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Turkish import duty will not hit imports dramatically

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World Coal,

The recent introduction of a duty on imported coal in Turkey will do little to reduce reliance on imports in the Turkish power sector, according to analysis from BMI Research.

In early August, the Turkish government set an import tariff of US$15 per tonne of coal that was to be used in power generation. This followed a decision by the operator of the Turkish wholesale electricity market, Tetas, to implement a guaranteed tariff for lignite-fired power plants that source coal domestically.

Although both actions were intended to stimulate domestic production of coal and reduce the country’s coal import bill, structural hurdles – including security risks and a lack of infrastructure – will effectively prevent a substantial rise in Turkey’s domestic coal output, said BMI Research.

While unlikely to stimulate domestic coal production, the import tariff will increase the risk that some planned power projects that were to rely on imported coal may be delayed or cancelled.

Pointing to a recently approved 1200 MW coal-fired plant that was set to run on 3 million tpy of imported coal as an example, BMI Research noted that “as the cost of such imports increases with the duty, there is a risk the plant will appear less attractive to its investors.”

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