Utilities gather to save Turkish power deals

Energy leaders and US officials are spearheading a campaign to rescue Turkish electricity generation deals that conflict with Turkey’s World Bank-backed plans for a liberalized electricity market.

NRG Group said it expected the US to ask Turkey to honour contracts temporarily transferring operating rights at state-owned power plants to private sector companies. Western companies and their Turkish partners have accused the World Bank of encouraging the government to cancel the 20-year contracts.

Eight of these contracts would transfer about $1bn in fees to the government and a further $1.2bn to upgrading decrepit state-owned power plants. But the plans do not fit in with the government’s recently adopted goal of creating a liberalized market, including the outright sale of state-owned power plants and distribution networks.

NRG warned that if the deals were unilaterally cancelled by the Turkish state, it would go to international arbitration to seek compensation.

ABB bags Romanian substation order

ABB has won a $19m order from SC Electrica, the Romanian electricity distribution utility, to supply six 110/20 kV substations to back the 110 kV distribution network in the country.

The project, likely to take just 18 months due to ABB’s use of modular technology, is needed to meet the growing demand for electrical power. The industrial areas of Brasov-Dirste, Tecuci and Comanesti will be equipped with the PS-1 outdoor substation equipment, which costs 20 per cent less than conventional technology and can be implemented in half the time.

ABB will also refurbish an existing substation in Comanesti with 13 vacuum circuit breakers and a new feeder-bay for Cluj-Manastur substation.

Estonia red flags NRG deal

Estonia has called off a deal with NRG Energy to sell its monopoly power producer after the US company failed to act on arranging funds for plant upgrades.

NRG was scheduled to have taken a 49 per cent stake in Narva Power’s two oil shale-fired power plants for a cash payment of $70.5m. NRG had also agreed to invest a further $300m in plant improvements. The deal would have given NRG a 90 per cent stake in the Estonian electricity market.

NRG and Eesti Energia had reached a provisional loan agreement with foreign banks but the December deadline passed without the deal being inked.

Uganda’s Bujagali gets go-ahead

Lead arrangers WestLB and ANZ Investment Bank are to co-arrange the 16-year, $349m loan for the 200 MW Bujagali hydropower project in Uganda. US developer AES gained final approval to start construction on the $550m plant on the Nile river in December 2001.

Financing will comprise a $234m ECA-supported facility and a $115m letter backed by a partial risk guarantee from the World Bank.

The 200 MW hydropower station includes construction of a 700 m long, 38 m tall dam. An existing 132 kV transmission line will be replaced along with an additional 220 kV line. Other renovations include a switchyard, a new substation to the north of Kampala and the improvement of the existing substation southwest of Kampala.

AES Nile Power will enter a 30-year power purchase agreement with the Uganda Electricity Transmission Company.

Emerson nets $1m Yugoslavia deal

US-based Emerson Process Management has won a $1m contract to upgrade the control system at the 300 MW Gacko electricity generating plant in Bosnia and Herzegovina. The company’s Westinghouse Process Control business will equip the plant with its advanced Ovation Information and Control System.

The plant, expected to be completed by year-end, will be operated by the Power Utility of Republika Srpska. Electricity generated provides power to Montenegro, Bosnia and Herzegovina in Yugoslavia.

Bulgaria holds on to monopolies

Bulgaria has entered a much anticipated energy market liberalization programme but will, for the short term, retain monopolies on power exports and gas imports.

Milko Kovachev, energy minister, said Bulgaria would keep the National Electricity Transmission Company for five years and may sell its natural gas monopoly Bulgargas as a package instead of unbundling it.

Proposals have been drawn up to increase electricity tariffs by ten per cent followed by another ten per cent this summer due to the 25-30 per cent losses electricity distribution companies have suffered. The news is sure to anger consumers who have seen ten per cent rises implemented late last year.

News digest

Germany: RWE has put forward a proposal to link Russian electricity producers with the European grid through a connection via Finland. The company aims are to link producers in the north-west of Russia where hydro and nuclear production are more or less in balance.

Israel: Israel Electric is to acquire power station environmental equipment from Babcock Borsig Power for $16.6m. The equipment will be used to reduce emissions in two units at the oil-fired Ashdod Eshkol power station. Equipment will also be used to prepare the units for future gas-fired operation.

Kazakhstan: The Kazakhstan Electricity Grid Operating Company is positioning itself to assume a leading role in Kazakhstan’s developing energy market. KEMA Consulting has been hired to provide consulting services.

Latvia: Latvian Company SJC Latvenergo and Fortum Engineering have signed a contract on consulting services for the Riga TPP-1 refurbishment project. The old power plant will be replaced with a 100-150 MW combined cycle gas turbine plant. The five-year project will start this year.

Russia: The Russian state will lend up to $500m to Ukraine to complete construction of the Rovno and Khmelnitskiy nuclear power station construction projects. The Ukraine government expects work to start on the plants in the second quarter of next year.

Russia: Russia needs $50bn in investment over the next decade to reform its power industry said Yakov Urinson, deputy chairman, Unified Energy Systems. He said: “The Russian government has no such money; and neither do power producers in Russia have it.”

South Africa: Tractebel and Sasol Gas, a subsidiary of the South African Synthetic fuels group, Sasol, have signed an agreement for the joint development of the cogeneration market potential in South Africa as well as for a joint gas survey of the country’s energy market.

Turkey: Metso Automation was recently awarded an automation order to be installed at the new Ankara power plant, Turkey. The 800 MW combined cycle power plant is being built by VA Tech Hydro from Austria.

UAE: Siemens Power Generation has secured an $87m contract, its largest ever order in the Gulf region, for the turnkey construction of a 1500 MW combined cycle power plant in Al Shuweihat in Abu Dhabi.

UAE: A $1.4m deal to provide computer software and technical expertise at eight power stations in the Emirate of Abu Dhabi has been completed by Innogy. The project is based on the system Innogy used in the competitive UK market.