Turkey pushes energy projects despite crisis

Wednesday, October 22, 2008

BANDIRMA, Turkey, Oct 22 (Reuters) - Energy import-dependent Turkey is pressing ahead with large energy investments despite global financial woes and ongoing private sector projects will raise capacity to 62,600 megawatts from 40,000 MW.

Turkey, a major energy importer, is under pressure to increase power capacity and liberalise the sector in the face of sharply rising demand, fuelled by economic growth and a rapidly growing population.
However, the shrinking global liquidity and lessening risk appetite generated by the financial crisis has raised concerns about companies' ability to raise the necessary funding and uncertainty surrounds some projects.

Leading conglomerate Sabanci Holding will continue energy sector investments despite the ongoing turmoil in markets, its chairwoman Guler Sabanci said at a ceremony to launch construction of a power plant in western Turkey.

She said the group's Enerjisa company, owned together with Austria's Verbund, would take over Baskent Electricity grid in the capital Ankara in December. They made the top bid of $1.225 billion in a sell-off tender in July.

Energy market regulator (EPDK) Chairman Hasan Koktas said at the same ceremony the value of private sector energy projects which had received EPDK licences and on which investments were continuing reached 33 billion lira ($20 billion) in October.

He did not give a comparative figure. Half of these ongoing projects are for hydroelectric power stations.

"I believe that private sector investments will accelerate in 2009 as the privatisation process continues," Koktas said.

In his speech, he said that after the completion of four current electricity grid sell-off tenders the private sector share of energy distribution would rise to 20 percent from two percent currently.
Last month, Turkey's Alsim-Alarko submitted the highest bid of $440 million to operate the Meram grid in central Turkey and retail group Kiler gave the highest bid of $128.5 million for the Aras electricity grid in eastern Turkey.

The Ankara grid tender was held in July, along with the Sakarya grid in northwest Turkey. The latter was won by Czech power firm CEZ with Turkey's Akenerji for $600 million.

By 2015, Enerjisa plans energy sector investment of $6-6.5 billion and the AkCez group plans $3.5 billion investments, according to Koktas.

Turkey also aims to develop a nuclear power industry and Energy Minister Hilmi Guler said on Wednesday the first power station tender would be completed within one or two weeks after "some questions are asked" to the winning Russian firm.

A consortium comprised of Russian Atomstroyexport and Inter Rao along with Turkey's Park Teknik Group was the sole bidder in a tender to build and operate Turkey's first nuclear power plant in September.

Some analysts have raised questions about the quality of technology of the Russian firm. The tender is for the first of three planned nuclear power plants in Turkey, but the lack of interest was an apparent blow to these plans.

The plant is planned to be built at Akkuyu near Mersin on the Mediterranean coast with a capacity of between 3,000 and 5,000 megawatts.

Separately, a government source told Reuters on Wednesday Ankara had cancelled a tender for an adviser in the sell-off of a group of power stations won last month by a Lehman Brothers -led consortium because of the U.S. bank's collapse.

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