Agreement in principle has been reached for the construction of a $1,500 million gas-fired power plant on a build-operate-transfer (BOT) basis near Ankara. But before the scheme, known as Ankaragaz, can go ahead, complicated legal problems remain to be resolved.

The 1,000-MW plant is being proposed by a consortium of Russia’s Gazprom, Switzerland’s ABB Asea Brown Boveri, and the local Entes. The consortium has reached agreement in principle for the plant with the Energy Ministry, but is waiting for the resolution of the legal problems. Once these are dealt with, construction will take around two-and-a-half years.

The plant will use Siberian natural gas already supplied by Gazprom within the context of a framework agreement reached with the former Soviet Union in 1994. The Russian company is committed to supply 1,700 million cubic metres of gas a year to fuel the power station.

Analysts say the legal problems for BOT projects chiefly relate to confusion over separate rulings by the the country’s Council of State (Danistay) and its constitutional court. The Danistay judged in early summer that 16 BOT power projects represented commercial contracts but not concessions; however, a later ruling by the constitutional court on a framework BOT law appeared to invalidate this.

Concession status would place foreign partners in BOT contracts at a disadvantage, notably by denying access to international arbitration in the case of contractual disputes. So far, however, the constitutional court has not yet published its reasons for its adverse ruling.

The Energy Ministry and BOT ventures are pressing forward in the interim, the latter with financing packages (MEED 30:7:95). But legal analysts say the issue may not be resolved before the projects are ready to start, and that prospective participants in financing packages, such as the Export- Import Bank of the US (Ex-Im Bank) and the US’ Overseas Private Investment Corporation (OPIC), may have to accept this risk.