On December 30, 2010 the Turkish Parliament approved a law that regulates the renewable energy resource markets in Turkey. Amongst other things, the new law determines the long-term pricing for electricity purchases and mandates regulations to be drafted to define and evaluate regions that will be used as resource fields.
Taner Yildiz, Turkey’s Energy and Natural Resources Minister, in a speech to Parliament applauded the approval of the bill and stated, "We have enacted a law that will create jobs and encourage industrialists in new sectors."
With the new law, standards for pricing were set at a guaranteed rate of $0.073 per kilowatt-hour for wind and hydroelectric power and wind energy; $0.133 for energy from waste products and solar energy; and $0.105 for geothermal energy (rates stated in USD).
New York-based TurkPower Corporation (OTCBB:TRKP), a Turkish-American consulting and service operations firm primarily focused on the rapidly-emerging Turkish energy market, is looking to benefit from the attention to growth that is surfacing in the Republic of Turkey. The Company offers its domestic and international clients consulting services and acts as a full service operator for wind, hydro, solar, coal and geothermal energy parks in Turkey.
Today, TurkPower announced that it has signed a consulting and sell mandate for a Wind Electrical Power Plant ("WEPP") with a production of 40 MegaWatts. As part of the agreement, TurkPower will be providing consulting services and taking the project to qualified investors for presentation. With 25% to 30% of the investment being equity, the complete investment amount will total $38 million for which, if successfully performed, will result in a success fee of five percent, or $190,000, for TurkPower upon closing of the WEPP project for its time and services.
Referencing the aforementioned new bill, TurkPower’s Chairman, Ryan E. Hart, made comments in the press release which reiterated the value of the new bill as a mechanism to encourage investor’s interest in the Turkish market.
Mr. Hart said, "After Turkish Parliament passed the new energy bill which increases feed-in tariffs (guaranteed purchase price per kWh/MW of electricity) from EUR 5.5 per MW to EUR 7.3 per MW, the expected returns for investors have increased further and debt financing has become more easily available as a result of the higher feed-in tariffs."
TurkPower pointed out that while this mandate provides a great opportunity for the Company, no assurance of any compensation has been granted until a binding agreement with a purchaser or investor has been negotiated and signed.
This announcement today comes on the heels of other recent announcements in which the Company has signed similar consulting and sell mandates with the owner of a Bio-Ethanol plant in the Mersin area of Turkey, which requires and investment totaling $150 million, with $75 million in the form of equity and a consulting fee structure the same as the WEPP deal.
Additionally, a consulting and sell mandate was also signed for a lignite-fired thermal power plant project in Konya, Turkey. Details of the pay structure for TurkPower were not disclosed in the press release, but the project requires a total of $1.26 billion, of which 30% is to be in the form of equity.
TurkPower could see a price explosion if these deals can be completed. They appear to be making significant headway in their market penetration and the laws being passed in Turkey are assisting in opening more opportunities. For a company that operates with an extremely high profit margin, many investors may start keeping a closer eye on TurkPower and for successful completion of these new consulting and sell mandates.
