Turkey Cancels Contract for First Nuclear Power Plant

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Written by Martin Lynch, European New Editor for Industrial Info (Galway, Ireland)--Turkey has pulled the plug on the country's first nuclear power plant by cancelling the contract with a Russian consortium led by Inter RAO UES (Moscow, Russia) and Atomstroyexport (Moscow).

Turkey's state-owned power company Tetas (Ankara, Turkey) announced the decision to cancel the contract for the 4,800-megawatt (MW) Akkuyu plant on the Mediterranean coast, but has given no reason for doing so. However, the decision comes only a week after a Turkish court ruled that parts of the contract were invalid, claiming that there were legal issues with the pricing arrangement as well as the location.

The cancellation undermines Turkey's ambitions to have three nuclear power stations up and running by 2020. The country, which could be facing an energy crisis as early as 2012, has stated that the three plants would provide up to 20% of the country's energy needs. Turkey is heavily reliant on Russian gas imports.

The cancellation also comes at a time when wide-ranging energy deals have just been brokered between Russia and Turkey, including the creation of a new liquefied natural gas (LNG) terminal in Ceyhan, the Samsun-Ceyhan pipeline deal, and Russia's obtaining permission to run the planned South Stream gas pipeline through Turkish waters. For additional information, see October 22, 2009, news article - Samsun-Ceyhan Pipeline Project to Turn Turkey into Energy Corridor. The South Stream pipeline is seen as a rival project to the European Union's Nabucco pipeline, which was created to break Europe's dependence on natural gas.

Despite this setback, Turkey still plans to forge ahead with nuclear plans. Turkish Energy Minister Taner Yildiz has confirmed that the government will not appeal the court's decision regarding Akkuyu. He has also said that a new tender for Akkuyu and another for a plant at Sinop on the Black Sea will be launched early next year.

The Akkuyu contract has been plagued by problems from the offset, especially since it emerged last year that the Russian consortium was the only one to tender for the contract. Others groups withdrew before tendering, claiming that the process was too rushed, and not enough sufficient guarantees were in place.

The price of electricity of the winning bid has been a particular bone of contention, with Atomstroyexport offering prices up to four times the current rates in Turkey. The Russian company initially offered a price of $0.21 (0.14 euro) per kilowatt-hour (kWh), later amending this to $0.15 (0.10 euro) per kWh, which was also deemed too high. The plan for Akkuyu was to build four Russian VVER-1200 pressurized water reactors by 2012, each capable of generating 1,200 MW of electricity. For additional information, see June 18, 2009, article - Turkey Likely on Course for First Nuclear Power Plant.

Turkey had planned to build a nuclear plant at Akkuyu in the late 1990s, but plans were scrapped in 2000 because of a lack of funds and pressure from various protest groups. Some groups maintain that the plant site lies on a seismic fault line.

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