Hurdles mar Turkish energy firms eyeing Africa projects

Turkish energy firms remain keen to invest in projects in African countries, but several obstacles, including political instability end up hurting their efforts, investors tell Anadolu Agency.

Several firms from Turkey have made investments in the energy sector in South Africa, Sudan, Ghana, Zambia, Ethiopia, Kenya, Tanzania, Uganda, and Nigeria. They wish to expand further in other countries, especially in electricity generation and renewable energy fields given that the continent provides ample opportunities to investors in these areas.

According to a World Bank report from June 6, 2017, Africa is far behind the rest of the world when it comes to electricity; just 35 percent of the population is estimated to have access to power.

One of the most innovative ways Turkey is helping some African countries cope with its electricity shortages is through the use of unique power ships.

Karpowership -- a Turkish firm affiliated with the mega Istanbul-based company Karadeniz Holding -- is providing electricity-generating vessels to Ghana and Zambia.

With its floating power plant, a Karpowership vessel with a generation capacity of 225 megawatts aims to cover 26 percent of Ghana's electricity for 10 years.

In November 2015, the Turkish firm was also awarded the contract to supply electricity to land-locked Zambia via cross-border interconnection lines through Mozambique and Zimbabwe. The company will initially supply 100 megawatts of power.

"The floating power ships are a flexible solution. With an easy movable system, we can connect directly to the country's network through all the ship equipment without any need for land," Karpowership Chief Commercial Officer Zeynep Harezi told Anadolu Agency via email.

Harezi said the objective of the investments in the continent is "to be a catalyzer in regional cooperation between African countries, to benefit [from] their development and progress, to create employment opportunities and to provide technology transfer and sustainable energy, including renewable".

However, there are some challenges for Turkish firms, including varying state policies throughout Africa, she said.

High costs, political instability

One country may have strict regulations while the pricing policies may be more effective in another, Harezi said.

She said the Turkish firms like hers seek "to ease the differences" in such situations, where "others might see as difficulties".

Sureyya Yucel Ozden, the head of Foreign Economic Relations Board of Turkey (DEIK)'s Energy Investment in Africa, also spoke about the weak regulations in some African countries where Turkish energy firms operate.

"Regulations are changeable in Africa like everywhere else in the world," Ozden said.

Ozden also mentioned financial difficulties.

"High financial costs lead to disappearance of the competition for wind and renewable energy in general in the developing countries," he added.

Yalcin Kiroglu, head of DEIK's Madagascar Business Council, mentioned political instability. "The constant changes in opinions due to political instability and the most important, the occupancy in state-guaranteed loan capacity regarding the financing" were the main challenges in project implementation in Africa, Kiroglu said.

He, however, added that Turkish firms remain optimistic and hope to continue investing in Africa.

"We have recently completed a report on 13 countries in Sub-Saharan Africa to shed light on energy potential, including renewable energy in terms of product and service opportunities for Turkish government, investors and the energy sector," he said.

Turkey's opening to Africa between 2005 and 2011 witnessed efforts towards breaking the ice in their reciprocal knowledge of one another. However, to be able to promote a mutual understanding with African countries, Turkey had to change its own perception -- and of course of the Turkish public -- about Africa and in particular Sub-Saharan Africa.

This awareness-raising project about Africa has resulted in a consideration that the continent is not a weak and distant place but rather a place full of potential connections and opportunities. Thus, Turkey established its presence through a number of multilateral projects, such as the New Partnership for Africa's Development -- a program of the African Union adopted in 2001 -- with the aim of alleviating poverty and promoting economic growth and sustainable development, as well as joining several security operations, such as NATO's counter-piracy actions in the Gulf of Aden, off the Horn of Africa.