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Istanbul, July 1, 2009
— IFC, a member of the World Bank Group, is helping finance GDF SUEZ’s investments in IZGAZ, a Turkish natural gas distribution and retail company, to support the privatization of the energy sector in Turkey and promote the use of energy efficient resources such as natural gas.
The $50 million equivalent local currency loan, IFC’s first major local currency investment in the Turkish energy sector, will be used for a grid extension and short-term debt restructuring. The financing will cover roughly nine percent of the project costs and will be used to support the company’s capital expenditure program and to pay down some of IZGAZ's outstanding liabilities. The European Bank for Reconstruction and Development is lending €60 million.
"These loans bear witness to the confidence that big financial institutions have in IZGAZ, and mean that we can now finance our gas distribution growth plan in the Kocaeli region,” said Imad Erdogan, Managing Director OF IZGAZ.
IZGAZ is the third largest gas distributor in Turkey, supplying natural gas in Kocaeli region, one of the most industrialized areas in the country, accounting for five percent of the GDP. IZGAZ is expected to reach 265,000 residential customers by 2014, greatly reducing the reliance on lignite, coal, fuel wood, and LPG by households, and significantly reducing the region’s environmental footprint. The new investments are expected to avoid 263,340 tons of greenhouse gas emissions per year by 2014.
“IFC is pleased to support the privatization of IZGAZ as part of the government’s privatization program in the energy sector,” said Shahbaz Mavaddat, IFC Director for Southern Europe and Central Asia. “The investments in the company will have significant efficiency and cost benefits for industry and consumers, while improving environmental performance. IFC`s participation by providing a local currency loan under current market conditions will address inherent foreign exchange risks and establish a new benchmark for long-term local currency loans.”
About IFC
IFC, a member of the World Bank Group, creates opportunity for people to escape poverty and improve their lives. We foster sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services to businesses and governments. Our new investments totaled $16.2 billion in fiscal 2008, a 34 percent increase over the previous year. For more information, visit
www.ifc.org
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