UAE firm may exit $12 billion energy project in Turkey

ANKARA/ABU DHABI

Turkey’s EÜAŞ and TAQA agreed on a project worth $12 billion to build several power plants using the lignite coal reserves of Turkey’s Afşin-Elbistan region. DHA photo

Abu Dhabi National Energy Co (TAQA), the state-owned oil explorer and power supplier, may exit the coal-fired power plant project in Turkey worth $12 billion, sources familiar with the subject told to Reuters yesterday, although the company announced that it had just delayed plans to start construction of coal-fired power plants in Turkey to 2014, citing other spending priorities.

Even though the company said the main reason behind the decision was economic, there are some reports saying that there may be some political motives as the two governments’ views about the latest developments in Egypt are opposing with each other. Alhough the UAE maintains support for Egyptian army while the Turkish government condemns Morsi’s removal as a coup against a democratically elected president.

Turkey’s state-owned Electricity Generation Co (EÜAŞ) and TAQA agreed in January on a project worth up to $12 billion to build several power plants using the lignite coal reserves of Turkey’s Afşin-Elbistan region.

The project was initially planned to kick off in mid-2013, a spokesman for TAQA said yesterday. “Due to other spending priorities, TAQA has decided to defer the investment decision in Afşin-Elbistan until 2014,” the spokesman said, although the UEA could not keep up progress on the project as it had sought a Turkish partner but couldn’t find one, sources familiar with the matter said to Turkish daily Radikal last week.

In search of a Turkish partner

Energy-hungry Turkey signed the landmark deal with the UEA to develop its coal fields in the south with that giant project. After the intergovernmental agreement had been made in January, some progress was seen on the way to establish a partnership scheme. While 35 percent of the project was given to EÜAŞ, the remaining 65 percent was held by the TAQA. After the partnership scheme had been established, the host country agreement was supposed to be made.

The TAQA, however, decided to seek a Turkish partner at this stage to give up to 14 percent of its 65 percent of share in the project, Radikal reported, yet potential Turkish partners did not look favorably on an “immediate” financing contribution, according to the sources.

In the framework of the project, some 15,000 people would be recruited during the construction phase and the facilities will provide jobs for 8,500 once finished.

Some 40 percent of Turkey’s lignite coal lies under the zone.