Feb 12 2019

Enka shuts Turkey’s biggest gas-fired power plant

Turkish energy and construction firm Enka İnşaat halted production at two natural gas-fired power stations, including the country’s largest at Gebze in western Turkey.

The stoppage at the Gebze and Adapazari plants occurred after an energy sales agreement with the state-run Electricity Generation Company (EÜAŞ) ended, Enka said in a statement to the Istanbul Stock Exchange late on Monday. It didn’t provide further details and said it would inform the public when the facilities, constructed under a build-operate-own (BOO) model, were re-opened.

The two power stations have a combined capacity of 2,400 megawatts, including 1,580 megawatts at Gebze, according to Enka İnşaat’s website. Enka partnered with U>S. energy giant Bechtel and Royal Dutch Shell to build the two plants after winning a state tender in 1997. Enka became sole owner in 2005. Şarık Tara, who runs Enka, was Turkey's biggest taxpayer in 2017, official data show.

Some Turkish energy firms have suspended the operation of power plants in the country saying government pricing renders the operations unprofitable. The ruling Justice and Development Party (AKP) has announced freezes or reductions in the price of electricity and fuel in recent months as it sought to curb inflation, which is running at more than 20 percent annually. Some older power deals have also distorted the market.

The Gebze and Adapazari plants were awarded new 49-year generating licenses running until 2068, Turkey's energy regulator said in November.

Some plant operators have been "complaining since last year that overcapacity, government pressure to reduce dependence on imported gas and the continuing offtake guarantees enjoyed by more inefficient plants constructed in the late 1990s, has made it next to impossible for them to operate at a profit," S&P Global said in an summary published on its website in conjunction with energy intelligence firm Platts. The plants were loss-making, it said.

Energy firms are among the hundreds of companies who have applied to the courts for protection from creditors or asked banks to restructure foreign currency-denominated loans after the lira slumped against the dollar last year. Losses for 2018 totaled 28 percent.

Shares of Enka İnşaat rose 0.4 percent to 5.06 liras at 3:20 p.m. on the Istanbul exchange, reversing earlier losses.  The main BIST-100 index fell 0.3 percent.

(Updates with comment in sixth paragraph).