Loans worth $12B need restructuring in electricity generation, distribution sector

Published 11.09.2019 00:24

The current debt stock of Turkey's electricity generation and distribution sector is around $47 billion, while the loan portfolio in need of restructuring stands at around $12 billion to $13 billion, the Banks Association of Turkey (TBB) said yesterday in a statement.

The restructuring of approximately $10 billion of this amount is expected to be completed in 2019, the statement further stressed.

"Classification and provision calculations for these loans are made in accordance with international financial models and audit. As the expectations of credit collateral and power plant cash flow projections are different, provision ratios may vary between banks," the statement added. "Even if provisions are set aside for all of these loans, even in the most unfavorable scenario, the effect of this on the capital adequacy ratio of the sector is estimated to be around 0.2%. Even if all these loans are included in the third group, the ratio of the nonperforming loans in the sector will remain at 0.22%. In other words, even if the most conservative actions are taken regarding these loans, the impact will remain quite limited, reasonable and manageable," the TBB said.

Meanwhile, the TBB in a recent announcement said it wants to make sure public debates on natural gas power plants are held on a more robust basis.

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