinking of developing ourselves."
But Hakman is keen to point out that Enerjisa's portfolio plans go further than simply building up a list of generating capacity. "Our target is for 45-50% of the portfolio to be renewables - around 40% hydro and 5-10% wind," he says, explaining that the aim is for the portfolio to reflect Turkey's national energy strategy of producing 45% of power from renewable sources.
Enerjisa's biggest planned investment is its Bandirma gas-fired plant, the first 920-MW unit of which will start generating in August this year, with a further 1,000-MW unit awaiting licensing. Once in operation, the plant will make Enerjisa one of Turkey's biggest gas consumers, making a move into gas importation and wholesaling sound business sense. "We're in discussion with Verbund over this and are ready to go ahead either as Enerjisa or as Sabanci group on its own," says Hakman, adding that management have been following closely the government moves to transfer the state-controlled gas import contracts to the private sector.
Also subject to talks with Verbund are plans to move into neighbouring markets, both with the intention of generating power for export back to Turkey and to supply local markets. Hakman identifies the development of hydroelectric power plants in Georgia primarily to export power back to Turkey, as one possible target, and other regional markets are under study.
The distribution of power
Also subject to study is Turkey's ongoing sell-off of the 21 regional electricity distribution companies.
Having already paid $1.225bn in 2008 for the Ankara electricity distribution company Baskent EDAS, Enerjisa is looking to add a second major regional distributor to its portfolio, which together with import and wholesaling activities will take the company's power trading activities up to the full 20% permitted.
With Baskent having around 3m customers, Hakman explains that he is looking to buy a second regional company of roughly the same size. Of the eight regions yet to see privatisation, that plan would allow a bid for either of AYEDAS or Bogazici EDAS, which supply Istanbul's Asian side and European side respectively; Toroslar EDAS, which supplies Adana; or Gediz EDAS, which supplies Izmir. "Our target for 2015 is to have around 6m customers, which we would prefer to be in just two regions," he says. "The most important thing has been that the regulator has been reasonable and open to making changes to the regulations where we have been able to show it is necessary."
This included a major adjustment to the national electricity pricing mechanism, the means by which more profitable regions subsidize the price of electricity in regions with high levels of losses due to technical problems and theft.
Both are issues that Enerjisa has had to face in Ankara. "There were figures for the level of losses, but when we took control of the company we discovered that the infrastructure to measure them accurately didn't exist, so we have had to create that from scratch," he says.
In order to do that, Enerjisa is currently preparing a full master plan for renovating the distribution infrastructure. "We expect to be investing between $200m-300m a year for at least the next five years," says Hakman, adding that by the end of the process he expects the Turkish capital to have the state-of-the-art distribution infrastructure it deserves.
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