A contract valued at $260 million for the expansion of the Kangal power station has been signed by the Turkish Electricity Generation & Distribution Corporation (TEAS) with a consortium led by Hungary's Transelektro with the local Gama . This is the second important contract to be tied up this year in a series of contracts for power stations fuelled by lignite (brown coal), together with the installation of flue-gas-desulphurisation (FGD) systems.

The consortium was selected in March for the award. Transelektro will supply the boiler island and Gama will carry out the civil and erection works, their portions roughly being equal at about $70 million. Japan's Mitsubishi Corporation will supply generators and the FGD system, while the electrical components and the coal handling system will be supplied by Germany's Siemens and Koh respectively.

The project calls for the expansion of the plant by the addition of a third 150-MW unit together with an FGD system, during a contract period of 46 months. The FGD unit is needed to counter the emission of pollutants from the slow-burning and sulphurous lignite.

It is the second major contract in the series to escape a treasury review of infrastructure development as part of the 5 April recovery programme. Negotiations with the treasury over the financing of the $500 million contract to expand the Cayirhan plant are nearing conclusion (MEED 29:7:94). However, decisions are still awaited from the prime ministry on the fate of an $85 million contract to add an FGD unit to the Kemerkoy plant, and a similar award for the Yatagan plant. Environmental factors will largely influence the outcome.

Financing still has to be concluded for the Kangal contract, however. The consortium yet has to select a bank to arrange the commercial portion of the funding, expected to be around $90 million. The remainder would be in the form of export credits from the countries of the participating foreign contractors. Commercial credit will have to be arranged for the whole of Gama's portion.