Croatia to revise Enron’s Jertovec IPP contract

US developer Enron and the Croatian government have agreed to terminate the $175m contract to build the 240 MW gas fired Jertovec power plant. Both sides are now expected to reach a new agreement by mid-July.

Croatia wanted to revise the contract on the construction of the plant and the 20-year sale of electricity because it hampered government plans to restructure and privatize the public electricity utility, HEP.

Deputy prime minister Goran Granic said Enron had agreed to terminate the contract for construction of the plant 30 km northeast of Zagreb, but the US company would retain the right to build a power plant once the government has completed the privatization of HEP.

The government agreed to complete HEP’s restructuring and privatization and fully liberalize the electricity market within the next two years. Enron will decide within 90 days (from June 12) whether it will build a power plant in the new free market. If Enron decides to go ahead, the plant should be completed within five years.

The government will continue to buy electricity from Enron. Under an agreement signed last year, Enron was to deliver 150 MW of electricity at 5.6¢/kWh by the end of this year. This agreement remained valid and Enron will continue to sell electricity to Croatia but as of January 1, will sell to Croatia for the next 18 months a total of 240 MW at 3.79¢/kWh.

Turkey cancels distribution deals

Turkey has cancelled three key privatization tenders worth more than $260m. The decision is a setback to plans to recoup $3bn from transferring operating rights in 2000.

Two of the three deals were scrapped partly because of laws limiting the roles companies with media interests can play in such deals. One of the deals, a $145m tender for distribution in the Thracian region in northwest Turkey, involved a group with media interests including cable television, Avrupa ve Amerika Holding.

The court earlier annulled a $60m contract awarded to Dogan Holding media group for distributing electricity in the eastern Black Sea area.

Earlier this year, the court annulled $830m of contracts to transfer operating rights in the energy sector to private companies, including a rights transfer awarded to a consortium including Dogan for $500m.

Turkey is targetting $7.6bn in state asset sales in 2000 as part of a three-year, $4bn IMF-backed disinflation programme. As part of this overall target it is expected to recoup nearly $3bn from transferring operational rights for 15 power grids and eight power stations.

  • Meanwhile, Turkish power company Yentes-Kanalet said it plans to invest dozens of millions of dollars in finishing the construction of the Kamabaratinskaya hydropower plant. The plant’s completion, which is being resumed after having been abandoned, will cost $230m.

Gas venture for Central Europe

Fortum Engineering and Wärtsilä NSD have concluded a cooperation agreement which will see the two Finnish companies develop cogeneration power plants based on natural gas for the Central European market.

The cooperation will include the development, marketing, sales, construction, financing, operation and maintenance of the power plants. Fortum will be responsible for the design and delivery of the power plant while Wärtsilä will design and supply the gas engines.

The cooperation agreement does not involve any form of cross-ownership between the two companies.

  • Fortum and Elektrocieplownia “Tychy” Spólka Akcyjna have signed a contract for the construction of a new CHP unit. The deal comes after the recent handing over of the first unit. The new unit includes a circulating fluidized bed boiler and extraction condensing steam turbine and will have a maximum output of 95 MWe and 152 MWth. The plant will be mainly coal fired, but can also operate with a small proportion of biomass (eg. RDF, wood waste) mixed with coal.

The new engineering, procurement and construction contract is worth about $67m, and the plant is scheduled for commercial operation in 2002.

Saudi Arabia relaxes legislation

Saudi Arabia has officially ended nearly 70 years of restrictive legislation in a move to promote foreign investment.

The council of ministers ratified a new Foreign Investment Law (FIL), the first such reform in 21 years, which the government hopes will entice foreign investors into non-oil industries. Saudi Arabia owns one quarter of proven global oil reserves.

Under the new law, tax holidays are abolished in favour of sweeping reductions in tax on profits payable by foreign entities. This brings them closer to levels which apply to local companies.

News digest

Estonia: The new Business Unit EV Services of Siemens AG is to provide services for two supply regions in Estonia. Service will cover scheduled, preventive and non-scheduled maintenance, including any necessary repairs. The two regions have 300 transformer substations, 11 000 km of overhead lines and 110 000 connections in the two regions.

Oman: A final concession agreement is likely to be signed shortly with the Dhofar Power Consortium (DPC) to build the country’s second private power plant. The consortium will build a 200 MW power plant in Salalah on a build-own-operate-transfer basis. Oman awarded DPC, led by PSEG Global, a letter of interest last year inviting the group for talks to build the Rial90m ($234m) natural gas fired station. Royal Dutch/Shell Group is also a member of the consortium, along with local contractors. Meanwhile, the first unit of the Hubara power station has passed its commissioning test. The station, designed by local company Electrowatt, has six gas turbines and is being constructed by Bharat Heavy Electricals Ltd. (BHEL).

Poland: The new Polish Power Exchange got off to a promising start during a test trading session last month. During the test 4867 MWh of electricity was traded in bids placed by six companies at an average daily price of zlotys83.99/MWh ($19.18/MWh). This was 27 per cent cheaper than the average price electricity distributors paid to generators at the end of the first quarter. Meanwhile, Vattenfall said it plans to invest hundreds of millions of dollars in the Polish power industry, primarily in distribution.

Qatar: Six international firms have been invited to bid for an independent power and water desalination project to be set up in Ras Laffan. The plant would produce 750 MW of power and 182m litres/day of water. The six firms are CMS Generation, AES Energy with Sithe Energy Inc., Marubeni Corp. National Power, Tractebel and Mitsubishi. The firm with the most competitive tariff rate and financing offer will be given a 55 per cent stake in the project.

Ukraine: The last reactor of the Chernobyl power plant will close down on December 15 this year. Until now, Ukraine had taken the position that the remaining functioning reactor of the four units at Chernobyl would not be closed until foreign funding was made available to finance its plans for a replacement new nuclear power station. US president Bill Clinton welcomed the news and at the same time announced an additional $78m of US aid to enclose the reactor that was destroyed in April 1996.