Turkey insists tender on second nuclear plant still running

By bne IntelliNews April 5, 2013

bne -

Turkey on April 4 denied reports in Japan that it has selected a Japanese-French consortium to build the country's second nuclear power plant. However, it confirmed that Japan's Mitsubishi Heavy Industries in a consortium with France's Areva is ahead in the $22bn tender, and that a decision is close.

"There is no scheduled timeline when the tender process will be finalised but all I can say is that we are nearing the end," an unnamed senior energy ministry official told AFP.

Japan's Nikkei reported the same morning that the consortium had got the nod from Ankara. The business daily cited unnamed sources as saying that Turkey's Energy and Natural Resources Ministry had informed a delegation of Japanese government and corporate officials of the decision at a meeting in the Turkish capital. A Mitsubishi Heavy spokesman declined to confirm the Japanese report.

Turkish Energy Minister Taner Yildiz said it is still too early to declare a winner for the plant in Sinop on the Black Sea coast, which the consortium has offered to fit with four Atmea1-type pressurized water reactors with a combined output of 4.5GW. Construction on the project is set to begin in 2017, with the first reactor coming on line by 2023.

"We are currently holding talks with China and Japan," Yildiz said on Turkish TV. "I can say Japan's claims are premature and the race is still continuing." He noted that alongside the Japanese-French consortium, Turkey is still talking with China Guangdong Nuclear Power Holding Co.

However, the official revealed that a South Korean bid in the tender process has now dropped out, joining an earlier exit by a Canadian bid. Yildiz said that amongst a number of reasons for the South Korean failure is Ankara's refusal to provide treasury guarantees. "It is significant for political stability in Turkey to implement this project without being a burden on the national economy, and without getting any extra share from the budget," he said.

Energy-hungry Turkey is pushing hard to expand its electricity generating capacity to keep pace with economic growth. However, it also needs to reduce its heavy reliance on gas-fired power plants due to ongoing struggles to secure supplies, in particular to replace Iranian flows. Turkey's second largest supplier of oil and gas is under international sanctions, exposing Ankara to pressure from the US and EU.

Therefore, on top of a recent turn to brown coal, Turkey is planning to build three nuclear power plants. Ankara struck a deal with Russia in 2010 to build the country's first power plant at Akkuyu in southern Turkey. Rosatom will assume all financial costs on the project in return for guaranteed energy prices.

Readiness for a similar project profile has set China up as a favourite for the second plant in recent months, but the country has limited experience in developing nuclear plants internationally, points out the Financial Times. Yildiz said Turkey wanted to build a nuclear power plant that could resist a magnitude nine earthquake. Turkey, like Japan, is in a fault zone.

Meanwhile, the selection of the Mitsubishi-Areva consortium would mark an improvement in Turkish-French ties, which have been strained in recent years. That has hit French businesses operating in Turkey, particularly in obtaining big state contracts, but a detente was signalled by a decision in Paris earlier this year to drop its objections to certain EU chapters under negotiation with Ankara.

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