Turkey's听participation听bank, Turkiye Finans, will bring the Islamic financial听tool "Sukuk" to the energy sector, the bank's senior director听told The Anadolu Agency.听
The听participation听bank, modeled on听financial practices structured in accordance with Islamic law, first tested听the "Sukuk" model in 2014 and will start to use it as soon as it has been officially approved by the听Capital Market Board of Turkey, said Osman Celik, commercial banking executive vice president of Turkiye Finans.
"We provide听finance听to energy investors by buying their future electricity production. So the investor will be able to use that resource for their new projects," said Celik.听
"The Islamic finance tool 'Sukuk'听is used mainly in the real estate sector but this听will be the first time it is used听in the energy sector," he said.听
Celik said that Turkiye Finans has provided nearly two听billion liras to the energy sector听to date.听
"We really take into consideration听if the investor is really committed to the energy sector and we set our sights on growth," he said.听
One of听Turkiye Finans'听main criteria for听providing loans for听energy projects is that 20 to听25 percent of the investment should be supplied by听the investor's own听equity capital provided the听required application听measures are in place,听Celik said.
"We won't accept applications if the investor outsources all the needed financing," he said.
Celik said that investors should thoroughly investigate听all financing alternatives听and听carefully听draw up the maturity date of the debt.听
"It is very important for investors to start their projects when the cost of credit is low. The听repayment plan of the loans used should be made with consideration for听the听return of the investment," he said.听
"Well-structured projects will not face any problem in finding finance," said Celik.听
He said that Turkiye Finans听will invest more on solar projects in 2015听as their rates of return are very high. "Geothermal and听thermal energy听projects need to be funded by听consortiums as these projects need听huge amounts of capital and have long-term maturity," Celik said.听
Celik also said that lower oil prices are in favor of Turkey's inflation, which will decrease the cost of finance. He said that the latest听interest rate cut by Turkey's Central Bank would positively affect investors.听
"If these rate cuts remain听permanent and听sustainable, it will encourage听investors听as their costs听are reduced," he said.听
By Arif Hudaverdi Yaman and Nuran Erkul
Anadolu Agency
arif.yaman@aa.com.tr
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