UAE and Turkey sign US$12 intergovernmental agreement on development of power plants

WAM ANKARA: The United Arab Emirates and the Republic of Turkey today signed an Intergovernmental Agreement for the development of power plants and associated mines in the Afsin-Elbistan region of Turkey.

The agreement marks the start of exclusive negotiations between Abu Dhabi National Energy Company PJSC (TAQA), Turkey’s Electricity Generation Co. Inc. (E?A?) and the Turkish government for the project with a combined power generation capacity of up to 7,000 MW.

TAQA and E?A? have been selected as the government-related entities responsible for implementing the project. The two companies have signed a Memorandum of Understanding for the establishment of a project company in which TAQA and any future partners would retain the majority shareholding.

In accordance with the Intergovernmental Agreement, the project company will acquire, modernise and expand the existing 1,400 MW Plant B and develop several new power plants and associated mines in sectors C, D, E and G of the Afsin-Elbistan region in southern Turkey. Preparatory work on Plant B and the feasibility study for the planned 1,440 MW Plant C and associated mine development will start immediately.

Mohamed bin Dhaen Al Hamli, Minister of Energy of the United Arab Emirates, said: “This agreement further strengthens the bond between Turkey and the UAE, adding an important commercial dimension to this strategic relationship.” Taner Y?ld?z, Minister of Energy and Natural Resources of Turkey stated that the agreement is worth US$12 billion.

The Intergovernmental Agreement follows the signing of a joint declaration between the Emirate of Abu Dhabi and the Government of the Republic of Turkey on October 9, 2012 and meetings held between His Highness General Sheikh Mohamed bin Zayed Al Nahyan Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, Abdullah Gul, the President of the Republic of Turkey, and Recep Tayyip Erdogan, the Prime Minister of the Republic of Turkey in February 2012.

The Agreement was signed by Taner Y?ld?z, Minister of Energy and Natural Resources of Turkey and Mohamed bin Dhaen Al Hamli, Minister of Energy of the United Arab Emirates. The event was held in the presence of Abdulla Saif Al Nuaimi, Director General of Abu Dhabi Water and Electricity Authority (ADWEA) and Vice-Chairman of TAQA; and Khaled Al Mu’alla, Ambassador of the United Arab Emirates to the Republic of Turkey.

Hamad Al-Hurr Al-Suwaidi said: “We are delighted to be part of this historic partnership which will achieve progress for both our nations. At TAQA, part of our strategy is to take our global expertise from Abu Dhabi to the world. As an emerging market with a positive outlook, Turkey is perfectly aligned with TAQA’s growth strategy. The country is creating the right conditions to attract foreign direct investment to develop its indigenous energy resources.” Carl Sheldon, Chief Executive Officer of TAQA, said: “As a full-scale energy company, TAQA offers Turkey a durable partner to develop this strategic project enhancing Turkey’s energy security. This agreement paves the way for TAQA to enter an emerging merchant market for power, demonstrating TAQA’s increasing maturity as a developer and operator of assets through the energy value chain.” The development of Turkey’s indigenous lignite resources is a priority because it enables the nation to reduce its dependence on imported natural gas. Lignite’s role in power generation is set to expand alongside rapid growth expected in electricity demand. Approximately 40 % of Turkey’s lignite is located in the Af?in-Elbistan basin.

The negotiations will lead to the signing of a Host Government Agreement in the second quarter of 2013, establishing more detailed terms.

WAM/MMYS

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