President Recep Tayyip Erdoğan announced a set of measures Wednesday designed to ease the pressure on households and businesses struggling to pay energy bills after slashing prices on basic foods to fight inflation days before.
In a televised address following a Cabinet meeting, Erdoğan said authorities would readjust the level under which higher electricity tariffs for households using more energy kick in, while some 4 million households in the country of more than 84 million people would receive state subsidies to help with high natural gas and electricity bills.
Civil society organizations would no longer pay the higher energy tariffs that apply to businesses, he said, adding that some small businesses would also be able to benefit from readjusted tariffs.
Inflation in Turkey soared to a 20-year official high of nearly 49% in January, eating away savings.
Households and businesses have additionally been hit with sharp hikes in energy prices after authorities raised electricity tariffs on Jan. 1, spiking prices by more than 50% for many homes and as much as 127% for businesses and high-consumption households.
Protests have broken out against high electricity bills and many small businesses, like restaurants, have been displaying high electricity bills on shop windows to show how close they are to being driven out of business.
“We continue to support households in electricity and natural gas. We are listening to the voice of our nation and finding solutions to their problem,” Erdoğan said.
The government will provide natural gas support in amounts ranging from TL 450 ($33) to TL 1,150, to be paid twice a year, for 4 million households.
For households with chronic patients and people living on life support devices, an additional 5% subsidy will be added to this figure.
Applications for natural gas support for families in need will start Friday by the Ministry of Family and Social Services, and payments will be made after the second week of March.
Natural gas payments will be made twice a year, in March and October.
The president reiterated that high inflation was “temporary” and that the new economic path will reap results.
Erdoğan said that the government has been persistently and resolutely implementing the economic program aimed at investment, employment, production, exports and current account surplus.
“We not only quickly compensated for the losses in the first months of the pandemic but went beyond. While the world was shrinking in terms of employment and exports, we left behind a period in which we grew and broke records,” Erdoğan said.
"Tourism, construction and agriculture sectors, which will be revived with the spring season, will increase employment even more,” Erdoğan said. He added that they were making efforts to reduce the burden of the high cost of living on citizens by supporting tradespeople and craftspersons with loan packages, by increasing the incomes of all employees from the minimum wage to civil servants and pensions.
“Our most important problem is high inflation. Hopefully, we will overcome it and see it go down month by month,” he said.
The government has embraced a model based on lower borrowing costs, saying credit, exports and investment will help the country weather inflation.
Erdoğan previously said the new economic path will also eventually help Turkey solve its chronic current account deficit problem and contribute to stabilizing the Turkish lira.
To support the drive, Turkey’s central bank had brought down the key policy rate by 500 points since September to 14% but paused the easing cycle in January.
Cihad Terzioğlu, secretary-general of the Independent Industrialists and Businesspersons Association (MÜSIAD) told Anadolu Agency (AA) Thursday that there are more than 120,000 active nongovernmental organizations (NGOs) in Turkey and that electricity costs, including distribution costs, will decrease by nearly 50% as the tariffs of these public organizations transferred from commercial to residential.
Terzioğlu reiterated that energy prices have increased all over the world, especially electricity and natural gas, due to the energy supply shortage and cost-based increases.
Pointing out that energy prices have increased by more than 100% even in European markets, where stable prices have been dominant for many years, Terzioğlu said, “We also experienced price increases in Turkey due to inflation pressure. It is a very positive step for our country, which focuses on fighting inflation, to improve the energy bills reflected on the end-user.”
In addition to these, I find the support and incentives announced for renewable energy power plants to be built to meet the electricity demands, very positively for the future of the sector,” he said, noting “I believe that these steps, which we see as part of the green development revolution, will also raise awareness on the use of renewable energy and energy independence.”
Bülent Çebin, the chairperson of the Energy Consumers Association, also stated that the conversion of the electricity subscriptions of NGOs from commercial to residential is a positive step.
He reiterated that NGOs, including associations, foundations and places of worship of the country's Alevi minority, referred to as Cemevis, had previously paid their dues under commercial status.
Earlier this week, the government lowered the value-added tax (VAT) on basic food supplies to 1% from 8%.
Meanwhile, more municipalities across Turkey, including central Malatya, northern Samsun, northwestern Yalova and Kırıkkale, western Balıkesir, and eastern Kilis and Bingöl, have decided to reduce the VAT rate on water consumption from 8% to 1%. Central Konya municipality has decreased the prices by 14% with an additional 7% reduction on the VAT rate.
Erdoğan on Thursday called on ruling Justice and Development Party (AK Party) municipalities to support the government's fight against inflation "by reducing water tariffs, with at least a reduction in VAT."
In the Istanbul Metropolitan Municipality (IBB) Council, the proposal for a gradual increase in water tariffs by Istanbul Water and Sewage Administration (ISKI) was earlier rejected by a majority of votes of the People's Alliance, comprising AK Party and Nationalist Movement Party (MHP).
Making a statement to the journalists after the General Assembly meeting, AK Party Group Deputy Chairperson Tevfik Göksu said that IBB came to the board with a proposal to raise between 90% and 175% and that the People's Alliance requested a revision between 43% and 55%.
