Türkiye will eliminate state subsidies for high-volume residential and commercial electricity consumers starting in February, as reported in the country’s Official Gazette.
Subsidies will be dropped for consumers of more than 5,000 kWh annually, while the subsidy limit for industrial users and public and private service sectors will be set at 15,000 kWh per year, it said.
Agriculture sector users will remain unaffected with current subsidy levels, and other exemptions include places of worship, charities and disaster relief organizations.
Energy and Natural Resources Minister Alparslan Bayraktar has said high-consumption users represent around 3% of the 40 million residential electricity customers.
Bayraktar last month said the planned regulatory change aimed to direct government subsidies to citizens who need them most.
Those consuming more, potentially due to larger homes or extensive appliance use, including electric vehicles, will face adjusted pricing aligned with true energy costs.
Türkiye has subsidized electricity usage for years, and government officials have repeatedly said that households have cheaper energy than in neighboring countries.
Last month, the International Monetary Fund (IMF) said it would encourage Türkiye to push ahead with further reducing costly energy subsidies while buffeting poorer households against the fallout.
A mix of unanchored inflation expectations and large energy import needs made Türkiye more vulnerable to a quicker and broader feed-through to inflation from possible energy shocks, Jim Walsh, the IMF mission chief for the country, said.
Walsh added that Türkiye could counter that by ramping up renewable energy production.
Tight policy, fiscal measures and base effects brought annual inflation down to 48.58% in October from a peak of 75.45% in May.
The country’s central bank earlier this month raised its year-end inflation forecasts for this year and next to 44% and 21%, respectively.
It previously forecast year-end inflation of 38% in 2024 and 14% next year. The government anticipates end-2024 and end-2025 inflation of 41.5% and 17.5%, respectively.
