PHOTO: FILE
ANKARA: Banks in Turkey are currently working on an energy venture capital fund for refinancing non-performing loans up to $2 billion, Garanti Bank executive vice president told Anadolu Agency on Thursday.
The fund will see the financial transfer of four to five natural gas and hydroelectric power plants with capacity of 1,500-2,000 megawatts.
Over the last 10 years, in the financing of a number of energy projects in which banks provided $70 billion in credit, investors repaid $23 billion, but the repayment of the financing balance of $12-13 billion became problematic.
As a solution, banks authorised a refinancing scheme in the last two years to recuperate the $12-13 billion, leaving a $2-billion outstanding debt. To recover the $2 billion, a number of bankers are working on structuring an energy venture capital fund with the Banks Association of Turkey (TBB).
Investors in the Turkish energy sector have experienced difficulties because of the weakened Turkish lira against the dollar as the repayments were in dollars while revenues were earned in liras.
The currency disparity between the dollar and the lira intensified since August 2018 and reached a rate with a six-fold differential. As a result, investors experienced greater difficulties in repaying the costlier loans.
The drop in electricity sale prices amid stable energy demand in Turkey further contributed to the financial burden of these investors.
Published in The Express Tribune, May 24th, 2019.
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