Steag bags $1.5 billion Iskenderun plant deal

German power plant developer Steag has announced that it is to construct the 1300 MW Iskenderun power station in southern Turkey under a $1.5bn deal. The contract is the largest in Steag’s history and confirms the company’s position in the world independent power producer market.

Steag will sell power to TEAS under a 20-year electricity supply contract backed by a Turkish government guarantee. The majority of the financing for the project will come from a consortium led by the German Bank for Reconstruction (KfW). State government export credit guarantees will be provided by Germany, Austria and South Africa.

Iskenderun, a bituminous coal-fired plant, will start operating by the end of 2003 and will be operated by a Turkish project company under the leadership of Steag. Steag is currently concluding a contract with RAG Trading and Rheinbraun Brennstoff for the supply of 3m tons of bituminous coal equivalent per year.

Tractebel pulls out of Kazakh operations

Belgian energy group Tractebel is closing down its operations in Kazakhstan and has agreed with the government to sells its assets and activities to state owned gas company KazTransGas. The move follows disagreements between the government and Tractebel over power tariffs that had resulted in international arbitration.

Tractebel has transferred all of its holdings in Almaty Power Consolidated (APC) and related companies to KazTransGas. It will transfer its holdings in the gas sector to KazTransGas in June. KazTransGas will pay Tractebel $100m for these businesses.

Tractebel began to re-examine its position in Kazakhstan several months ago, and began negotiations with the government to either improve the conditions under which it operated in the country, or to withdraw from its operations on acceptable terms.

It entered the market in 1996 when it acquired APC, and invested in the gas sector in 1997, buying a stake in Intergas, the operator of the 9000 km gas pipeline network.

Tractebel’s operations have suffered due to the low electricity tariffs and the low payment levels. While the company devised ways of overcoming the latter, the government refused to increase tariffs and the company called for international arbitration.

Taweelah A-1 delay

The Abu Dhabi Water and Electricity Authority (Adwea) has postponed the final selection of the developer of Abu Dhabi’s second independent power project, Taweelah A-1, and has asked the two shortlisted companies to submit revised proposals.

Adwea said that some conditions of the selection had been changed, requiring US-based CMS Energy and the French-Belgian consortium of Total-FinaElf and Tractebel to submit a revision of proposals by the beginning of June 2000.

The proposals will be re-evaluated and the winner will take a 40 per cent stake in the company that will develop the water and electricity project on a build-own-operate basis.

The project developer will take over and refurbish the existing 225 MW, 29m gallons/day of desalinated water Taweelah A-1 plant and will also extend it with 500-750 MW of power and 25-40m gallons/day.

CMS Energy is currently developing Taweelah A-2, also an independent power and water project, under a contract it won in 1998. Commercial operation of Taweelah A-1 is expected to start in early 2003.

Kenya seeks to augment supplies

Kenya’s government has sought assistance from Uganda to increase its power supplies after the failure of the April-May rains reduced the capacity of hydropower plants in the country by 40 per cent. Kenya has also introduced stringent power rationing.

The government believes that it could alleviate its situation by importing 30 MW of electricity from neighbouring Uganda and renting a diesel power plant. In early May it signed a $52.3m contract with Finland’s Wärtsilä NSD for a 74 MW power plant, Kipevu II.

Kenya’s power output has dropped from 580 MW to 480 MW due to low water levels in its reservoirs.

SwePol to start ahead of judgment

The 600 MW SwePol cable connection between Sweden and Poland is due to start transmitting power in June 2000, several months ahead of a court ruling on action brought by Swedish environmentalists against the cable. Lars Marketeg, SwePol’s chief executive, has said that the cable is currently undergoing testing.

A Swedish court is due to give a ruling on the operation of the cable before the end of 2000 based on action brought by environmentalists who claimed Sweden would use the cable to import ‘dirty’ power from Polish brown coal plants.

News digest

Czech Republic: Alstom Power has announced that the ECKG Kladno project has been handed over to the customer, ECK Generating s.r.o, a consortium of NRG Energy Inc., El Paso Energy International, TECO Power Services and Mosbacher Power Group. The 2 x 124 MWe coal-fired and 68 MW gas-fired power plant is the largest independent power project in central and eastern Europe. Alstom Power was the main contractor for the project, supplying two CFB boilers, two steam turbines, a gas turbine and associated equipment.

Czech Republic: Sokolovska uhelna a.s. has awarded Fortum Engineering a a26.5m contract for a flue gas desulphurization (FGD) system for its Vresova power plant in Western Bohemia. Fortum will supply a wet limestone-based FGD for the 110 MWth, 220 MWe plant near the city of Karlovy Vary, and is due to complete the project in October 2002.

Estonia-Latvia: Estonia’s and Latvia’s governments are considering a possible merger between their respective state utilities, Eesti Energia and Latvenergo. The two will at least form a closer cooperation, aimed at increasing competitiveness, price stability, power supplies and efficiency, and could also approach Lithuania for inclusion in their agreement. The cooperation will also help the utilities to increase their credit ratings, which are instrumental in enabling them to obtain financing for investments. The Baltic states have medium-term plans to create a regional market, and a Latvian spot market is due to be running in 2002.

Iceland: The Industry and Commerce Ministry and Hydro Aluminium have agreed to undertake a preliminary feasibility study into the construction of new power plants to supply power to a new aluminium plant in Reyoarfjorour. A final decision on the project will be made in early 2002. Construction of the power plant would begin in the summer of 2002 with commissioning scheduled for 2006.

Lithuania: Both Sweden and the European Bank for Reconstruction and Development (EBRD) have said that they will contribute funding to help close the first of two reactors at the Ignalina nuclear power plant and help alleviate the loss of power caused by the closure. Sweden will donate SKr50m (a6m) and will take part in the June 21-22 donor conference in Vilnius. The EBRD will focus on investing in new power capacity to replace the reactor which is due to be shutdown by 2005.

Ukraine: The World Bank has voiced objections to the draft proposals for the reform of the Ukrainian electricity market, saying that the draft effectively proposes a renationalization of five regional power distribution companies that have already been privatized.