Select Committee on Trade and Industry Appendices to the Report




Turkey, a country characterised by a high hydroelectric potential, is facing a substantial increase in energy demand.

  With an eye on reducing State involvement, the government has launched a certain number of projects on the basis of BOT and project financing. Still, the difficulties encountered in turning such projects into concrete reality have led Turkey to also carry on direct negotiations with business consortia, providing its sovereign guarantee for the financing. The Karkamis project with Elin (Austria) and the Deriner project with ABB and Sulzer (Switzerland) resulted in private contracts with international consortia supported by their governments with respect to setting the financing required on the basis of bilateral agreements.

  Within this framework, France and Turkey agreed in a co-operation convention of September 1996 to provide their support, and in particular, for France, to provide credits (in accordance with OECD rules) within a scheme involving the construction of four dams and hydro-electric power plants that are part of the development of the Coruh river, located in north-eastern Turkey: Yusufeli, Artvin, Borcka and Muratli.

  By a governmental decree dated 23 July 1997, the Turkey Council of Ministers authorised the Ministry of Energy and Natural Resources to negotiate private contracts relating to the two dams and hydro-electric power plants of Yusufeli (540 MW) and Artvin (332 MW) with the consortium led by Spie Batignolles and including Cegelec (now ABB Alstom Power). The other two hydro-electric projects were awarded to a consortium led by Elin (Austria) under the same governmental decree.

  On the basis of that decree, the Ministry of Energy and Natural Resources authorised its General Directorate of State Hydroelectric Works (DSI) to carry out the negotiations and finalise the contracts with the selected consortia.

  The general architecture of development of the Coruh river requires, first of all to implement Yusufeli dam and hydro-electric power station for reasons relating to the regulation of the downstream river flow, and to the construction time required (7.8 years). The Artvin project would be undertaken in a second phase on commercial and financing terms to be determined, this phasing making it possible to spread out the amount to be financed over time.

  The Yusufeli project is to be carried out in accordance with the Final Design provided for the Turkish Government in 1990 by EPDC (Electric Power Development Company—Japan), and Su-Is Project Engineering Company/TMB Terzibasoglu Consultancy & Engineering Company (Turkey). That design, constituting the basis of the contract, will be reviewed by Coyne & Bellier on behalf of DSI.

  Along with the technical and commercial negotiations, the Consortium mandated Paribas and Barclays to work out the project financing in liaison with the French Administration, the financing entities of the concerned countries, and the Turkish Treasury, which is the borrower. With this in mind it was decided to:

    —  Choose a Turkish partner belonging to the Dogus group. That group has several banks, a fact that will facilitate the financing of the project, alongside international banks.

    —  Widen the Consortium to take in Belgian, Spanish and British companies in order to diversify the equipment supply and to have a better spreading of related buyer's credits.

  The Consortium led by Spie Batignolles TP consists of three groups:

    —  the Civil Works Group, consisting of the companies Spie Batignolles TP (France—Leader), AMEC (UK), Besix (Belgium), Dogus (Turkey), Dragados Construccio«n (Spain) and FCC Construccio«n (Spain), constituted as a joint venture;

  Coruh Civil Contractors the Electrical and Mechanical Group, a consortium consisting of:

    —  ABB Alstom Power Hydraulique (France—Leader), ABB Alstom Power Hydro (France), Spie Enertrans (France), Abay TS (Belgium), Alstom Acec Energie (Belgium), ABB Generacion SA (Spain) and Alstom Hydro SA (Spain);

the Engineering and Consultancy Services Group, a consortium consisting of Coyne & Bellier (France—Leader) and Dolsar Engineering (Turkey)

  The Yusufeli project includes a rockfill dam of 20 million m3, a surface spillway (8 million m3 in excavation and 400,000 m3 of concrete), an underground plant, head race and escape tunnels (325,000 m3 in excavation), three Francis turbines of 184 MW power each, three 200 MVA vertical alternators, the transformers, the outside 380 kV switchyard, and the related control command and electrical equipment.

  The project value is equivalent to US$ 383 million, including provisions for contingencies and price escalation, made up with US$ 454 million for offshore portion and US$ 384 million for onshore portion. The financing is planned by means of buyer's credits to the extent of US$ 454 million and of US$ 384 million in financial credits; the Turkish Treasury will be the borrower.

  The approval by the Minister of Energy and Natural Resources of the commercial contract concluded with DSI in December 1999 makes it possible to resume discussions towards the implementation of the financing required for the project.

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Prepared 4 April 2001