The biggest city of Turkey, and its economic heartland, Istanbul has ended the year 2016 with power cuts over several days. Besides causing public outrage towards the provider companies, the power cuts also meant economic losses for private businesses. According to the Turkish Automotive Parts Industry Association (TAYSAD), car manufacturers lost almost 300 million Euros in these few days. Escalating winter conditions made power cuts hard to tolerate for consumers as well, as a good amount of houses are using electrical heaters. This situation is not without irony for a country that is hoping to become a global energy hub.
While the power cuts have been caused by damages in the transmission lines, as a result of winter storms, experts have warned of an upcoming energy bottleneck. After BOTAŞ, Turkey’s natural gas provider, stopped supplying the power plants because of shortage in the gas reserves, the Chamber of Electrical Engineers (EMO) issued a statement on 23 December pointing out the public costs of the government’s planning failure.
A photo showing Energy Minister Berat Albayrak, President Erdoğan’s son-in-law, seemingly berating the head of TEİAŞ, the company responsible for the electricity transmission lines spoke volumes about how unpleasant the political outfall from the cuts might be for the government. While the minister and the pro-government media have pointed to the possibility of an international conspiracy against the national electricity network, it is clear that at a time, when the government is hoping to rally public support for a constitutional referendum, these cuts will not help their ratings.
Even after the damage was repaired, the experts have continued warning that the problem is lying deeper and further cuts are to be expected mainly owing to the shortage in natural gas. Iran, the second biggest exporter to Turkey, has cut down the gas flow in December 2016 due to technical reasons, a development increasing the already existing deficit. BOTAŞ has repeated that it will cut supply to gas-fired power plants early in January. These cuts in urban centers have only been postponed as the weather conditions worsened last week.
Another challenge for the energy security of the country is the falling currency exchange rate. Most energy imports are traded in Dollars and the electricity companies are among those holding high amounts of debts in foreign currencies.
Thirty eight per cent of the electricity used in Turkey is produced by natural gas, with Russia supplying 63% of the gas. Turkey has long aimed to become an international hub for gas coming from the Mediterranean Sea, its southern neighbors and central Asia. In a recent agreement Russia and Turkey have made plans to set up a pipeline (Turkey Stream) that would channel Russian natural gas into Europe. Moreover, owing to the recent rapprochement with Israel, Turkey is destined to be the main consumer of natural gas from the recently discovered Leviathan basin. Both sides are also trying to reach a consensus to settle the Cyprus conflict, which they hope would allow to build a liquefaction facility on Cyprus or to construct a pipeline to Turkey through Cyprus’ Exclusive Economic Sea Zone.