The economic crisis has complicated financing negotiations for a series of contracts for the installation of flue gas desulphurisation (FGD) units at thermal power plants, contractors say. The FGD units are required to curb pollutant emissions from the lignite (brown coal) fuelling the plants (MEED 29:4:94).

The Turkish Electricity Board (TEK) has awarded most of the contracts already, and they have been included in the budget and investment programme for 1994. The government's 5 April austerity package calls for a 20 per cent spending cut in all sectors. This includes the energy sector and externally financed projects, but as they are a high priority for the government they are likely to escape any cutbacks.

However, it is uncertain whether the treasury will be willing to shoulder the fresh borrowing required for the FGD schemes. The treasury's external borrowing requirement for 1994 is about $1,000 million. Funding proposed for most of the contracts includes a mixture of commercial and external credits.

Project financiers, following the lead of sovereign lenders, are likely to seek more expensive terms after the downgradings by US ratings agencies, contractors say. This is likely to delay some of the FGD schemes, they add.

Projects which may be affected include:

The $505 million order to add 250 MW-300 MW in generating capacity and two FGD units to the Cayirhan power station being carried out by a consortium led by Austrian Energy & Environment. A team of financiers visited Ankara on 10 June to negotiate terms (MEED 14:1:94)

The $250 million scheme to add 150 MW plus an FGD unit to the Kangal power plant. This is being carried out by a Japanese, German and Hungarian consortium with local partners

A $85 million contract to add an FGD unit to the Kemerkoy plant, awarded to the US' Babcock & Wilcox with the local Gama

The contract now being negotiated between TEK and Germany's Gottfried Bischoff & Company with the local Guris to install an FGD unit at the Yatagan plant

A $38.5 million contract to install an FGD unit at the Orhaneli plant, awarded to Germany's Noell-KRC and the local Alarko. Financing has already been agreed for this contract.