ICBC contributes $89.2 million to syndicated loan for 124MW Menzelet and 54MW Kılavuzlu hydroelectric power plant privatization

In March 2018, ICBC Turkey and several other lenders provided a dual currency syndicated loan to Menzelet Kılavuzlu Elektrik Üretim — a special purpose vehicle (SPV) and wholly-owned subsidiary of ENTEK Electric Uretimi (Üretim) A.S. — for the privatization (i.e. acquisition of operating rights from the Privatization Administration of Turkey) of the 124MW Menzelet and 54MW Kılavuzlu hydroelectric power plants. The loan carried a 13-year maturity and 1-year grace period. It included a USD-denominated tranche worth $399,9000,000 and a Turkish lira-denominated tranche worth TRY 1,530,000,000. Participants in the loan syndicate included ICBC Turkey, EBRD, Türkiye Garanti Bankasi A.Ş. (Garanti), Yapi ve Kredi Bankasi A.Ş. (Yapi Kredi), Türkiye Iş Bankasi A.Ş. (Isbank), Unicredit S.p.A., and Akbank T.A.Ş. In total, ICBC reportedly contributed $89.2 million to the loan syndicate. The Menzelet and Kilavuzlu hydroelectric power plants are located in the Kahramanmaras province in Turkey’s southeast. Menzelet has a total installed capacity of 124 MW and Kilavuzlu a total installed capacity of 54 MW. Entek Elektrik Üretimi A.S. was the winning bidder of a competitive privatization tender from the Privatization Administration of Turkey in September 2017. Final approval for the tender was issued December 5, 2017. Final privatization occurred March 9, 2018. The privatization tender handed the plants over for 49 years of operation. This project was part of the Turkish government's strategy of privatizing state-owned assets, including hydropower plants, in order to liberalize the country’s energy sector. In addition, most of the project's products will be sold on the wholesale market with no long-term public offtake commitment, contributing to liquidity in the market.

Additional details

1. The estimated monetary value of ICBC’s contribution to the syndicated loan is $89.2 million. It is based on the following source: https://www.dropbox.com/s/242d545telketqt/PFI-League-Tables-2018.pdf?dl=0. 2. A 'letter of guarantee facility' for TRY 1,057,485,000 was also provided by the loan syndicate. AidData has assumed that this is a type of loan repayment guarantee. 3. ENTEK Electric Uretimi (Üretim) A.S. (‘Entek’) is a subsidiary of the country’s largest diversified conglomerate Koç Holding and continues its operations since 1995 as an electricity generation company having six hydroelectric power plants and one gas-fired power plant with a total installed capacity of 244 MW. 4. For the time being, AidData has coded the maturity field based on the maturity length of the TRY-denominate tranche. This issue warrants further investigation. 5. The Turkish project title is Menzelet ve Kılavuzlu Hidroelektrik Santralleri’nin.

Number of official sources

14

Number of total sources

20