Turkey Sells 600-Megawatt Seyitomer Lignite-Fired Plant for $2.25 Billion

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Researched by Industrial Info Resources (Sugar Land, Texas)--Turkey's Privatization Authority sold the operating rights for the lignite-fired Seyitomer Power Plant for $2.25 billion. Among the 16 firms bidding for the privatization tender, Turkey's Celikler Insaat (Ankara, Turkey) placed the highest offer for the 600-megawatt (MW) plant. This marks the highest offer placed in 2012 regarding power grid privatizations.

In December alone, Turkey sold Bogazici EDAS and Gediz EDAS operating rights for $1.96 billion and $1.23 billion, respectively. For additional information on Gediz EDAS, see December 21, 2012, article - Turkey Sells Power Distributor Gediz EDAS to Consortium for $1.23 Billion. For more information on Bogazici EDAS, see December 18, 2012, article - Turkey's Biggest Grid BEDAS Attacts $1.96 Billion. According to the privatization filing, the tender included the power plant, which is located near Kutahya, east of the Agean region, and the operation licenses and assets for the related lignite fields, which hold 1.8 billion metric tonnes of lignite.

"The price was not that much high," said Celikler Insaat Chairman Tahsin Celik after the privatization tender. "There's an important reserve here, and the price is normal."

The Seyitomer Plant was built by German, French and Italian plant designers, and the first two units became operational in 1973. The units were built by Stein Industrie of France, and the steam turbines were built by Franco Tosi of Italy. The other two units were built by VKW of Germany in 1977 and 1997. Currently, the plant employs about 1,000 personel, which can be reduced by half after privatization.

"The risk is in nearby coal; the coal price is approximately $3.30 million British thermal units (MMBtu), which may be reduced to less than $2.00 MMBtu with further investments," said Haluk Direskeneli, an independent energy analyst in Ankara. "The plant generated 4 billion kilowatt-hours in the year 2011, with an average 74% availability. Availability may get higher after the privatization during upgrading."

He also said that there is new investment potential for constructing a 300-MW capacity, coal-fired thermal power plant next to the existing thermal power plant in the future.

Turkey is planning a full liberalization in electricity markets, which includes an electricity exchange. According to draft legislation, the exchange will operate as a spot market, a day-ahead and intra-day market, which will allow for futures contracts.

On December 20, Turkish Finance Minister Mehmet Simsek told CNBC-e that the government's revenue from privatizations may exceed projections next year, considering sales of operating rights in the national lottery and coal-powered plants, and the second initial public offering of Turk Telekom. According to the medium-term program, the Turkish government expects $5.3 billion in privatization revenue in 2013.

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