In November 2006 we reported that The World Bank and IMF were calling for Turkey to hike its electricity prices following increases in the cost of production and distribution. The price of electricity has been unchanged for around 3 years but the costs of the energy used to generate it have increased significantly. It was the increase in costs that led to the 13 hour blackouts in the summer of 2006 as generating companies found they were actually making a loss for every unit of electricity they produced. The response by the energy authorities was to introduce measures to stop the energy companies from ceasing generation but the problems are fundamental. The Turkish economy cannot afford to subsidise the rising costs and this is what the World Bank and IMF are highlighting.

The Government has taken note of the warning and have indicated that electricity prices will be next on the agenda for price hikes. The details were contained within the letter of intent delivered to the International Monetary Fund as part of the 6th review and release of the next tranche of IMF funding.