Groundbreaking was scheduled on 21 May for a $190 million build-operate- transfer (BOT) power plant to be fuelled by natural gas at Esenyurt, outside Istanbul. Its sponsors say it may be the first large BOT plant to go ahead in Turkey.
Construction is scheduled to start in mid-1995, for completion and start- up two years later. The 180-MW co-generation project is sponsored by the US’ Mission Energy Company together with the local Doga Enerji, and will include heating as a by-product for two large housing complexes with a combined 14,000 new homes at Esendent, and Bogazkoy nearby. The organisers expect this social aspect to give the project high priority amongst a number of BOT power schemes under way.
Another promising aspect to the Esenyurt deal is that it contains very little or no commercial financing. In the past, finding acceptable assurances other than a sovereign repayment guarantee has proved a hurdle.
The financing package put together by Citibank will be a blend of export credits and equity. The Overseas Private Investment Corporation (OPIC) of the US will probably cover about 60 per cent, 20-25 per cent will be supplied in the form of equity from the project partners, mainly Mission, and most of the remainder will be in the form of export credits covered either by the Netherlands’ or Italy’s official export credit agencies.
Most of the relevant BOT agreements have been signed for the project, including an energy sales agreement with the Turkish Electricity Generating Authority, and a gas supply agreement with state pipeline and gas agency Botas. However, the final agreement of the treasury to guarantee the sales and gas supply is still pending. This is supposed to replace a direct sovereign repayment guarantee for construction financing.
A decision is still awaited from the country’s highest administrative court on whether the project represents a concession or not. The council is reviewing all BOT projects following a ruling by the country’s constitutional court that BOT projects could be considered as concessions. Constitutionally, this would mean that the final court of appeal in contractual disputes would be the council, closing off avenues for appeal to international arbitration.