Announcement of World Bank Loan to Assist Reforms in Turkey's Energy Sector on June 29, 1987

FOR IMMEDIATE RELEASE • World Bank 1818 H Street, N.W., Washington, D.C. 20433, US.A. BANK NEWS RELEASE NO. 87/ 97 Contact: Fawzi Rihane (202) 477-5325 WORLD BANK LOAN TO ASSIST REFORMS IN TURKEY'S ENERGY SECTOR WASHINGTON, June 29 The World Bank has approved a $325 million loan to support Turkey's medium-term energy sector reform program, which aims at improving the efficiency of public sector energy production and facilitating private sector participation in the energy sector. In the mid-1970s, the Turkish government responded to increasing oil import costs by embarking on a massive program of indigenous energy resource development. By the end of the decade, the public sector nearly had a monopoly on the country's energy supply. Today, the energy sector dominates public expenditures and employs more than 100,000 people. To reverse extensive public sector involvement and reduce the country's energy deficit and costs of supply, the government launched a sector adjustment program in 1984. The World Bank loan will support the continuation of this program for the period 1987-89. The adjustment program is expected to result in changes in the sector's institutional framework, investment strategy and operating efficiency. It includes decentralized control of the sector, increased private investment, development of the government's planning and coordination capacity, more cost- effective investments, improved efficiency of all energy agencies, reforms in energy pricing policies, and the implementation of energy conservation policies. The World Bank loan is for 17 years, including four years of grace, with a variable interest rate, currently 7.92 percent, linked to the cost of the Bank's borrowings. It also carries an annual commitment charge of 0.75 percent on the undisbursed balances. Note: Money figures are expressed in U.S. dollar equivalents.