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Turkey - When energy lacks the willpower

In theory Turkey should be a paradise for engineers, construction companies and banks involved in the electricity sector. Consumption is far outstripping supply and in theory state monopolies are being opened up to privatization and foreign investment. In practice these developments are entangled in the bureaucratic, constitutional and financing red tape that afflicts almost all enterprise in Turkey. Then there's the tangled geopolitics of gas supply from neighbours. Metin Munir reports

In terms of forecast investment, Turkey is the fourth-largest electricity market in the world behind China, India and Brazil. Between 1970 and 1997 primary energy production nearly doubled but consumption quadrupled. According to Citibank the government plans to add 40,000MW of capacity by 2010, of which at least 25% will be generated in gas-powered plants.

Traditionally, energy investments in Turkey, like all infrastructure projects, have been a state monopoly. Since 1984 the country has been in the throes of opening up infrastructure investments to foreign and domestic private investors. "The implementation of this has been subject to bureaucratic impediment and continuing legal challenge," says David Tonge, chairman of Istanbul-based research house IBS and an expert on the Turkish power sector. "But step by step, private-sector power generation has become a reality." The share of the private sector, which provides around 13% of power generation, is due to increase. Operating rights to over half of existing capacity are in the process of being transferred to the private sector and a large number of new plants are in various states of development.

The plan, in general terms, is to privatize power generation and distribution and to encourage foreign investment.