This much of a high hike a sign of bad management

ERDAL SAĞLAM

The high rate price hikes for electricity and natural gas that came on the weekend – besides their negative consequences on economic balances – have also clearly revealed bad energy management.

We have always been saying that the price of the bill of not imposing the necessary price hikes and delaying them is always much higher than it actually is and turns the scales upside-down. This is what has happened.

This is because the price hikes that were not imposed on time multiply the accumulation of the hikes that have to be imposed in the end. It also causes bigger losses in some energy-related State Economic Enterprises (KİT) and thus, in order to straighten out their situation, even higher price hikes have to be imposed. At the end of the day, it is the people who suffer from bad management.

It’s not just wide segments of the public that are negatively affected in a serious way by these hikes, but the private sector as well. Private sector companies, which are already suffering from increased transportation costs due to fuel price hikes, will now be in a worse situation with serious increases in input costs because of electricity and natural gas price hikes. This situation will cause a loss in the competitive power of Turkish goods.

The Central Bank was counting on the months of April and May to pull down the double-digit inflation to single digits. However, the high rate of price hikes on electricity and natural gas will be serious factors preventing any decline of the rate of inflation because they will both pull up inflation indexes with their direct effects and because they will cause serious price hikes through their indirect effects.

While Energy Minister Taner Yıldız was defending the natural gas price hikes that reached 19 percent, the fact that he was justifying the hikes by saying that they had not imposed any hikes for a long time even though the costs had grown higher was indeed tantamount to an admission that the hikes were not imposed on time – in other words, that it was bad management.

Just as in natural gas, it is known in electricity as well that civil servants had prepared the necessary hikes on time and demanded them, but it was Prime Minister Recep Tayyip Erdoğan who prevented the hikes from being imposed at the time. Cabinet ministers also cannot influence the prime minister on this matter. How the prime minister accepted such high rate hikes this time is, at least for now, unknown.

EPDK’s dependency confirmed
Another truth that the recent price hikes on electricity have revealed is that those indications, which we have been complaining about for a long time, that pointed out that the independence of “the Energy Market Regulatory Authority (EPDK) is only on paper” have now moved beyond being mere claims to being confirmed.

The EPDK held its routine meeting on Wednesday last week to discuss the necessary electricity price hikes. However, since Erdoğan and Yıldız were both in South Korea and Iran, in other words since they could not get the approval for the price hikes that needed to be imposed, they adjourned without making a decision.

Yıldız, on his return from Iran on Friday last week, told reporters, “We will meet with ministers tomorrow and decide on the hike on electricity prices and announce them.” Hearing and almost alarmed by this, the EPDK members, in order to prevent further embarrassment, returned to Ankara on Saturday. They held a meeting that lasted just over half an hour and officially announced the electricity price hikes to the public.

The EPDK, on paper, is legally an independent body from the government, and the authority to determine electricity prices belongs to the EPDK administration, not to the government. However, as you can see, it cannot make a decision despite the necessary technical information and documents, despite the demand from relevant institutions, while the energy minister, as in the last example, officially declared that it was the government that made the hike decision. After this picture, nobody should now ask, “Why are there no foreign investors in the energy sector? Why can’t energy institutions be privatized?” As the price hikes decision has confirmed, if price hikes can be delayed for a long time even though they were necessary just because politicians do not want them, and if electricity price hikes are imposed by politicians at the time and rate they want and not according to the technical authority, the EPDK, then why should people come and invest and risk their millions and billions of dollars here?

Erdal Sağlam is a columnist for daily Hürriyet in which this piece was published on April 2. It was translated into English by the Daily News staff.

ERDAL SAĞLAM - esaglam@hurriyet.com.tr