Goldman-Backed Aksa Expands to Africa on Tight Margins in Turkey

Aksa Enerji Uretim AS, a Turkish power producer in which Goldman Sachs Group Inc. holds a 17 percent stake, clinched its foreign deal as tight domestic margins are causing losses on its dollar-denominated debt.

The second-largest electricity producer in Turkey is in talks to construct as many as six power plants in Africa after it announced a deal to build a 370-megawatt facility in Ghana, Cuneyt Uygun, chief executive officer of the Istanbul-based company, said Monday in a phone interview.

Margins on producing electricity in Turkey have tightened because the government hasn’t increased power prices for at least two years. Turkey produces nearly half of its electricity from imported natural gas and the lira’s 16.3 percent depreciation against the dollar this year, the third-biggest in emerging markets after Brazilian and Colombian currencies, according to data compiled by Bloomberg, is widening the gap on power companies’ debt in dollars.

“Tight profit margins in electricity production industry in Turkey are forcing us to invest in other markets through dollar-denominated deals,” said Uygun. About 80 percent of Aksa’s $700 million total debt is in dollars, he said.

Investments in Africa will help offset losses of Aksa Enerji, which has a total production portfolio of 2,300 megawatts, on its dollar debt, Uygun said. He declined to comment on the size of planned Africa investments.

Aksa’s deal in Ghana includes building the power plant, which will burn heavy fuel-oil, and operating it for five years from the end of the first half of next year. Aksa will then sell power to Ghana on a dollar-based power sales agreement, according to a public filing.

Aksa’s first-quarter loss widened to $39.1 million in the first quarter after a loss of $4.2 million a year ago. Aksa shares rose Monday as much as 2.8 percent to 2.93 liras in Istanbul.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE