Turkey windfarm project to receive €130m loan

By Delphine Strauss in Ankara
Published: May 12 2009 02:28

Multilateral lenders are stepping into the gap left by crisis-hit banks to kickstart investment in Turkey’s renewable energy sector, on Monday announcing a €130m loan to a subsidiary of Zorlu energy group to build the country’s biggest windfarm.
It will be the first transaction in Turkey by the European Bank for Reconstruction and Development, which is providing €45m of the total in a package led by the International Finance Corporation, the World Bank unit for private sector lending.

The IFC is investing €55m and the European Investment Bank €30m, with the EBRD and EIB contributions backed by guarantees from HSBC and Denizbank.
“In a normal market, we’d have taken the lead and syndicated from commercial banks,” said Shahbaz Mavaddat, the IFC’s director for southern Europe. Instead, the IFC, which aims to make new loans of around $300m in Turkey this year, has facilitated a package financed almost entirely by multilaterals.
This kind of partnership is growing more common as the drop in global capital flows forces a bigger role on multilateral lenders.
The EBRD may step up plans to invest €450m in Turkey by the end of 2010 as it considers expanding to help mitigate the financial crisis, a spokesman said, adding it was also looking at loans to Turkish banks to support small business finance.
Turkey, which urgently needs to increase power generation to avert shortages, is keen to attract investment in wind and solar power, but projects have been plagued by delays and many groups planning to invest have yet to find financing.
Wind power accounts for a minimal part of Turkey’s energy use at present and the 135 megawatt plant being built by Zorlu’s subsidiary, Rotor Elektrik, will boost output by 35 per cent when it begins operating at the end of 2009, the IFC said.
“We are very ambitious in renewable energy projects, which will play an extremely important role in our country’s future,” said Murat Sungur Bursa, chief executive of Zorlu Energy Group.
The World Bank said last year it planned “substantial” financing for the Turkish energy sector, and Mr Mavaddat, who has just finalised two similar energy sector deals in Albania, said the package could help mobilise other investors.
But Mehmet Sami, a director at Ata Invest in Istanbul, said there was little sign of commercial lending for infrastructure unfreezing. “Increasingly people are turning to multilaterals. For the time being, these institutions are going to be an independent lifeline to industry,” he said.
Copyright The Financial Times Limited 2009