Turkey’s electricity rates

ANKARA (Reuters) – Turkey’s energy markets watchdog has rejected electricity tariffs that the privatization body has suggested 20 electrical grids should charge once they are sold off, saying the rates were unrealistically low. Approval of the tariffs is the final step before Turkey can invite tenders to auction off the distribution grids as part of a World Bank-supported plan to liberalize its electricity market. «We decided to send the offer related to the electricity tariffs back to the Privatization Administration (OIB) without approving it,» Energy Market Regulation Authority Chairman Yusuf Gunay told Reuters on Friday. He said proposed tariffs, to be applied over the next five years, were too low and did not allocate enough to future investment in infrastructure and the transfer of operation rights or cover losses from leakage and illegal use. He said the decision not to approve the proposed tariffs would not harm the privatization process. «I think the shortcomings will be addressed in a short period of time and then we will be able to approve the tariffs,» said Gunay. The government estimates that illegal use of electricity accounts for 16 percent of consumption, but has announced that it will try to cut that figure to 10 percent. The tenders have been delayed since March 2005 due to slow progress on preparing the appropriate legal infrastructure. Turkish electricity consumption is expected to grow amid robust economic expansion and a growing population. The Turkish economy grew nearly 8 percent over the past four years and the government is predicting growth of 6 percent for 2006.