Electricity bills do not give industrialists a competitive advantage.
Türkiye HAS FALLEN BEHIND ITS COMPETITORS IN ENERGY COSTS.
This electricity bill will scare foreign investors., It doesn't give local manufacturers a chance to compete!
Electricity prices, directly linked to investment, production, and employment, are causing serious concern for industrialists. Producers, who need a predictable and competitive cost structure for efficient and sustainable production, are worried about rising electricity prices. They fear that these costs, which weaken their position in international competition, will negatively impact their production and investments, as well as employment and consequently the national economy.
According to data from the International Energy Agency's 2019 report, a comparison of energy prices across countries shows that, with recent increases, Türkiye ranks among the countries with the highest electricity prices. When this data is considered in conjunction with the wealth of the countries, the picture becomes clearer. Indeed, in a wealthier country, you can pay less for your electricity bill and use more electricity with the cash you have. In other words, when the annual per capita Gross National Product is divided by the cost of electricity consumption in that country, unfortunately, Turkey falls into the position of being one of the countries where a person can afford the least amount of electricity per year. This situation clearly reveals the fact that industrialists must invest their scarce resources and capital, which is less than in developed countries, in electricity.
Industrial companies in Türkiye pay more for electricity per unit than in the United States, Norway, the Netherlands, Canada, Korea, Denmark, Greece, Estonia, the Czech Republic, Poland, Hungary, Slovenia, Mexico, Luxembourg, Finland, Sweden, and Lithuania. The countries where electricity is more expensive than in Türkiye are Italy, Japan, Germany, the United Kingdom, Switzerland, and France.
On the other hand, countries like Eastern European countries, which are trying to attract investors from Türkiye and where there is a risk of industrial facilities in our country relocating, are attracting investors with the advantage of electricity prices.
Given that electricity and human intelligence are the main raw materials of Industry 4.0, it is clear that increases in electricity prices make automation investments unprofitable. High electricity prices cause manufacturers to shift towards low-value, labor-intensive products instead of sophisticated ones, putting them at a disadvantage in competition.
ELECTRICITY PLACES A HUGE BURDEN ON WORKING CAPITAL.
During these challenging times, companies are struggling with insufficient working capital and difficulty accessing bank loans, while also bearing the pressure of high interest rates. They can only sell their goods on payment terms of up to six months; furthermore, they have to pay their electricity bills monthly, further straining their already limited working capital.
INDUSTRIAL ELECTRICITY IS MORE EXPENSIVE THAN RESIDENTIAL ELECTRICITY.
Türkiye’de elektrik tarifesinin belirlenmesinde konutlara verilen bedelin düşük tutulduğu, bununla beraber maliyet artışların belli bir ölçeğin üzerinde tüketim yapanlara yüklendiği bir politika mevcut. Oysa örneğin Amerika’da sanayi elektriği 69,3 Dolar/MWsaat iken konut elektriği ise 128,9 Dolar/MWsaat. Türkiye’de kullanılan sanayi elektriği bedeli Amerika’daki bir sanayi tesisinden %51 daha pahalı. Amerika’da kişi başı gayrisafi milli hasıla 62.517 dolar iken Türkiye’de ise 8715 Dolar. Yani bu hesapla ortalama bir kişi ABD’de 901 MWsaat elektrik alabilirken, biz 83 MWsaat elektrik satın alabiliyoruz.
We can see that America's strategy for setting electricity prices takes industrial electricity and employment into account. When industrialists have access to electricity at more affordable prices, this will positively impact production and exports, and will also reduce imports. More employment, more earnings, and more spending will accelerate the wheels of the economy. Otherwise, our country will be forced to import from countries where energy costs positively impact production, exports will decrease, many industrial facilities will close, unemployment figures will rise, and this will lead to a serious economic crisis.
Türkiye IS AT A DISADVANTAGE IN INVESTMENT PREFERENCES.
Industrial energy prices are taken into account when making investment plans in energy-intensive sectors. However, Turkey is increasingly losing its attractiveness due to energy costs. This situation creates a negative picture for foreign investors who would create jobs, while some domestic producers are shifting to countries with more affordable production costs. This situation, which leads to a drain of national capital and talent, also causes a decrease in employment.
EVERY %1 DECREASE IN ELECTRICITY MEANS %0.3 EXTRA JOBS.
Belçika’da 2018 yılında Leuven Üniversitesinin yaptığı “Elektrik Fiyatlarının İmalat Sanayine Etkileri “ raporunda, elektrik fiyatları ile yatırımlar ve istihdam arasında bir ekonomik model oluşturulmuştur. Bu modele göre elektrik fiyatlarındaki %1’lik bir düşüş (diğer tüm koşullar aynı kalmak şartıyla) 0.30% ekstra istihdam yaratırken 0.55% ekstra imalat yatırımına sebep olmaktadır. Sanayide 5,4 milyon kişi istihdam edildiği düşünülürse döviz bazında %10’luk bir artış %3’luk bir istihdam kaybı ve %5,5’luk bir yatırım kaybı anlamına gelmektedir.
When purchasing industrial electricity, international energy prices should be monitored, and the correlation between per capita GDP and electricity prices should be taken into account. Dramatic price increases should be avoided, especially for energy-intensive industries such as iron, steel, and chemicals, without conducting impact and competition analyses. Industrial companies operating with very low margins are negatively affected by such large increases in energy prices and, particularly compared to alternative products from less energy-intensive sectors domestically, become more expensive and lose market share.
NEW PRICE INCREASES WILL PARALYZE PRODUCTION!
PAGEV Chairman Yavuz Eroğlu stated that allocating resources to reducing production costs and preventing the dramatic increase in energy costs, one of the most fundamental production costs, has become vitally important for industrialists. Eroğlu said, "“He also emphasized that the new prices to be announced by EPDK in January should not impose another burden on the industry, which is already facing such difficult conditions.
Click here for our press release and media coverage regarding the recent price increases.
