Bloomberg: Türkiye eyes electricity, gas hikes as energy costs surge

Türkiye is weighing potential increases in electricity and natural gas prices, sources familiar with the matter told Bloomberg, as surging global energy costs threaten to raise the cost of state subsidies. The increases could be implemented as early as this month, though deliberations—including the scale of any hike—are ongoing, the sources said.

The Energy and Treasury ministries declined to comment, and any increase would require approval from President Recep Tayyip Erdogan. For years, the Turkish government has subsidized electricity and heating bills for households. Higher utility prices could complicate Türkiye’s disinflation program, a key policy priority following years of soaring costs.

Annual inflation in Türkiye slowed more than expected to 30.9% in March, but economists predict renewed pressure in the coming months. Selva Bahar Baziki of Bloomberg Economics noted that the immediate impact of higher oil prices on inflation is limited—fuel accounts for only about 3% of the consumer basket. “The bigger threat will come from second-round effects, as firms pass higher energy costs as well as currency weakness into prices,” she said.

Energy Minister Alparslan Bayraktar estimated that if oil prices remain at current levels, the total cost of energy subsidies could reach 620 billion liras ($14 billion) by year-end.

To ease the burden on consumers, Türkiye has also been managing gasoline prices through tax adjustments, most recently reinstating a sliding-scale mechanism that cuts fuel taxes to “significantly limit” inflationary impacts, according to Turkish central bank economists. Authorities are reportedly considering changes to natural gas subsidies as well, potentially linking support more closely to consumption levels and regional climates.

By Vafa Guliyeva