Güler Sabancı Spoke at the Energy Markets Summit

20.01.2015
  • GÜLER SABANCI : “SUSTAINABILITY IS NOW A REQUIRED COURSE, NOT AN ELECTIVE, FOR THE BUSINESS WORLD”
  • “EXCESS SUPPLY IS AN OPPORTUNITY TO SWITCH TO THE LIBERAL ELECTRICITY MARKET ”
  • “WE ARE LOOKING FORWARD TO THE ELECTRICITY EXCHANGE ”
  • “WE SHOULD NOT COMPROMISE ON THE FREE MARKET CONDITIONS BUT WE ARE TO THE SOCIAL TARIFF”
  • “OUR OBJECTIVE IN THE ENERGY SECTOR IS A CONSUMER FRIENDLY, TRANSPARENT AND COMPETITIVE MARKET”
  • “INSTALLED POWER CAPACITY HAS NOW DOUBLED. ALL INVESTMENTS HAVE BEEN MADE BY THE PRIVATE SECTOR”
  • “AS SABANCI, WE HAVE MADE ENERGY INVESTMENTS AMOUNTING OVER TRY22 BILLION IN THE LAST EIGHT YEARS”

Energy Markets Summit hosted by the Energy Market Regulatory Authority and held in Ankara on Friday, January 23 by the Energy Professionals Association was attended by the President Recep Tayyip Erdoğan, Energy and Natural Resources Minister Taner Yıldız, President of the Energy Market Regulation Authority Mustafa Yılmaz and President of the Energy Professionals Association Mehmet Ertürk as well as by the key figures of the business world.

Güler Sabancı, Chairperson of the Board of Directors of Sabancı Holding, addressed the participants: “One of the most powerful trends of the world is urbanization. The integral part of this trend is electrification, which means that the significance of electricity in our lives is increasing day by day. And this brings more responsibilities to us, to everyone engaged in this field. Sustainability is now a required course, not an elective, for the business world, for all of us. We have to manage the existing needs and expectations by looking at our activities from the societal, economic and social viewpoint. With this attitude in mind, our objective in the energy sector is a consumer friendly, transparent and competitive market which allows promoting people’s life quality. Quite striking developments are now taking place in the supply-demand balances, energy policies and energy technologies in the energy sector worldwide. Developing countries maintain their deterministic role in the increase in the demand for energy. We are witnessing the effects of the developments in the energy technologies and innovation which increase the energy efficiency. As the intelligent networks and demand management practices are becoming widespread, the energy system is enabled to gain a more efficient and sustainable structure.

“Regulatory framework” plays a vital role in these developments. The regulations applicable to the energy sector are effective only if they satisfy the needs of the sector and are predictable and transparent. Mal-designed regulations, however, create many problems in practice. For example, it has been clearly observed that the method employed in the incentives provided for the renewable energy resources in many countries is not successful. Turkey’s proper approach to this matter makes us all more optimistic about the future of the regulations on the energy. Since 2002 when the electricity market was launched, Turkey’s installed electric power has more than doubled. This increase has been almost entirely ensured by the private sector investments. And this striking growth has been achieved especially thanks to our Energy Ministry and the Energy Market Regulation Authority with their most valuable efforts to ensure the creation of a competitive and free market structure. We thank them once again.”

AN ENVIRONMENT OF TRUST

Sabancı went on speaking as follows: “The steps taken in the distribution and production privatizations have considerably contributed to the creation of a competitive market structure. Inherently competitive, predictable and transparent policies combined with the country’s potential have provided an environment of trust, and the private sector has rushed to make investments.

As Enerjisa, by trusting these policies, we have tried to remain at the forefront as a private sector player with the production, trade, sales and distribution of electricity. And in the last eight years, we have made investments amounting over TRY22 billion. Today, we have arrived at a certain point in our country in the development of a liberal electricity market. However, we should not be contented with this, we must continue to work for a more competitive market. Our expectation from all of us, especially from you, esteemed regulators, is that you keep directing the sector with the same approach. ”

EXCESS SUPPLY PERIOD

Güler Sabancı continued her speech as follows: “At this point, I would like to share with you my opinions about the steps we think are important to be taken. In the last few years, an excess supply has arisen in the electricity sector with the addition of the new capacity which has been realized quite above the increase in the demand. The excess supply period that we are currently in provides the opportunity, especially for the consumers, to take bold steps in switching to a more competitive, liberal and transparent electricity sector.

Despite various privatizations completed in the last period, the electricity supply still controlled by the public which acts as a market player consists of almost 50% of the total. In the upcoming years, we should attain a structure in which the dominant position of the public in the market will decrease and the share of the competitive private sector will increase to higher levels. Until this objective is fulfilled, we expect that the production privatizations should continue and that as a market player, the public should maintain its activities “under the same conditions” as the other private sector players. We consider all these as important steps to be taken for the development of the competitive market in the proper director.

In terms of the switching of the electricity sector to the free market, another important issue is “price formation”. That the price should be determined by the market within the supply and demand balance is a must for the liberal and competitive market. However, such a market will create a sustainable investment climate. We are looking forward to the establishment of an “electricity exchange” which has a high liquidity, which is transparent and deep and which will cover accurate prospective price signals! The developments in this area will ensure the predictability and competitiveness of the Turkey’s electricity sector and therefore will support the formation of a healthy investment climate. As for the retail aspect, we have not yet bring into force a structure which has the free market conditions. We expect to switch to a market structure which is fully competitive and in which the end consumer price will be determined on the basis of the liberal market dynamics (considering also all dimensions such as “social tariff).”

NEW TARIFF PERIOD

“Electricity distribution privatizations have been completed successfully. The existing tariff period in the distributions will be completed at the end of 2015. However, in the areas that we have taken over, we still heavily continue our investments in infrastructure and system improvements despite all challenges. Our aim is to provide continuous world-class electricity supply and to offer best quality service to consumers.

In order for us to see our future and for the sector to develop healthily, the principles of the new post-2016 tariff period should be announced as soon as possible.  We consider this very important in terms of the investments and continuity, and we are looking forward to this. A decrease in the energy import is of great importance in both reducing the current deficit and in improving the carbon inventory of Turkey. We have a very important potential in terms of the domestic and renewable resources, which has still not been used.  In the natural gas sector, however, we think that the current progress on liberalization is quite behind the electricity sector. In the natural gas as well, a predictable and sustainable structure which is similar to that in the electricity market and which is both cost-based and reflecting the supply and demand balances should be brought into force considering also the relevant social dimension. Regarding Turkey’s present and future energy sector, we encourage that a very important priority must be certainly given to the domestic and renewable energy resources.

This potential should be used by employing the most suitable technologies and accurate approaches and in accordance with the sense of sustainability. Moreover, we should also place emphasis on the fact that the transmission and distribution infrastructures should be improved in parallel with the production capacity and composition. When we look at the world, certain mistakes have been made in this as I have mentioned earlier. We should not make the same mistakes. In the efforts to increase the investments in the domestic coal resources, we think that we should prefer “investment period-oriented” incentives rather than the mechanisms which are not compatible with the operation of the competitive market such as “purchase and price guarantees”. We believe that only this approach will enable us to ensure the formation of the “free market” which we will not be able to give up and which we currently aim.”

THE HEART OF OUR BUSINESS: “PEOPLE”

Sabancı ended her speech as follows: “Aside from all of these and more importantly, we should focus more on the “energy efficiency” for a better energy future in our country! We believe that the recently-increased awareness in the energy efficiency, the practices that have started to become widespread and the effective policies will make a huge contribution to “a better energy future”. The increase in the energy efficiency in all stages of the energy value chain from production to consumption will strengthen the global competitiveness of the economy of Turkey and also the sustainability of the growth in terms of environmental and social aspects.

The G-20 summit which will be held in Antalya in November, 2015 is therefore very important. Considering that the G-20 countries consume 80% of the total world energy and release carbon dioxide at the same ratio to the atmosphere, we believe that both the G-20 Summit which will be held in Antalya and the summit which will be attended by the world leaders in Paris in December will be very important platforms for energy and climate change. We expect that new technologies, regulations and business models which will place the consumer at the heart of business and which will focus on the energy efficiency potential will be brought into force in the upcoming period. The respective steps to be taken by the Ministry of Energy and Energy Market Regulatory Authority will create an energy sector which will support our economic development and social progress.

In conclusion, as Sabancı, as Enerjisa, the heart of our business is “people” and to serve people. We always believe in this: Our people deserves the best. Our aim is to develop, to provide our people high world standards and therefore to increase life quality. We are working towards “a better energy future”. We make all these studies, investments and efforts for this goal, we want all these regulations in order to achieve this goal.”