Turkish industry hit by power cuts amid gas supply troubles

Turkey suffered a manufacturing shutdown after problems with the country’s gas supplies forced the state to impose electricity cuts on industry.

Tofas, a Turkish carmaker part-owned by Fiat Chrysler, was among those announcing a halt in production on Monday, according to Turkish media, after the government said it would impose three days of power cuts on heavy industrial users this week. Others included Renault’s joint venture, which said it would halt production at its factory in Bursa, in the west of the country, for 15 days from Monday.

The outages, which risk stoking Turkey’s already soaring inflation and hitting President Recep Tayyip Erdogan’s export targets, come after Iran — which provides around 10 per cent of Turkey’s natural gas — last week announced that it would temporarily suspend gas exports to its neighbour because of technical problems.

The drop in supply, combined with high demand for energy as cold weather and snow have swept the country, has put heavy pressure on the power network in a country where more than half of electricity is produced in gas-fired power stations.

“It’s an extraordinary shortage for Turkey,” said Emre Erturk, founder of the Istanbul-based consultancy Energy IQ. “This kind of country-wide curtailment plan has never been adopted for this long.”

The decision was met with dismay by Turkish manufacturers, who complained they were given little notice of being forced to halt production this week — with power outages affecting different provinces on different days.

Botas, the state gas importer, announced an exemption for companies making crucial goods including medicines, milk and meat products.

But analysts and industry figures said that the move risked hitting key manufacturing sectors, including automotive, steel and textiles.

The power shortage could threaten Erdogan’s efforts to put exports at the centre of what he has termed his new economic model. He hopes booming overseas sales will be the upside of a sharp slide in the Turkish lira, which lost around 45 per cent of its value against the dollar last year.

“It will have consequences in terms of export growth,” said Ozlem Derici Sengul, the founder of the Istanbul-based Spinn Consultancy. “If it does not stay as a one-time shock, we may have to revise our overall growth estimates down.” 

Derici Sengul added that a prolonged shutdown could also further fuel inflation, which was already at a 20-year high of 36 per cent in January.

Turkey sent a delegation of officials to Iran on Monday in an effort to resolve the crisis, according to Bloomberg news service.

Tehran oil minister Javad Owji said at the weekend that Turkey had urged Iran to continue gas exports and postpone repair operations. “But considering that it was risky and could cause incidents, we had no other choice but to bring down the [gas] pressure and exports,” Owji told local media. “Based on our contract and safety issues, we have to fix the leak at the first possible opportunity. But the cold weather made us postpone it for a few days. This problem definitely needs to be resolved while we see this as a matter of principle.”

In a telephone conversation on Saturday, Erdogan told President Ebrahim Raisi that Turkey considered its neighbour a “reliable source of energy”, according to Iranian media. No further details were given.

Erturk, the energy analyst, said that while Ankara had made significant efforts to increase its gas importing capacity in recent years, it had failed to renew critical long-term contracts that expired last year with Russia and Azerbaijan.

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