18_Dec_AAAnadolu Agency Energy terminal |23 Dec,2014

– Turkey’s financial markets and banking regulations should improve to acquire long-term assets for energy investments, according to CIO of Infrapartners Management LLP

By Ovunc Kutlu and Arif Hudaverdi Yaman |

Turkey’s financial markets and banking regulations should improve to acquire more long-term assets for energy investments, said Gary Neville, the Chief Information Officer of Infrapartners Management LLP.

“There is no capital market in Turkey. You have long-term assets funded by short-term cash. And that’s not sustainable in the long run,” Neville told The Anadolu Agency.

“For investments in Europe and North America, we used to able to get 20-25 year money, 30-40 years bonds. Here in Turkey we struggle to get 15 years on long-term assets,” he added.

By the end of October 2013, the total loans given to energy sector in Turkey were recorded as more than 94 billion Turkish liras (US$ 40.7 billion), according to Turkey’s Banking Regulation and Supervision Agency, BDDK.

Current total cash and non-cash loans in Turkey’s energy sector reached 111 billion Turkish liras ($47.9 billion) and more than a 16 billion lira ($6.9 billion) growth was seen at the end of October in 2014, according to BDDK.

“There is a relevantly undeveloped financial market in Turkey which has to change, and there is a huge infrastructure deficit,” he said.

Neville reminded that these are shortcomings that often exist in many developing markets, stating that attracting foreign investment is not without challenges.

“Stability is what one is looking for. Turkey wouldn’t want to see another devaluation. It’s the right decision for Turkey to have a diversified portfolio,” he said.

“There is a lot of geothermal, wind, and solar potential in Turkey who is also embarking on a nuclear program,” Neville added.

Turkey and Russia’s state-run atomic energy corporation Rosatom will build Turkey’s first nuclear power plant on Turkey’s Mediterranean coast which will cost $22 billion and become fully operational in 2023.

Turkey is planning to construct its second nuclear power plant on its northern coast in Sinop, and it’s in talks with the U.S. and China to build a third nuclear plant.

Speaking about the advantages of the Turkish financial markets, Neville highlighted that the country has a clear and understandable regulatory environment.

“Turkey has a very dynamic business society with very capable contractors, who got a huge track record, not only in Turkey, but internationally delivering projects as well,” he said.

– Oil price slump and projects

Neville believes that the decline in oil prices will affect only some projects and investments in the sector, emphasizing that investors will look for confidence in projects.

“Marginal projects will drop off and people will concentrate on more feasible projects,” Neville said.

“Due diligence of review of projects are so much more thorough,” he added.

The global benchmark Brent crude oil price has been on a steady decline since June, and has fallen almost 50 percent from $116 per barrel, and reaching $58.50 last Tuesday – its lowest point in the last five and a half years.

“Low oil prices drive a need to evaluate projects very closely, which means some projects will not happen, Neville said.

“From international investors’ perspective, they will look for confidence in a project,” he concluded.