Turkey Hikes Gas Price for CCGTs (Correction)
(Clarifies $/lire rate)
Turkey's state gas importer and transmission operator Botas has informed power generators that it has hiked the price of gas to power generators by 49.5% effective August 1.
The announcement has not yet officially been made public but according to an industry source who has seen the text, the new price will be lire 1,312.20/'000 m³ or lire 0.12332707/kWh, when lire 4.86=$1.00. In addition the announcement states that in future gas sales for power generation will be index linked to the Turkish central bank's daily base sale price for dollar.
The hike follows more than six months during which Botas kept gas prices frozen ahead of the Turkish general election June 24 despite the sharp fall of the lire over the same period. Since the start of the year it has lost 30.1% of its value and is now worth about a fifth of a dollar.
News of the hike caused power prices on Turkey's EPIAS day ahead power market to rise sharply. No price rise was announced for Botas gas sales to gas distribution companies or to commercial customers who buy direct, suggesting the aim is reduce gas burn for power generation without directly affecting consumers.
Turkey has for the past few years been following a contradictory energy policy, prioritising domestic primary energy resources with the aim of reducing dependence on imported gas, while simultaneously trying to expand the range of sources of gas available with the aim of increasing security of supply. While the timing of the hike is clearly in response to the continuing fall of the lira – Botas imports gas paying in dollars – its targeted nature also comes at a time when Turkey is at loggerheads with Washington over US demands that it re-impose the US sanctions against Iran from November.
Ankara has stated categorically that it will not impose new sanctions against Iran, but it may not be in a strong enough position to resist.
Under the previous sanctions regime Turkey's gas imports were exempted, however no indication has been given by Washington that it plans to grant Turkey another waiver this time around.
A further reduction in Turkish gas burn may help avoid shortages next winter if Washington forces Ankara to reduce Iran imports.