Turkey’s hard-strained industrial natural gas users breathed a sigh of relief today, as state-run NG monopoly BOTAS announced that the 10 day long restrictions on usage will be lifted tomorrow. However, the crisis which began with Iran temporarily cutting gas flow to Turkey because of pipeline break-downs left a deep scar in BOTAS’ balance sheet. The company needs constant capital injection from parent Turkey Wealth Fund, as well as subsidized FX purchases from Central Bank (CB).
Turkish natural gas sector sources told local newspaper Daily Sabah on Wednesday that the amount of gas supplies from Iran had been increased to around 50% of levels guaranteed under a contract between the two countries.
That comes as supplies had dropped to around 20% of the contractual levels last month after technical problems affected pipelines and pressure facilities on the Iranian side of the border.
The cut forced Turkey to reduce gas supplies to power plants and factories by as much as 40%.
Sales of foreign currency to Turkey’s state economic enterprises – primarily energy importer BOTAS – reached a record $4.15 billion in January, the central bank said on Monday, surging after a plunge in the lira and a jump in energy prices.
The January data brought forex sales to state enterprises in the last three months to $9.7 billion, after levels of $3.36 billion in the previous two months – both record levels at the time – with energy imports accounting for the vast majority.
Turkey’s budget swung to a record deficit in December with the government spending an unprecedented amount on gas imports as international prices surged and the lira collapsed.
Boru Hatlari ile Petrol Tasima AS, the national gas import company better known as Botas, received a total of 59 billion liras ($4.4 billion) from the government through loans and transfers in the last month of 2021 alone. No such transfers were made from the budget in 2020, Bloomberg had reported.
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CB has precious reserves to waste on BOTAS, because it is also tasked with defending the exchange rate at an artificially low level.
BOTAS, on the other hand, will need all the capital injection and CB help it can get because, the public can’t tolerate higher energy prices.
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Thousands of people throughout Turkey on Sunday continued to take the streets in protest of rising electricity prices since the beginning of the year, Duvar news site reported.
Marches took place in the western province of İzmir, and the southeastern provinces of Diyarbakır and Mardin, Duvar said, with crowds carrying their electricity bills and foreign currency in a show of protest.
The protests arrive as consumers and businesses were hit with an electricity price hike of between 50-100 percent on January 1st, along with an increase in natural gas bills.
Turkey’s energy conundrum should last until summer months, when an expected decline in global prices and low consumption ought to stabilize TL prices. However, BOTAS shall continue to be a big burden on the budget, because it can’t charge market prices for the NG it sells, while its net income stands to be seriously impaired, if—as expected—Turkish Lira takes another plunge.
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