$7.5B of $10B energy finance for 2019 restructured


Turkey's energy investors restructured around $7.5 billion out of an approximate $13 billion non-performing loans (NPLs) while the banks and companies also agreed on initial settlements to restructure a further $2.5 billion by the end of 2019, sources in the banking sector told Anadolu Agency (AA) Friday.

Turkey's electricity production companies have faced some challenges in the last couple of years due to exchange rate anomalies against the U.S. dollar and with higher electricity production costs. The Turkish lira hit a record low due to the escalating crisis between Turkey and the U.S. last year, which negatively impacted energy companies in their repayments as the majority of these companies' earnings are in Turkish lira.

Energy demand has slowed down and the country's surplus energy capacity further contributed to the challenges that energy investors face. Local coal, hydropower and natural gas power plant companies account for the majority of the NPLs along with some electricity distribution companies.

Total bank debt of these energy investors stood at $47 billion, however, the current factors put the repayment of approximately $13 billion in difficulty. From this dilemma, energy companies and banks started to search for solutions to the repayment problem. As a result of negotiations between the companies and the lenders, around $7.5 billion has been restructured so far. The total capacity of the plants of which loans have been restructured amounts to 4,500 megawatts (MW). Both sides agreed on initial settlements for restructuring a further $2.5 billion with 2,500 MW by the end of this year. The remaining $3 billion debt is on natural gas power plants with around 3,500 MW of capacity. Next year will see the restructuring of these loans to cover this debt.

As Turkey tries to maximize the use of its local and renewable energy resources to curb energy imports, the share of natural gas power plants for electricity production has gradually declined, while the potential in hydropower plants has risen. Turkey's Energy and Natural Resources Ministry announced earlier this week that there are no plans for new natural gas facilities or imported coal plant investments in the country.