The International Finance Corporation (IFC), a member of the World Bank Group, the European Bank for Reconstruction and Development (EBRD) and the Dutch Development Bank FMO have joined forces to finance improvements in the electricity distribution network in Turkey's Osmangazi region in western Anatolia.
The financing package of the Turkish Lira equivalent of $330 million to Osmangazi Elektrik Dagitim A.S (OEDAS) will help to upgrade, modernize and expand a distribution network that serves around 2.7 million people in 194 towns and 1,596 villages. The OEDAS is the electricity distribution company of the Osmangazi region, which includes five provinces, Afyonkarahisar, Bilecik, Eskişehir, Kütahya and Usak. The IFC is extending a loan worth $80 million, the EBRD is providing $110 million and the FMO is contributing $65 million.
Commenting on the occasion, Zorlu Enerji CFO Elif Yener said, "The new long-term financing in Turkish Lira from international finance institutions for our distribution company will enable us to focus on improvements in the infrastructure and grids, providing better services to millions of people."
The improvements are expected to reduce electricity losses and enable the connection of increased solar capacity, as a result saving at least 30,000 tons of carbon emissions per year. They will also enhance environmental and safety standards and improve efficiency and reliability of supply. These investments are part of a capital expenditure program required by Turkey's Energy Market Regulatory Authority (EMRA) for the five-year regulatory period between 2016 and 2020.
Wiebke Schloemer, IFC's regional director for Europe and Central Asia, said: "Power sector development is one of the prioritized areas identified in the World Bank Group's strategy for Turkey. The financing package in local currency tranches will help our long-term partner Zorlu Enerji and its subsidiary OEDAS to further improve the quality and reliability of service to over 2.5 million people in Turkish provinces. The structure of this significant agreement demonstrates the IFC's important role in mobilizing other financial resources and a good example of cooperation between multilateral institutions."
The OEDAS is ultimately owned by Zorlu Enerji which, together with its subsidiaries, engages in establishing, renting and operating electrical energy production plants in Turkey. It is part of the Turkish conglomerate Zorlu Holding.
The World Bank Group has been a long-time partner in the development of the power sector in Turkey. Since 2008, the IFC consistently continues to support the sector with a series of high-impact projects. The IFC has financed over 5 gigawatt (GW) capacity generation by investing or mobilizing more than $3 billion in the Turkish power sector. Turkey is the IFC's second-largest country exposure globally and the IFC's office in Istanbul, established 30 years ago, is one of its largest outside Washington providing services across regions.
The EBRD is a major investor in Turkey. Since 2009 it has invested 10 billion euros in various sectors of the Turkish economy, almost all of which were in the private sector. Earlier this year it invested in the debut bond issuance by Zorlu Osmangazi, the OEDAS's parent company.
FMO has long-term relations with several key players in the Turkish industrial and financial sectors. During the last few years, FMO's Energy Department increased its focus on renewable energy projects. The investments as executed by Zorlu Osmangazi and OEDAS also contribute, among others, to improved state-of-art, more efficient electrical grids and distribution systems, more efficient metering and a dedicated, professional approach to facilitating and managing the intermittency of wind-, solar- and hydro-powered projects in Turkey.