UAE drags feet on huge energy project in Turkey

Neşe Karanfil ANKARA / Radikal

Energy-hungry Turkey signed a landmark deal with the UAE to develop its coal fields in the south with a giant project worth nearly $12 billion. DHA photo

The United Arab Emirates (UAE), which promised in January to invest $12 billion in Turkey’s Afşin Elbistan power plant, appears now to be dragging its feet on the huge project. The UAE 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.

Energy-hungry Turkey signed a landmark deal with the UAE to develop its coal fields in the south with a giant project worth nearly $12 billion. The deal was made between the Abu Dhabi-based, government-controlled TAQA and Turkey’s state-run electricity company EÜAŞ in January.

After the intergovernmental agreement had been made, 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. The TAQA intended to ask its potential Turkish partner to make a financing contribution of around $1.7 billion. Potential Turkish partners do not look favorably on an “immediate” financing contribution, according to the sources.

The TAQA have met some Turkish companies to build a partnership, but these companies are hesitating to provide the required money.

Not about Gezi or Egypt

The TAQA’s attempts to find a Turkish partner started before the Gezi protests or the latest riots in Egypt, so the attempts are not about the Gezi protests or some challenging views of Turkey and of the UAE on the latest developments in Egypt, according to the sources. The UAE’s company’s attempts are mainly arising from financing concerns, they said.

In the meantime, the representatives from both countries are now working on some details, including the unit price for kWh.

“The private sector wants to be in the project. Some companies may however have some concerns about the project as the intergovernmental agreement was made months ago. Yet the project proceeds on the right track,” the sources said.

In the framework of the project, the parties said the generation of some 85 million tons of coal annually, or 45 billion kWh, would be possible. Some 15,000 people will be recruited during the construction phase and the facilities will provide jobs for 8,500 once finished.

The Afşin-Elbistan facility will be the largest among Turkey’s planned coal-burning facilities, as some 40 percent of Turkey’s lignite coal lies under the Afşin-Elbistan zone.

Under the intergovernmental agreement, the project partners will modernize and expand the two plants with the capacity of 2,800 MW.