Caspian Brief: August 4, 2017
Turkey, EU interested in updating Customs Union, says ministry
Updating the Customs Union meets the interests of both Turkey and the European Union (EU), the Turkish Ministry for EU Affairs told Trend Aug. 3.
The Customs Union’s updating is not a unilateral demand of Turkey, said the ministry.
Turkey is the only country, which is in the Customs Union without being a member of the EU. Turkey can export about 15,000 commodity items to the EU countries.
Negotiations on updating the Customs Union between Ankara and the EU began in Brussels on June 13.
The ministry said that Germany’s demand to freeze negotiations with Turkey on modernization of the Customs Union contradicts the spirit of negotiations between the EU and Turkey.
It should be noted that earlier, the German government demanded from the European Union to exert financial pressure on Ankara. Moreover, the government of Germany thinks that the EU should freeze negotiations with Turkey on the modernization of the Customs Union.
“Updating the Customs Union can contribute to the growth of trade turnover between Turkey and the EU,” added the ministry.
Updating the Customs Union will give several advantages to Turkey. First of all, Turkey will get free access to European markets for selling its agricultural products. Secondly, the quota for Turkish cargo carriers will be abolished. Thirdly, investors from both sides will get an opportunity to freely participate in the privatization of public property.
According to the Turkish Statistical Institute (TUIK), 64 percent of foreign investments in Turkey account for EU countries.
Turkey is one of the five major foreign trade partners of the EU. Trade turnover between Turkey and the EU totaled $145.864 billion in 2016 that is by 2.2 percent more than in 2014.
Turkey plans to overhaul VAT regime to encourage investment, cut business costs
The government is looking to standardise its value-added tax (VAT) regime by 2018 to relieve some pressure on corporations and encourage investment, Turkish Finance Minister Naci Agbal told Reuters on August 2.
“The current VAT law is a financial burden for companies and creates a deterrent effect for investment. We are working on alternatives to relieve the burden on taxpayers,” Agbal said.
“A company buys an intermediate product at 18% VAT and sells the final good at 8% VAT. The difference causes an additional burden on the producer,” he added.
Work continues for a smaller cut in the general corporate tax, or a bigger reduction for some strategic sectors, the minister also reportedly said without elaborating.
He added that the changes in the VAT would be carried out in a way to avoid a spike in inflation.
Turkey’s annual inflation rate declined to 10.9% in June from 11.72% in May. On August 1, the country’s central bank raised its end-2017 consumer price inflation forecast to 8.7% from the previous estimate of 8.5%, citing food inflation.
The central government budget ran a deficit of TRY13.7bn ((EURO)3.3bn) in July, a sharp 74% y/y increase. The deficit in the first half amounted to TRY25.2bn against the surplus of TRY1.15bn posted for the same period of 2016.
Revenues increased by 9% y/y but expenditures were up 18% y/y across January-June. Tax revenues rose by 14% in the first half of the year.
More than TRY 10.6bn has been collected from the restructuring of tax and social security payments in the year-to-date, and efforts to lower the budget deficit continue, Agbal told the news service.
New Georgian minister talks on South Caucasus Pipeline Expansion
The implementation of the South Caucasus Pipeline Expansion (SCPX) project is making good progress in Georgia and remains on track to start up in 2018, Georgia’s Energy Minister Ilia Eloshvili said in an exclusive interview with Trend.
“The South Caucasus Pipeline (SCP) along with Trans Anatolian Natural Gas Pipeline (TANAP) and Trans Adriatic Pipeline (TAP) represents the key project of the Southern Gas Corridor in Europe,” he said. “Georgia’s involvement in this project enhances its role as a transit country in the region and the image of a reliable and important transit partner.”
The minister pointed out that the SCPX will expand the existing 7 billion cubic meters SCP system to accommodate a further 16 billion cubic meters with a new 48-inch pipeline loop, constructed parallel to the existing SCP.
“The SCPX project also includes construction of a number of facilities. These comprise two new compressor stations in Georgia, two intermediate pigging stations (one each in Azerbaijan and Georgia), six 48-inch block valve stations (one in Georgia and five in Azerbaijan), pressure reduction and metering stations at the international borders, and the interconnection with TANAP at the Georgia-Turkey border,” said Eloshvili. “The execution of the SCPX project is based on an overall philosophy of safe design and quality build. SCPX construction is making good progress in Georgia and remains on track to start up in 2018.”
The minister pointed out that today, over 2,600 Georgian citizens are employed on SCPX construction work.
“SCPX compressor stations’ construction is progressing with the first compressor station near Azerbaijan-Georgia border due to start-up in early 2018; and the second compressor station — in late 2018,” he added.
Construction works are also near completion at the new pressure reduction and metering station, the connection point between the SCPX and TANAP pipelines near the Georgia-Turkey border, according to Eloshvili.
Siemens wins tender for building wind turbines in Turkey
A consortium of German giant Siemens and Turkey’s Türkerler and Kalyon Enerji holdings won a billion-dollar wind energy tender on Aug. 3, offering the lowest price to the state with $3.48 cents per kilowatt hour.
A consortium of Chinese company Mingyang and Turkish company İlk İnşaat competed until the end of the reverse auction before getting eliminated, quitting in the 30th round.
The tender came at a time when Turkish economy officials accelerated efforts to tone down a recent row with Germany, vowing that German investments in Turkey were safe and citing a “communication mistake” for reports about an anti-terror probe against hundreds German companies in the country.
“The tender ended with a win by German company Siemens. We can say that this picture sends an important message to the region and the world,” Energy Minister Berat Albayrak told the media after the auction.
“When the 200-year-old cooperation between Turkey and Germany is considered, I think this result will make an important contribution to Turkish-German relations,” he added.
Eight consortia, including four German giants, participated in the Energy Ministry’s 1,000-megawatt (MW) wind power project tender on July 27.
In addition to the German and Chinese firms, Danish Vestas also took part in the bidding, as well as the U.S.’s General Electric, along with their local partners.
The winning consortium is expected to make an investment of more than $1 billion in the project, which stipulates the gradual local production of wind turbines.
Albayrak said the locally produced turbines would be installed by early 2019 and added that the price was a record.
Atambayev signs ratification of agreement with EBRD on allocation of funds for remediation of tailings in Kyrgyzstan
President of Kyrgyzstan Almazbek Atambayev signed the law on ratification of the agreement between Kyrgyzstan and the European Bank for Reconstruction and Development on environmental rehabilitation in Central Asia and the Kyrgyz Republic signed on January 9, 2017 in Bishkek.
The law was passed by the Parliament on June 28, 2017.
The agreement aims to improve the situation on provision of protection of the population of Kyrgyzstan from radiation exploration on the territories, where uranium was obtained and processed, create bank accounts in the EBRD for conducting operations and distribute the donors funds for cooperation purposes — financing or co-financing evens on preparation and implementation of projects on rehabilitation of the tailings in Kyrgyzstan, the statement says.
The Government of Kyrgyzstan will be obliged to provide the personnel and infrastructure for implementation of the project.
The law comes into force 10 days after its official publication.