Turcas Petrol A.Ş. (“Turcas”) operates in liberalising Turkish Energy Market with its 84 years of deep experience and diversified portfolio. Turcas has an investment holding structure with participations in leading oil&gas and energy companies.
Turcas has strategic partnerships in each of the businesses it operates. In fuel distribution business, Turcas has 30% share in Shell & Turcas Petrol A.Ş. JV whereas Royal Dutch Shell has 70% share.
In power generation business, Turcas has 30% share in RWE & Turcas South Power Generation JV whereas RWE has 70% share.
Shell & Turcas Petrol A.Ş. (STAŞ) continues to be the market leader in gasoline sales (24%) and Lubricants (25%) and #3 in White Products, which consists of the sum of Gasoline and Diesel sales, with a market share of 17% as of end of December 2015. STAŞ has been the market leader in sales per station ratio (throughput), which is the key indicator of profitability in the sector.
STAŞ's network consists of 1.034 nationwide Shell-branded stations as of December 2015. As has been the case, STAŞ will continue to seek for new opportunities in order to grow its station network and hence further strengthen its market leader position.
In 2016, EBITDA of STAŞ is expected to reach TL 580 mln (vs TL 451 mln in 2015) with a sales volume of 5.956 ths m3 (vs 5.674 ths m3 in 2015).
775 MW Denizli natural gas fired combined cycle power plant which has been jointly constructed by RWE (70%) and Turcas Elektrik Üretim A.Ş., (30%) is operational since June 2013.
The project cost is around 600 million Euro. In order to finance its share of 180 million Euro in the Project; (i) Turcas injected 30 million Euro as equity, (ii) 120 million Euro has been raised from Bayern LB and Portigon AG (former West LB) under ECA (Euler Hermes) coverage with 3+10 years tenor, (iii) 55 million USD has been raised from Industrial Development Bank of Turkey (TSKB) as the Commercial Facility with 3+7 years of tenor on a pro rota pari passu basis.
After the commercial operation of the Plant, these project finance loans are being serviced through the back to back Shareholder Loan repayments from the JV. Please note that all of the financial liabilities shown in the consolidated financial statements of Turcas Petrol A.Ş. consist of these credits.
On 22 December 2015, RTG’s paid-in capital was increased from TL 510 mln to TL 1,072 mln via conversion of approximately half of the remaining Shareholder Loans, i.e. TL 562 mln into Equity. Shareholders have contributed to this non-cash capital increase on pro rata basis (Turcas: 30%, RWE: 70%). This conversion will cut by half the interest costs and associated VAT to be incurred by RTG due to Shareholder Loans hence reduce the company's Financial Expenses by 50% leading to improved results in the following quarters.
In 2016, RTG’s EBITDA is expected to be realized at TL 10 mln with electricity sales of 2.800 GWh and gas consumption of 550 mcm.
In view of the rising project cost lowering our estimated return from this project, we have decided to divest from STAR refinery project.
Turcas had formed a JV with BM Engineering and Alte Enerji, back in September 2013 in order to develop a geothermal power plant project in Aydın, Kuyucak. Accordingly, Turcas and BM Engineering each has 46%, Alte Enerji has 8% stake in this JV. In December 2014, Turcas & BM Kuyucak JV (TBK) obtained pre-license from Energy Market Regulatory Authority. In Dec 2015, TBK applied to EMRA in order to revise pre-licence installed capacity from 13.2 MW to 18 MW. In Feb 2016, pre license was revised accordingly to 18 MW following EMRA’s approval. On 24 June 2015, a grant agreement was signed between TBK and U.S. Trade and Development Agency (“USTDA”) with the purpose of utilizing the grant in TBK’s planned geothermal power plant project investment. In accordance with the agreement, grant amount to be provided by USTDA is USD 463.840 and the mentioned grant will be utilized in financing of technical and financial feasibility studies by an independent consulting firm during the project financing process. On 1 March 2016, TBK secured the financing of the project via project finance loan agreement signed with Türkiye Sınai Kalkınma Bankası A.Ş. amounting to EUR 15 mln and USD 40.5 mln in cash and TL 10 mln in non-cash with a maximum grace period of 30 months and a total maturity of 14 years. Total project cost amounts to USD 71.2 million (including financing costs) implying Debt/Equity ratio of 80%. The mentioned geothermal power plant investment’s first phase (8 MW) and second phase (8 MW) are planned to start commercial operations in the third quarter of 2017 and third quarter of 2018 respectively.
Till date, TBK has drilled 4 successful production wells and 1 re-injection well. The Company anticipates to have secured approximately 11 MW of power generation from the 4 successful wells and plans to further drill 2 more production wells and 1+1 re-injection well within 2016-2017 period to secure the targeted 18 MW installed capacity which shall generate an EBITDA of 9.5 Million USD per annum thanks to the feed-in tariff mechanism.
The Board of Directors of Turcas takes into consideration the Company’s Articles of Association, relevant laws, legislation, market conditions, planned capex investments and their financing while deciding on the distribution of dividends.
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