German energy giant to finalize exit from Turkey due to currency crisis

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German energy giant EWE is close to completing its exit from Turkey, poised to sell its assets in the country, the Habertürk daily reported on Wednesday.

The company has been considering exiting the Turkish market since late March due to historic losses in value of the Turkish lira and hired British finance company Barclays to advise on the transaction, the German Handelsblatt daily reported.

EWE, one of Turkey’s biggest natural gas distributors with an annual 2-2.5 billion cubic meters in gas sales, has five energy companies in Turkey comprising provincial natural gas hubs Bursagaz and Kayserigaz, EWE Energy, Enervis and Millenicom.

According to the report Azerbaijani energy company SOCAR has tendered a bid to buy EWE’s assets in Turkey as has Turkish energy giant Kolin. The total value of the sale has been estimated at around $250 million.

SOCAR is the biggest partner of the Trans Anatolian Natural Gas Pipeline (TANAP) project in central Turkey, a joint initiative inaugurated on June 12 by Turkish President Recep Tayyip Erdoğan and Azerbaijani President İlham Aliyev.

The Turkish government criticized EWE for its alleged connections to the Gülen movement, which it blames for a 2016 coup attempt. Ten EWE staff members were fired, including senior executives, after being accused of ties to what Ankara describes as a “terrorist movement,” according to the Handelsblatt daily.

The Turkish market once held great promise for EWE, with Managing Director Frank Quante quipping as recently as 2015 that the division won a new customer every eight minutes. Last year EWE’s foreign activities, which include Poland but predominantly reflect the Turkish business, saw sales fall 14 percent to €624 million. Operating profit slipped 3 percent to €24.8 million.

EWE buys its gas in dollars and then sells it in lira, exposing the company to significant currency risks. On April 2, the lira’s valuation was around 3.96 to dollar, while as of today it is around 5.30.

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