Turkish firm with few assets wins billions of dollars in incentives

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Metcap Energy Invesment, a Turkish energy company, and its Qatari partner won investment incentives for a $4 billion chemicals plant from President Recep Tayyip Erdoğan’s government this week, but Metcap has virtually no assets to back up the financial support.

Metcap, which is chaired by Celal Metin, the former chief executive officer of Sabanci Holding, one of Turkey’s largest industrial groups, received the incentives from Erdoğan to build the plant in western Turkey along with 18 other firms at a ceremony at the presidential palace in Ankara on Monday.

The award of the financial perks to Metcap and Qatari partners Fusion Dynamics was part of 135 billion liras ($33 billion) of incentives handed out by Erdoğan’s government to help boost economic growth and narrow the current account deficit. The windfall includes 10 years of corporate tax breaks of double the investment and exemptions from sales taxes, customs duties and social security payments for employees. Erdogan has awarded the incentives for 23 projects in total.

Metcap’s website, updated just two weeks ago, shows the company had developed four windfarm power plant projects – Bandirma, Briza, Bali and Bora, with a total capacity of 207.5 megawatts. But it had sold all of the assets at project stage by 2013, including the Bali plant to close Erdoğan business ally Kazim Turker.

Metcap also offloaded a 860MW gas-fired power plant project in Samsun, named Turkish Borasco Elektrik Uretim, to Austrian energy company OMV in 2008, again before the facility was built. Many Turkish businessman use their government connections to acquire licenses to build such projects before attempting to sell them on to investors at big profits.

No one was available to answer calls at Metcap’s offices in Istanbul’s Beşiktaş district on Wednesday.

Metcap and Fusion Dynamics, run by Qatari businessman Mohammed al-Hajri, will also complete a natural gas combined-cycle power plant of 550 megawatts for $1.2 billion, the companies agreed in a protocol this week. Construction of the facility in Turkey’s Kırklareli and Karaman region is already under way and will meet about 5 percent of Turkey’s electricity production needs.

Under Erdogan, Turkey has obtained tens of billions of dollars in investment and other funding from Qatar since the governing Justice and Development Party (AKP) won power in a general election in 2002. The two countries have also partnered in projects such as sponsorship of Islamic rebel groups in Syria and in economic and political projects in Africa.

Erdogan was heavily involved in picking which firms would receive the investment incentives, personally approving each one, Economy Minister Nihat Zeybekçi said.

Metcap and Fusion Dynamics will complete the two investments by 2023, when Erdogan plans to celebrate Turkey’s centenary year with a wealth of achievements covering employment, growth, mega-projects such as the new Istanbul airport and hospital construction.

Metcap aims to meet 35 percent of Turkey’s petrochemical needs, state-run Anadolu agency reported on Tuesday.

French car maker Renault SA was the only other foreign company to win investment incentives from the Turkish government this week, obtaining perks for a car motor project worth about $120 million in partnership with the Turkish Armed Services Retirement Fund, Oyak.



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