x Abu Dhabi, UAEMonday 24 July 2017

Turkey's call for builders for its nuclear reactor receives single bid

Turkey's fledgling nuclear programme is dealt a potentially serious setback with a lack of investment interest.

Greenpeace activists protest the Turkish government's plans to build a nuclear reactor in the country.
Greenpeace activists protest the Turkish government's plans to build a nuclear reactor in the country.

Turkey's fledgling nuclear programme has been dealt a potentially serious setback as a government call for proposals to build the country's first atomic power plant attracted just one bidder. ZAO Atomstroyexport, the Russian nuclear reactor builder, submitted the only offer to build a four gigawatt generating plant near the Mediterranean port of Mersin in southern Turkey by the close of bidding on Wednesday.

The development, with a price tag estimated at up to US$8 billion (Dh29.4bn), could force the government to cancel the tender, delaying a major energy project that is viewed as an important step towards resolving the country's looming electricity crisis. Haci Duran Gokkaya, the general manager of Tetas, the Turkish state power producer issuing the nuclear plant permit, said late last week that it was not clear whether the submission of a single bid met the tender's competition rules. He said a commission evaluating the offer from Atomstroyexport, which bid in partnership with Turkey's Park Termik, would determine whether the criteria had been met. Details of the Russian bid would be announced later, Mr Gokkaya added.

General Electric, the US conglomerate that had previously considered bidding on the project with Turkey's Haci Omer Sabanci Holdings and the Spanish energy company Iberdrola, had asked Turkey to postpone the bidding deadline to give companies more time to develop proposals and to seek clarification from Turkish authorities on such issues as state guarantees for power purchases. Turkey's Energy Ministry rejected the request.

Anne Lauvergion, the chief executive of France's Areva, the world's biggest builder of nuclear reactors, said yesterday that Areva did not submit a bid because the Turkish government's deadline was "impossible" for her company to meet. She said Areva could not meet specific deadlines set in the tender for large forgings such as the reactor vessel. Turkey faces a power shortfall as early as next year, following years of underinvestment in its state-controlled electricity sector. A seven-year-old agreement with the International Monetary Fund has precluded Turkey from state investment in new generating capacity since 2001. Private companies have been slow to invest, in part because government loan guarantees have been unavailable, and power plant operators until recently were not allowed to negotiate prices for electricity sales.

The country is seeking to build three very large nuclear plants to generate three per cent of its power supply by 2020. Three years ago, it cancelled plans for a smaller nuclear facility due to environmental protests, which continue to be directed towards Ankara's current nuclear plans. Turkey's electricity demand has been growing at eight per cent annually in recent years. To meet its burgeoning power needs and to cut its reliance on costly and sometimes unreliable imports of natural gas to fuel generating plants, Turkey's government is encouraging private investment in domestic hydroelectric development. It recently sold off a portfolio of nearly 700 projects to the private sector.

In other developments late last week, Kiler Group, a Turkish company controlling a domestic supermarket chain, won an auction to run the electricity grid in Turkey's eastern Erzurum region with a $128.5 million bid, and Alarko Holdings, a Turkish builder and power generator, purchased the grid in Konya, central Turkey, for $440m. The Turkish government's efforts to attract foreign investment to its electricity sector as it privatises power generation and transmission networks have been largely unsuccessful. Recent government auctions of electricity assets have attracted fewer bidders than expected. @Email:tcarlisle@thenational.ae