European development bank offers loan to help enhance power distribution in northwestern Turkey

ISTANBUL

In a move to enhance reforms in the Turkish electricity sector, the European Bank for Reconstruction and Development (EBRD) has said it is financing electricity companies operating in the north west of the country, in a written statement. 

The Bank is extending a $134.75 million loan to the Trakya Electricity Distribution Company (TREDAŞ), the Trakya Electricity Retail Company (TREPAŞ), and to their parent company, IC İçtaş Elektrik (ICEL), it said on Dec. 12. 

As part of the loan $82.25 million will be converted to Turkish Lira at the time of each disbursement to help the companies manage foreign exchange risk, according to the statement. 

The transaction is part of a $700 million dual-currency financing package, which also includes parallel loans from Garanti Bank, İşbank, Vakıfbank and TSKB. 

The funds will enable the three companies to optimize their financing structure and implement capital investment plans for 2016-20, said the Bank. 

“These include expanding and upgrading the network, enhancing metering systems, implementing environmental, health and safety improvements and increasing network efficiency,” it added. 

Founded in 1995, state-owned TREDAŞ was acquired in 2011 by the diversified Turkish conglomerate İbrahim Çeçen Yatırım Holding, through its energy-sector investment arm ICEL. In 2013, when distribution companies were legally required to unbundle their retail activities, TREDAŞ separated into two units with TREPAŞ to focus solely on retail. 

“We are pleased to further encourage the ongoing liberalization process in Turkey’s electricity sector. This project is a great example of how the EBRD can support the modernization of power networks following their privatization. Our financing, alongside the loans from four local banks, will help our client implement the necessary measures to remain one of the most efficient electricity companies in Turkey,” said Nandita Parshad, EBRD Director for Power and Energy. 

The EBRD will also work with TREDAŞ to draw in and develop female talent in the male-dominated Turkish power sector, read the statement. 

 “As part of the privatizations, we have put high reliability and quality of supply, as well as improved customer services, at the very center of our operations. This loan will serve to upgrade our network and further improve efficiency and reliability. I am confident that this transaction will also pave the way for a broader strategic partnership between IC Holding and the EBRD. I should add that the loan closing comes at a very critical juncture, and is a strong sign of the EBRD’s continued confidence in and support for our country.
 
Furthermore, we appreciate the substantial contribution of our long-term partners, Garanti Bank, İşBank, Vakıfbank and TSKB as well, who have extended their strong support and cooperation to our various projects,” said Serhat Çeçen, Chairman of the Board of İbrahim Çeçen (IC) Yatırım Holding. 

To date the EBRD has invested close to 9 billion euros in the country through more than 200 projects in infrastructure, energy, agribusiness, industry and finance. It has also mobilized nearly 20 billion euros for these ventures from other sources of financing. Some 98 per cent of the Bank’s investments in Turkey are in the private sector.