EBRD backs privatisation of two Turkish hydropower plants

12 March 2018

The European Bank for Reconstruction and Development (EBRD) has approved a dual-currency loan for Koç Holding subsidiary Entek Elektrik Üretimi A.S, to acquire two hydropower plants in Kahramanmaras province in Turkey’s south-east from the state.

The US$55 million dual-currency loan (US$ 35 million in US dollars and the equivalent of US$20 million in Turkish lira (TRY) will be used to buy the 124MW Menzelet and 54MW Kilavuzlu projects, after the firm won the bid for the plants in a competitive privatisation tender.

The EBRD’s loan is part of a dual-currency financing package of TRY 1.05 billion, equivalent to around US$260 million, to finance the acquisition. Other lenders include Garantibank, Isbank, Akbank, Yapikredi, Unicredit and ICBC Turkey.

“Privatisation is a key part of the Turkish government's strategy to liberalise the country’s energy sector,” explained Arvid Tuerkner, EBRD Managing Director for Turkey. “Our investment supports the goal of increasing the participation of private suppliers in power generation and reinforces the role of renewable energy in the sector.”

Entek began investments in 1995 and operates six hydroelectric power plants and a gas-fired power plant.

Yagiz Eyüboglu, Chairman of Koç Holding Energy Group, said: “Taking over the operating rights of these two hydroelectric power plants in Kahramanmaras is an important step for the Koç Group’s vision of growing in sustainable and renewable energy. In order to be one of the leading power generation companies, Entek continues to strengthen its portfolio. By winning the biggest privatisation tender in 2017, we have demonstrated our vision and belief in the future of our country.”

Bilal Tugrul Kaya, CEO of Entek Elektrik, added: “In 2017, Entek had a total  244MW of installed capacity. With these two power plants, our installed capacity has almost doubled to 422MW. The privatisation of Menzelet and Kilavuzlu is the largest acquisition of hydropower plants by a domestic investor in Turkey. In the forthcoming period, we are planning to continue our investments by considering a balanced and diversified generation portfolio.”

The EBRD had already financed in 2016 the privatisation of the Karacaoren hydropower plants, with a combined capacity of 78MW and located in Burdur, south-western Turkey, by energy company Gama Enerji.

Encouraging greater private sector participation in the energy sector and promoting the use of more environmentally friendly sources of energy is a priority for the EBRD in Turkey. Almost half of its projects in the country contribute to financing sustainable energy.

The EBRD is a major investor in Turkey. Since 2009, it has invested €10 billion in various sectors of the Turkish economy, with almost all of these in the private sector.

In 2017 alone, the Bank invested €1.6 billion in 51 projects in the country. Nearly a third of this financing was provided in Turkish lira.

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