Zorlu Quits Turkish Gas Distribution
Turkey's Zorlu Enerji is selling its gas distribution subsidiary Gazdas, which operates 9n the Turkish regions of Thrace and Gaziantep, citing the difficulty of operating in the current Turkish gas market.
Sinan Ak, the head of Zorlu Holding's energy group, announced the sale plan in an interview with Turkey's state news agency Anadolu.
"It has become almost impossible to operate in the gas market. Botas continues to dominate and it is difficult to compete in such a monopolistic environment," he said.
Ak said that Zorlu also plans to sell its wind power operations and that it plans to continue to grow its geothermal and solar power businesses.
Zorlu is Turkey's biggest geothermal operator and has a solar power joint venture with First Solar.
The news comes a day after another Turkish energy company, Altek Alarko announced that it was taking its 82-MW Kirklareli combined-cycle power plant in Thrace offline for "at least one year", citing "economic reasons". The announcements are being widely understood as further evidence of the crisis facing the Turkish gas sector, caused by repeated efforts by the Turkish government to manipulate Turkey's nascent gas market for political ends.
Turkey's energy market operator EPIAS, in September launched a new gas trading platform with the aim of promoting and extending market liberalisation. But since then, sales have dropped and the gas plants cannot compete.
Before the general election in June, state gas importer Botas was selling gas at below cost to artificially hold down retail gas and power prices despite the sharp fall in the Turkish lira over the first half of the year.
This under pricing also made it very difficult for private importers to compete, sharply reducing imports by the seven companies holding contracts with Gazprom to import Russian gas with some of the seven now believed to be unable to meet annual take-or-pay commitments and facing possible bankruptcy.
Subsequently on August 1 Botas hiked gas for power prices by 49.5% in an effort to both recoup losses and to reduce gas imports in line with government efforts to reduce Turkey's trade deficit and hence pressure on the lira, a move which has made it difficult for gas fired power plant operators to sell power into a market with excess generating capacity, leading to plants being taken off line.