Mehmet Özdağ | Electronics Engineer, Yeni Parti Samsun Provincial Chair
THE SOURCE OF THE DEFICIT IS CLEAR
The Ministry of Treasury and Finance has announced the budget realizations for August. The central government budget ran a deficit of 1 trillion 308 billion liras in the January-August period. During the same period, 1 trillion 988 billion liras were paid in interest. When interest expenses are removed from the calculation, the budget does not run a deficit; rather, it has a surplus of 680 billion liras.
In the same period last year, the picture was as follows: a 907.6 billion lira deficit and a 518 billion lira primary surplus. In other words, the primary surplus grew by 162 billion liras in one year, yet the total deficit increased by 400 billion liras. The state covers all its non-interest expenditures—from education to health, from pensions to social assistance—with its revenues and even has money left over. The entire deficit stems from interest.
On average over the eight months, the state pays approximately 249 billion liras every month solely for interest.
THE JUSTIFICATION FOR THE HIKE: THE 'SUBSIDY' BURDEN
According to information reflected in the press in mid-August, energy management informed the economic administration that electricity prices need to be increased by 40-50 percent to cover costs and reduce the subsidy burden on the budget. The decision is expected to be made during meetings with the Ministry of Treasury and Finance in September, with the hike taking effect in October.
Minister of Energy and Natural Resources Alparslan Bayraktar had announced that the amount allocated for electricity and natural gas in the 2026 budget, referred to as "support," was approximately 305 billion liras. When we place this figure side-by-side with interest payments, the entire year's energy support is equivalent to just over one month of interest payments.
Money in the budget does not have labels; it would not be technically accurate to say that every lira from the price hike will go directly to interest. But the overall balance is clear: In a budget that has no deficit other than interest, cutting subsidies—as defined by the Ministry—means closing the hole opened by interest payments with the citizen's bill. The place where belts are tightened is the household budget, while the item being protected is interest.
I know that the cost pressure is real. The war in the region, gas prices, and the exchange rate increase production and import costs. My objection is not to the existence of the cost, but to who is being made to pay the burden. While the same budget covers interest payments without any debate, when it comes to energy support, it is said that "there are no resources."
WHOSE 'SUBSIDY' IS IT?
Here, we also need to question the concept of "subsidy" used by the Ministry. The Ministry compares the tariff paid by the household with the Market Clearing Price formed in the day-ahead market operated by EPİAŞ and calls the difference support. However, the exchange price is not a production cost. Every hour, the bid of the most expensive power plant that meets the demand becomes the selling price for all power plants in that hour. A power plant that has already recovered its costs also makes money from the price of a plant running on imported gas.
The public production company EÜAŞ, on the other hand, sells electricity to authorized supply companies at a wholesale tariff approved by the EMRA (EPDK) that remains below the exchange price. The energy cost of the national tariff is calculated based on a mix of this EÜAŞ price and the exchange price, as required by the EMRA communiqué. In other words, the significant factor keeping household bills low today is not the calculation the Ministry calls a subsidy, but public production. The burden of the difference is written to the balance sheet of the public company EÜAŞ. This cheap electricity reaches the consumer through private authorized supply companies, and these companies receive their regulated profit margins under all circumstances.
The situation is different for natural gas. BOTAŞ selling the gas it imports with foreign currency below its cost is a real burden. But in electricity, the problem is not that households are given too much support. The problem is that production is increasingly left to private power plants, and the price is left to an exchange that is formed according to the most expensive power plant and has weak oversight. As the share of public production grows, the need for "subsidies" calculated according to the exchange price shrinks. The solution is not a price hike; it is strengthening public production and strictly auditing price formation on the exchange.
WHOSE BACK IS THE BURDEN ON?
In the April regulation, there was a 25 percent hike for residential tariffs, 17.5 percent for the public and private services sector connected to low voltage, and 5.8 percent for industry connected to medium voltage. The heaviest hike was placed on residences. The bill for a residential subscriber consuming 100 kWh per month rose to 323.8 liras. If the discussed 40-50 percent hike is implemented, the same bill will rise to between 453 and 486 liras.
The second burden comes from the Last Resort Supply Tariff (SKTT). EMRA has lowered the SKTT limit for residential subscribers from 5,000 kWh per year to 4,000 kWh, effective January 1, 2026. This means an average of 333 kWh per month. Households exceeding the limit are removed from the supported national tariff; the energy cost is calculated based on the sum of the market clearing price and the YEKDEM cost, with a coefficient of 1.05. In other words, the household becomes exposed to all the volatility of the market price. Minister Bayraktar had stated that approximately 1.2 million households were removed from support with the 5,000 kWh limit, and had signaled in December 2025 that the limit could be lowered by another tier in 2026.
High electricity consumption can be a sign of deprivation, not always luxury. Crowded households that heat with electric heaters in addition to solid fuel stoves in places without natural gas lines, the pensioner who cannot replace a fifteen-year-old refrigerator, and the tenant stuck with an air conditioner in the summer in an uninsulated apartment exceed this limit. Lowering the limit is punishing those forced to live in inefficient buildings. It is not the household that wastes energy, but the policy that leaves that household alone with uninsulated walls and old appliances.
SAVINGS ARE ACHIEVED THROUGH EFFICIENCY, NOT PRICE HIKES
A price hike suppresses consumption through price; efficiency, on the other hand, reduces the need. The former impoverishes the household, while the latter creates permanent savings.
According to İZODER data, only about 25 percent of buildings in Turkey have thermal insulation. With proper insulation, the energy spent on heating and cooling in buildings can be reduced by up to 50 percent; the association predicts annual savings of 12-15 billion dollars by insulating the building stock. Turkey consumes about one-third of its total energy in buildings, and 80 percent of this goes to heating and cooling. 99 percent of the natural gas we use is imported.
This picture also shows the solution to the subsidy problem. A building stock that burns less gas and draws less electricity would reduce both BOTAŞ's import bill and the need for support covered by the budget. Efficiency is the only way to achieve the budget relief targeted by the price hike without impoverishing the citizen.
MY CONCRETE PROPOSALS
The October hike should not be implemented, and the SKTT limit should not be touched.The residential limit should not be lowered below 4,000 kWh. A separate limit should be determined for large families, taking into account household size and heating type. Additionally, a solution must be produced for collective usage meters.
Interest-free insulation loans should be provided to property owners. A long-term loan program should be established for sheathing, roof, and window insulation, which can be used on behalf of the apartment building with a decision by the board of property owners, provided through public banks, and where the Treasury assumes the interest burden. Installments should be kept compatible with the energy savings achieved. The cost of the interest-free loan to the Treasury is only the interest difference; directing a small portion of the resource flowing to interest today into the citizen's home is sufficient.
VAT and SCT should be reduced on energy-efficient appliances.VAT should be reduced to the lowest rate and SCT should be abolished for high energy-class white goods, inverter air conditioners, heat pumps, LED lighting, heat-insulating glass, and insulation materials. An additional discount should be applied to those who hand in their old appliances so that inefficient devices are truly withdrawn from the market.
Public buildings should lead the way.Insulation and efficiency investments should be accelerated in schools, hospitals, and public service buildings. The public should first demonstrate the savings it demands from the citizen in its own buildings; this investment also reduces the public's own energy bill.
Our call to the AKP government is clear:
Abandon the October hike, do not play with the SKTT limit. The budget deficit stems from interest, not energy support. You cannot pass the bill for this deficit on to the citizen who sits in an uninsulated house and cannot replace their old refrigerator.
If energy savings are desired, the path is clear: insulate the building, replace the inefficient appliance, and take the cost of this upon the state, not on the back of the citizen. A small portion of the 249 billion liras paid to interest every month is enough to start such an efficiency mobilization.
News Source: 12punto
