Georgian Deputy Minister of Energy Valishli “We will contribute to energy security with the construction of new HEPPs”

Moreover, Georgian Deputy Minister of Energy Marika Valishli informing about the investment opportunities in Georgia pointed out that as the government they concentrated on improving relations with Turkey and noted the importance of improving relations between the two countries. Valishli recorded as a transit country, Georgia had strategic partners such as Turkey, Azerbaijan and added that the new transmission line to be constructed with Turkey would cost half a million dollars and increase up to the capacity of 1,000 MW.

Valishli, stating that they developed policies concerning diverse energy sources and use of local sources after 2006 gas crisis occurred in the country, noted the importance of developing HEPP potential of Turkey and Georgia in terms of improving the welfare of the countries. Valishli, informing increase in demand will continue shortly, said that energy security was synonymous with state security. Valishli, reporting construction of HEPPs will contribute to energy security, noted existing infrastructure would also be rehabilitated and new infrastructure projects would be prepared.

Feasibilities of 80 ea new small-scale HEPP projects have been prepared

Valishli stated there were 20 ea ongoing HEPP projects in the country among which Turkish Consortiums were included and feasibilities of 80 ea new small-scale HEPP projects had been prepared. Valishli continued that arrangements were made in the projects to be realized with Build-Operate model in favor of the investors. Valishli indicated that efforts were being spent and liberal policies were implemented in order to make Georgian energy sector attractive for the investors and added that generation and distribution sectors were completely privatized, tariff and network fees were eliminated for new HEPP projects for encouragement purposes. Valishli reported that only construction license was sought for these projects which was provided to the companies within 60 days, Valishli went on to say that long-term transmission agreements could be made, guaranteed purchase opportunities were provided and license procedures for projects greater than 13 MW would be made easier.

Furthermore TEİAŞ Deputy General Director Halil Alış communicated in his speech that Turkey’s connection to European Electricity System would start latest in June via triple test connection and added agreements were signed with Greece and Bulgaria last month and net transfer capacity would reach 1500 MW after one year. Alış informed that the transfer with Georgia increased to 140 MW, the route was changed in order to transfer electricity to be obtained from 400 kV 160 km line to inner regions and Turkey part of 135 km would be completed in June 2012. Alış said attraction decreased due to falling electricity prices stemming from excess supply in Turkey and added that Turkey would face supply security problem in 2012 if 3,000-3,500 MW project was not put into service each year/

Econ Poyry Project Manager Bjorn Brandtzaeg, Georgia Government’s HEPP consultant company, said there was an important HEPP potential in Georgia and the sector was developed in the country because of new policies. Brandtzaeg informed about Upper Mtkvari HEPP Project, tender of which was announced recently, stated that a pumping project close to Turkish border was opened to prequalification applications and applications could be submitted until 28 April 2010. Brandtzaeg stated that 135 km tunnel, 32 km pumping storage would be implemented in the project and it was projected to have generation capacity of 700 GW. Valishli said that the company to submit their offers in the way to release the maximum electricity in Georgia would have the opportunity to win the project which would cost between $ 410 million and $ 604 million according to the alternatives. Brandtzaeg said that together with the project electricity export could be made with Turkey and Gama company from Turkey informed them that that it was interested in electricity purchasing.

LICENSING work continues in connection with the recent private sector applications made to Energy Market Regulatory Authority (EMRA) in the scope of the liberalization process of electricity market.

According to TEBA information, EMRA has started to study and evaluate the 5 auto-producer and 5 wholesale license applications made. It is noted that some of the applications opened for objections have reached the level of appropriateness, EMRA will continue to take up all the applications made gradually so as to put them to the same level.

Subsequent to the companies realize the necessary procedures, the abovementioned licenses are expected to be issued: Applicant companies for wholesale license are: CS Uluslararası Toptan Elektrik Sanayi ve Ticaret A.Ş., AGE Elektrik Enerjisi Toptan Satış A.Ş., Özaltın Makro Elektrik Enerjisi Toptan Satış A.Ş. and Anadolu Grup Elektrik Enerjisi Toptan Satış A.Ş. company which has 2 applications.

Names of the companies which have applied for auto-producer license:

Legal Entity	Location	Type of the Plant	Installed Power (MWm)
Durum Gıda Sanayi ve Ticaret	Mersin	Thermal-co-generation-natural gas	6.42
Işıl Sağlık Hizmetleri A.Ş.	Ankara	Natural Gas-thermal-co-generation	0.8
Ne-Sa İnşaat ve Madencilik	Adana	Natural gas	1.584
Keskinoğlu Tav. Dam. İşlet.	Manisa	Natural gas	3.624
Canan Tekstil Sanayi Ticaret A.Ş.	Gaziantep	Thermal-co-generation-natural gas	4

April 12 2010-Treasury Issued Incentive Certificates for Investments Amounting to TL 1,955 Billion in February

Completely new investments rank first with incentive certificates valued at TL 1,219 billion by sectors followed by expansion investments with TL 292 million

UNDERSECRETARIAT of Treasury issued incentive certificates for 295 investment projects in the amount of TL 1,955,884 billion. Foreign exchange usage of these investments has become $519,416 million.

In the incentive certificates issued for investments in February, Completely New Investments rank first with 184 certificates valued at TL 1,219,979 billion, followed by Expansion Investments amounting to TL 292 million with 57 certificates. The other certificates issued in February are as follows: Expansion-Modernization Investments amounting to TL 213,461 million with 10 certificates, Modernization Investments totaling TL 163,052 million with 29 certificates, and Modernization-Shipment Investments valued at TL 21,794 million with 1 certificate.

While, by sectors, Manufacturing Industry ranks first with the incentive certificates amounting to TL 874,625 million, it is followed by Electricity-Gas-Water Sector with certificates totaling TL 264,200 million. Mining-Quarry Sector ranks third with the certificates amounting to TL 172 million.

WORLD BANK Turkey introduced its report titled “Lights Out? The Outlook for Energy in Eastern Europe and Central Asia” at the meeting held by Economic Policy Research Foundation of Turkey (TEPAV) on April 7, 2010.

Making an opening speech at the meeting, World Bank Turkey Country Director Ulrich Zachau said that energy was a strategic issue for the whole world and that its importance would increase in the years ahead. Noting that the countries in Eastern Europe and Central Asia would face a bottleneck in energy supply unless the required energy investments would be realized, Zachau said “The upcoming days seems not to be bright”.

Stating that the energy efficiency and renewable energy resources need to be improved, Director Zachau also emphasized that the greenhouse emissions required to be reduced. Commenting Turkey recently took important steps especially in her energy policies and energy investments, Zachau said “Turkey’s position is good compared with the many countries of Eastern Europe and Central Asia. As World Bank, we support the national energy strategy of Turkey”.

“Also private sector must take part in required investments”

The Manager at Infrastructure and Energy Sector Department of World Bank Europe and Central Asia (ECA) Region, Kari Nyman noted in his informative speech on World Bank’s outlook report that the huge future investments required in the region could not be provided by the public sector alone and that private sector should also take part in these investments. Nyman pointed that also the electricity infrastructure was required to be renewed in addition to the natural gas infrastructure in the region. Stating that Russia is an important natural gas supplier for the countries of the subject regions, Nyman noted that Russia and Gazprom needed $20 million capital investment in order to meet the potential increase in energy demand of the regions. He added that the World Bank might support the countries for the energy investments along with the carbon financing.

According to the Report prepared by the World Bank, if an investment of $3 trillion were not made in the next 20-year period, an energy bottleneck will be experienced in Europe and Central Asia. It is further pointed out in the Report that due to the economic crisis appeared in 2008, a temporary a problem-free period was lived but afterwards, upon rising the growth rates again, energy consumption seems to increase, and that between the years 2010-2030, an investment of $1.2 trillion is to be made in primary energy resources. In addition, an additional investment of $1.5 trillion is to be made in the infrastructure of electricity sector within the coming 20-25 year period apart from an investment of $500 million in the regional heating requirements.

In the Report, it has further been emphasized that countries are to act speedily as much as possible to provide financing support, when the needed magnitude and length of the periods in energy sector towards the implementation of the projects are taken into consideration. It is also communicated in the Report that failure to create an appropriate medium to support the investments will lead limiting the economic activities plus 10% deficit in energy supply will lead a 1% decrease in economic growth.

In connection with this issue, the World Bank European and Central Asia Region Sustainable Development Director Peter Thomson has said that in the region, the demand for primary energy is expected to increase by 50% and the demand for electricity by 90% by 2030. Thomson has also indicated that the financial crisis has created an opportunity for the countries to eliminate the energy bottleneck to a certain extent, and that this opportunity will last only for 5-6 years and measures are to be taken for both supply and demand. Lastly, he has added that in case no measure were taken, the region will become a net importer leaving behind its net exporter position.

IT IS REPORTED that the scrutiny conducted by SPO Undersecretariat for some time towards New Ankara High Speed Train Central Station Project planned to be realized on Build-Operate-Transfer (BOT) Model by TCDD General Directorate is about to be completed and expected to be submitted to the Supreme Planning Council (SPC) for approval.

The sources close to the subject report that as the result of the scrutiny conducted by SPO Undersecretariat until now, BOT Model Project was considered to be given approval conditionally and SPO opinion to this effect is expected to be completed in the days ahead.

As it might be recalled, we earlier reported that Ankara Metropolitan Municipality has forwarded favorable opinion to TCDD towards the in-city connections of the project which was given importance by SPO Undersecretariat (TEBANEWS#1453/March 22, 2010).

The sources close to the subject report that SPO may express the condition of assuming the construction of metro connections of the project on BOT Model by TCDD together with Ankara Metropolitan Municipality. Accordingly, construction of both Atatürk Culture Center (AKM) and Metropolitan Municipality Metro Station connections of New Ankara Central Station Project will be committed by TCDD and Ankara Metropolitan Municipality together.

The same sources further note that SPO Undersecretariat has found some lacking points in the answer given by Ankara Metropolitan Municipality towards metro connections of BOT Model Project and for this reason deemed it appropriate to present such a condition to be fulfilled. As a matter of fact, in the answer given by Ankara Metropolitan Municipality, the financing aspect of the metro connections were not included. Furthermore, it was not clear by whom the financing of the metro connections would be assumed.

It is reported that the importance of clarification of the investment to be required for subject connections and by whom the subject investment to be assumed are placed emphasis by SPO Undersecretariat in its scrutiny.

Within the context of new Ankara Central Station Project, there will be 6 lines, 3 home, 3 out and 3 platforms. The construction area of the New Central Station totals to 175 thousand m², the area of construction is 70 thousand m². Within the context of Project, there will be a 4 star hotel, 5 thousand m² office area, 2 thousand m² shopping area, 7 thousand m² food hall and other halls.

According to the revised feasibility report, in case own sources are used by 50% in the project, the cost effectiveness ratio will be 2%. Only the internal equipments and manufacturing are planned to be made on BOT Model. The tracks, signaling and telecommunication systems and platforms in the Central Station will be installed by TCDD within the context of Başkentray Project.

April 12 2010-Global Crisis Contribution Credit of USD 1.3 Billion by International Reconstruction and Development Bank for Turkey’s Balance of Payments

The agreement towards the credit of €931 million provided on March 24, 2010 by International Reconstruction and Development Bank, main agency of World Bank, Mart 24, 2010, has taken effect on April 7, 2010. Turkish Government has committed to report its long term debts to the Treasury Undersecretariat from now on

THE AGREEMENT towards the credit of €931 million (approximately USD 1.3 billion) provided by the International Reconstruction and Development Bank (IBRD), main agency of the World Bank for financing the cash deficit of the Treasury Undersecretariat has been published in the Official Gazette dated April 7, 2010 and has taken effect.

Credit extended under the title of Restoring Equitable Growth and Employment Programmatic Development Policy Loan–REGE DPL is expected to be used by the Treasury Undersecretariat in April at one draw in its balance of payments program.

By the subject credit, maintaining the social programs at sustainable costs, improving the public fiscal management, providing employment and social protection in the Global Crisis period and in post- Global Crisis period, supporting the reforms implemented towards increasing the employment of Private Sector origin are targeted.

Treasury Undersecretariat will pay preliminary commission fee for the credit, in the amount of 0.25% of the credit. Treasury Undersecretariat is envisaged to pay subject fee within 60 days as from April 7, 2010 which is the effectiveness date of the credit. In the repayment of the Credit, the interest to be paid for each Interest Period will be equal to libor ratio+Variable Margin applied to monetary unit of the Credit.

Repayment of the Credit will be completed in 19.5 years with a grace period of 16 years. The principal payment of the Credit will be started on August 15, 2026 as to be made on each February15 and August 15 along the period starting from August 15, 2026 up to February 15, 2029. Along this period, in each payment, 14.29% of the principal will be paid back. Furthermore, on August 15, 2029, the amount corresponding to 14.26% of the principal will be paid.

April 12 2010-EÜAŞ’s Afşin-Elbistan C, D and E Coal Fields Projects

Since Supreme Council of Immovable Monuments and Antiquities will stop the tender for finding an “Historical monument” in a specific area of D Field, exclusion of D Field from the coverage of the specification is considered. The remaining fields can be added into C and E fields

REPORTEDLY, a new stage has been reached in the works carried out towards the evaluation of C, D and E Coal fields in Afşin-Elbistan region by EÜAŞ General Directorate to be operated on royalty model on the condition of installing power plant in line with the target set by the Ministry of Energy and Natural Resources (MENR) to get benefit of the indigenous lignite.

It has been learnt that for an “Historical Monument” has been found out in a specific area in D Field in the course of evaluation of the drilling works conducted by the Mineral Research and Exploration Institute (MTA) General Directorate and scrutiny on the final drilling reports towards the fields, EÜAŞ General Directorate has re-considered the investment plans towards the field.

As the Supreme Council of Immovable Monuments and Antiquities will cancel the tender for finding an historical monument in D Field. EÜAŞ General Directorate has submitted the offer of excluding the problematic area in D Field from the coverage of the investment plan to the authorities involved.

As it might be recalled, we earlier reported that EÜAŞ had started the preliminary preparations towards the tender to be launched for making use of C, D and E Fields for launching royalty tenders anew (TEBANEWS#1448/February 15, 2010).

As is known, Minister of Energy and Natural Resources Taner Yıldız has dwelt upon the importance of Afşin-Elbistan lignite within the context of making utmost use of indigenous sources in the electricity generation, in his press conference held on March 23, 2010 and said that a power plant potential of 7-8 thousand MW existed in C, D and E Fields in Elbistan (TEBANEWS#1454/March 29, 2010).

The sources close to the subject report that the areas out of the specific point where Historical monument was found in D Field is considered to be made use of and the subject areas will be added into C and E Fields.

Under the circumstances, subsequent to the approval of authority of EÜAŞ General Directorate is obtained, the coal maps have to be prepared for C, D and E Fields anew. Thus, D Field will be excluded from the coverage of royalty model tenders, and in return C and E Fields will be enlarged.

In MTA General Directorate’s final drilling reports prepared for Afşin-Elbistan E Field, the existence of coal reserves of 1 billion 375 million tons, sufficient to operate a Thermal Power Plant of minimum 1000 MW in E Field was defined (TEBANEWS#1448/February 15, 2010).

In the most recent news story on the subject we reported that EÜAŞ would launch an international consultancy tender first for the evaluation of the new coal fields in Afşin-Elbistan and the regulation would be clarified in the project, the financing model would be defined and international introduction of the project would be made by the consultant to be delegated (TEBANEWS#1454/March 29, 2010).