Energy cuts amid economic downturn

After Iran announced on Jan. 20 that it reduces the gas exports to Turkey, Turkish Energy Transmission Company (TEİAŞ) announced to cut electricity to all Organized Industrial Zone’s (OSB) for 72 days. The cuts started today. The restriction will be effective in all OSB’s where the manufacturers will only be allowed to use electricity for lighting and security.

All OSB’s announced that they suspend production. Already weakened by the currency fluctuations and soaring prices, manufacturers state that long power cuts will harm Erdoğan’s growth-oriented economy model. In addition, they say the cuts can cause problems in the supply chain as factories that use perishable materials in their production, or produce food, disinfectant, or dairy products may get harm that would cause a shortage of supply throughout the country. They added that there may be a problem in accessing basic necessities, and that the agricultural, manufacturing and logistics sector will be affected by these cuts.

Due to the crisis, Minister of Energy and Natural Resources Fatih Dönmez and Minister of Industry and Technology Mustafa Varank, on Jan. 23, met energy circles online.

Iran stated that they resumed the gas supply due to a technical fault, but Turkish officials state that Iranian supplies were lower than the required volumes, Reuters reported.

Meanwhile, Treasure and Finance Minister Nureddin Nebati met economists on Jan. 22, and stated that he “expected 10 billion of forex deposits to be converted to Lira due to new law exempting such deposits from corporate tax,” Reuters reported on Jan. 24.

He added that “they expect inflation to rise to 40 percent in the coming three months. Participants cited him as saying there would be no turning back from the central bank’s current monetary policy and that an interest rate hike should not be expected, adding that the policy rate’s importance had lessened.”