Publication: Eurasia Daily Monitor Volume: 5 Issue: 182

Despite calls for a delay, Turkey’s ruling Justice and Development Party (AKP) is pushing ahead to award the tender for building the country’s first nuclear power plant.

On September 24 the state-owned Turkish Electricity Trading and Contracting, Inc., (TETAS) will open the bids for building a nuclear power plant in Akkuyu, close to the eastern Mediterranean port of Mersin. It is the fourth time that Turkey has attempted to build a nuclear power plant. The previous three attempts were subsequently cancelled, most recently in July 2000 when the then Prime Minister Bulent Ecevit said that nuclear energy was too expensive (Radikal, Milliyet, July 26, 2000).

Consumption of electricity has grown rapidly in recent years, however; and demand is forecast to double by 2016 (TETAS website, www.tetas.gov.tr). Total electricity production in 2007 stood at 191.2 billion kilowatt hours (kWh), of which about half was produced by natural-gas-fired power stations. The remainder was almost evenly divided between hydroelectric and coal-fired power plants. Alternative sources such as wind energy are still in their infancy in Turkey, accounting for approximately one percent of established capacity.

The Turkish economy is heavily dependent on imports of both oil and natural gas. Since it first took office in November 2002, the AKP has sought to diversify and, as far as possible, indigenize Turkey’s energy supplies. The political vulnerability as a result of its dependence on energy imports was underlined by the August war between Russia and Georgia. Turkey imports almost two thirds of its natural gas from Russia (see EDM, September 9), leaving it with very little room to maneuver when there were international calls to isolate Russia in punishment for its de facto annexation of Abkhazia and South Ossetia.

Drought and global warming have made it extremely difficult for Turkey to increase hydroelectric production. Indeed, in the summers of 2007 and 2008 there were frequent power cuts in regions of the country primarily dependent on hydroelectric production (see EDM, May 29).

The AKP has always insisted that the solution to Turkey’s rising demand for electricity lies in nuclear power (Jamestown interview with Turkish Energy Minister Hilmi Guler, Istanbul, September 2003). It was not until November 2007, however, that it created the legal framework for the construction of a nuclear power plant (Law No. 5170, published in the Official Gazette, November 21, 2007) and March 2008 before a contract for a plant with a capacity of 4,000 megawatts, plus or minus 25 percent, was officially put out to tender (Official Gazette, March 19, 2008).

To date, 13 consortia have bought tender documents. They include companies from Canada, Japan, France, Belgium, Russia, South Korea, China, the Netherlands, and Germany, as well as several Turkish firms, either on their own or in partnership with foreign companies (Milliyet, Radikal, Dunya, Referans, Zaman, September 22).

However, 11 of the 13 potential bidders are reported to have expressed concern about issues such as insurance requirements and the terms of the state’s guarantee of electricity purchases for the first 15 years of the plant’s operating life. Four of the 11 that have expressed concern are reported to have asked the government to extend the deadline for bids (Radikal, September 23); but, on September 22, Prime Minister Recep Tayyip Erdogan dismissed the requests and insisted that the bids be opened as planned (NTV, CNNTurk, September 22).

The bids are currently scheduled to be opened at 14:30 Turkish time on September 24. Those that meet all of the requirements—such as signature authorization, tax declarations, and the relevant financial guarantees—will be forwarded to the Turkish Atomic Energy Authority (TAEK), which will have 10 days to determine whether the bids meet the safety criteria. All of the bids approved by TAEK will then be forwarded to TETAS, which will, on an as yet unspecified date, award the contract to the bidder that offers the lowest price for the guaranteed state purchases of electricity during the first 15 years of the plant’s operating life (NTV, Referans, September 22).

It is currently unclear how many of the 13 companies that bought the tender documents will actually submit a bid, particularly given the uncertainty about the prospects for securing financing in the wake of the recent turmoil on international markets.

“The financial crisis will definitely have repercussions,” said TETAS General Manager Haci Duran Gokkaya, “but we hope that it will not affect the bids. The level of participation in the tender is very important for us” (NTV, September 22).

The AKP is adamant that there will not be another tender. It has already announced that it foresees nuclear energy accounting for 8 percent of Turkey’s total production of electricity by 2020, rising to 20 percent by 2030 (Radikal, September 23). It has plans for building a second nuclear power plant at Sinop on Turkey’s Black Sea coast and a third plant at an as yet unspecified location.

For the moment at least, Turkish energy officials are not publicly discussing their options if they do not receive any suitable bids on September 24. Given that they are ruling out a second tender, however, the only other option would appear to be for the state to build the nuclear plant itself in cooperation with a privately-owned company that would supply the technology.