40-50% electricity price hike under consideration: Decision to be finalized in September

The option of a price hike for the new period in electricity tariffs has returned to the agenda. In evaluations conducted by energy management, it is stated that there is a need for an increase of between 40 and 50 percent in tariffs to cover costs and reduce the subsidy burden on the budget.

The process regarding whether a price hike will be implemented is expected to be clarified following discussions to be held with the Ministry of Treasury and Finance in September. If the Ministry grants approval, the new electricity tariffs will be reflected in bills starting from October.

The last price increase in electricity was implemented in April, with a 25 percent hike applied to tariffs. In Turkey, electricity tariffs are generally reviewed in three-month periods. While the Energy Market Regulatory Authority (EPDK) determines electricity tariffs, natural gas tariffs are announced by BOTAŞ.

SUBSIDY BURDEN AND INFLATION CALCULATION

It is stated that unit electricity prices are kept low for residential subscribers, particularly for consumption up to 8 kilowatt-hours per day, and therefore significant support is provided from the public budget. Subsidies applied to electricity and natural gas create a separate burden on the budget each year.

It is known that the economic management has played a decisive role in increases in goods and services provided by the public or whose prices are directed by the public since the second half of 2023. In this context, relevant institutions evaluate price hike proposals with the Ministry of Treasury and Finance.

It is stated that different scenarios are being worked on for possible rates regarding the electricity price hike, and the final decision will be handled in conjunction with inflation targets. Central Bank Governor Fatih Karahan had announced in the presentation of the year's third Inflation Report that the year-end inflation target was maintained at 24 percent, while the forecast was raised to 28 percent.

For this reason, not only energy costs but also the impact of a potential increase on year-end inflation will be taken into account in the discussions to be held in September. If approval for a price hike is granted, the rate will be finalized following these evaluations, and the new tariff will enter into force after being published in the Official Gazette.

News Source: 12punto