Announcement of Turkey TEK Restructuring Project on June 17, 1991

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. * Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 91/91 Contact: Fawzi Rihane Tel: (202) 473-2675 TURKEY: TEK RESTRUCTURING PROJECT The following is information on a project approved by the World Bank's Board. DATE: June 17, 1991 WORLD BANK GROUP SUPPORT: World Bank loan: $300 million. The loan is for 17 years, including five years of grace, with a variable interest rate, currently 7.73 percent, linked to the cost of the Bank's borrowings. It also carries an annual commitment charge of 0.25 percent on the undisbursed balance. TOTAL COST: $9.5 billion OTHER FINANCING: Government of Turkey, $1.6 billion; Turkish Electricity Authority (TEK) net internal cash generation, $890 million; Customer deposits, $40 million; Other borrowing, $2.8 billion; State Hydraulics Works/Public Participation Administration (DSI-PPA), $1.6 billion; Private sector, $2.3 billion IMPLEMENTING AGENCY: TEK ESTIMATED COMPLETION DATE: 1995 PROJECT DESCRIPTION: The objectives of the TEK Restructuring Project are to: (a) support the corporate restructuring of TEK in the context of the government's state economic enterprise reform program; (b) implement a medium-term, least-cost investment program for the power subsector in both the public and private sectors; and (c) strengthen the local capability to assess the environmental effects of power investments. The project includes: (a) implementation of a corporate restructuring program for TEK, including reform of the electricity pricing policy, reform of TEK's management practices, including the adoption of an annually renewed corporate performanance plan between TEK and the government of Turkey, and restructuring of TEK's capital and debt, including the conversion of part of it into equity; (b) partial financing of the foreign exchange cost of a time-slice of TEK's least-cost investment program in power; and (c) financing technical assistance to build up TEK's capability to carry out environmental assessments and for institutional strengthening.