Energy shortages to deal blow to exporters, supply chain center ambitions

Turkish industrial representatives continue to warn that production could be at risk if the energy crisis continues to grow.  Initially, the natural gas use of the factories was restricted by 40% in Turkey, however, following a recent decision, electricity cuts would be imposed in all organized industrial zones (OIZs) across the country as of 12 a.m. on Monday, Jan. 24, and the country’s industrial production will stop completely for at least three days.


A CHP delegation which visited the Ankara OIX found shattered factories and businesspeople complaining of not being able to pay their workforce.  With an expected 11% YoY jump in 2021, industrial production is the bright point in an otherwise dismal year in Turkish economy.  Turkish exports also recorded a double-digit surge in 2021, thanks to robust demand from EU, accentuated by some buyers shifting procurement to more reliable Turkey from Asia. Yet, industrialists now complain, Europe could start searching new supply nodes, if Turkey proves to be an unreliable supplier.


Memiş Kütükcü, head of the Supreme Organization of Organized Industrial Zones (OSBÜK), underlined that the power outages in OIZs continue to challenge the industrialists at a time when production and exports have accelerated and that they, as OSBÜK, are following the issue closely. He added that some officials from Turkey also went to Iran and are trying to fix the problem.



“The zones are currently making extraordinary efforts to manage this process and to keep the production losses of our industrialists to a minimum. However, despite this, we know that power cuts experienced at a time when production and exports are accelerating will harm the economy and industrial production,” he said.


Orhan Aydın, head of the Middle East Industry and Trade Center (OSTIM) in Ankara told Dünya that they created a cut-off plan that would cause the least damage after meeting with the industrialists, noting that they determined the appropriate method for their members.


Veysel Yayan, secretary-general of the Turkish Steel Producers Association, also told Dünya that notification of the power outage was issued to the sector via an official letter.


The iron and steel sector uses the most electricity in Turkey, and Yayan stated that the power cut meant “every second of power cut was a financial loss” for it.


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Note that these industries are heavily export oriented.


The actual causes of natural gas shortages remain mired in dispute. Iran has indeed cut off NG flow, because of “technical problems” on its side but some experts claim the real problem is BOTAS having run its storage empty during the summer.   Political analysts claim Russia and Iran are dangling gas cuts to Turkey as a means of stopping the country from rushing to the aid of Ukraine.


The fact of the matter is that with snow blanketing most of the country (which drives up household consumption), going back to normalcy is going to take time, meaning current production stoppages could deal a serious blow to industrial production and exports in January-February.


Recently, Turkish President Tayyip Erdogan said on Wednesday full gas flow from Iran will return in 10 to 15 days after the neighbor cut supplies last week due to a technical problem, prompting some Turkish manufacturers to halt production.


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Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and and has contributed to the financial daily Referans and the liberal daily Radikal.