Search

 

Cablegate: Enron's Response to Bot Problems

This record is a partial extract of the original cable. The full text of the original cable is not available.

141457Z Nov 03

UNCLAS ANKARA 007103

SIPDIS


SENSITIVE


STATE FOR E, EB/CBED, EB/IFD, AND EUR/SE
DEPARTMENT PASS OPIC, NSC FOR BRYZA
USDOC FOR 4212/ITA/MAC/OEURA/CPD/DDEFALCO
USDOE FOR CHARLES WASHINGTON
TREASURY FOR OSIA


E.O. 12958: N/A
TAGS: EINV ENRG ECON PREL TU
SUBJECT: ENRON'S RESPONSE TO BOT PROBLEMS


REF: A. ANKARA 6696
B. ANKARA 6612
C. ANKARA 6423


This cable is sensitive but unclassified, not for internet
distribution.


1. (SBU) Summary. ENRON's lawyer has forwarded a proposal
to AK Party Vice-Chair Reha Denemec in an attempt to reach a
compromise with the Ministry of Energy (MENR) over its BOT
project. ENRON continues to demand an unconditional license
and appears anxious to resolve the dispute over electricity
prices to avoid further investigations. ENRON's offer to
lower prices gradually upon reduction of gas prices by BOTAS
will put pressure on other BOT companies to do adopt a
similar approach. However, with local elections looming, the
GOT's eventual response will be overshadowed by politics.
End Summary.


2. (SBU) On November 7, ENRON's lawyer told econoff that he
presented Reha Denemec, AK Vice-Chair and close advisor to
Prime Minister Erdogan, with a proposal that should form the
basis of eventual discussions between the GOT and ENRON on
how to resolve this BOT project's problem (reftels). Instead
of launching formal negotiations with the Energy Ministry and
the Energy Market Regulatory Authority (EMRA), ENRON has
decided to raise the issue with the Prime Minister's advisor
because the MENR and EMRA continue to stall. Denemec
reportedly promised ENRON that he would intercede with the
Ministry of Energy, and ENRON is awaiting an informal
response. ENRON's proposal was faxed to EUR/SE.


3. (SBU) As reported in reftel C, ENRON wants EMRA to issue
an unconditional provisional license to the Project for
statutory minimum of 10 years, with agreed zero cost buyout
by the MENR in 2010. The provisional license would in effect
be a 6 year license. ENRON also insists that the GOT (TETAS
and the MENR) pay all currently outstanding arrears,
totalling $3.90 million as of October 31, 2003. After the
license is issued and all investigations and audits are
closed, ENRON is offering to lower electricity prices.


4. (SBU) ENRON is considering a 25 percent price reduction
(1.52 cents per kilowatt hour kWh) in the non-gas component
of the power price upon reduction in the price of natural gas
charged to the Project by BOTAS from approximately $250 per
million cubic (Mcm) meters to about $170 Mcm. The combined
price reduction will reduce the overall power price from
10.67 cents kWh to 7.64 cents kWh. ENRON would consider
further incremental price reductions with the condition that
the buyout provision be extended to 2012.


5. (SBU) ENRON fears that the problems are escalating beyond
the dispute over electricity prices. ENRON's lawyer cited a
recent GOT tax audit as an example that Ankara wants to
recover losses or generate revenue in addition to lowering
electricity prices. GOT auditors claim that ENRON owes $140
million in taxes, but ENRON's Turkish partner GAMMA disputes
this amount, saying that ENRON does not owe anything.
ENRON's lawyer complained that the tax audit was further
harassment for BOT companies.


6. (SBU) Comment. ENRON's proposal appears to be a
reasonable compromise to lower electricity prices over time;
however, with elections looming, politics is likely to
overshadow the GOT's eventual decision. ENRON also is
offering a significant discount to the GOT in return for
protection from future investigations. This could put a lot
of pressure on other BOT projects to unilaterally reduce
their prices. Additionally, some elements in Turkey would
use this to validate their claims that electricity prices
should be lowered and demand renegotiations with BOTs. End
Comment.
EDELMAN

© Scoop Media

 
 
 
World Headlines

 


Myanmar: UN Condemns Escalating Violence In Deadliest Day Of Protests So Far

In response to the killing of at least 18 protesters demonstrating against Myanmar’s military coup, the UN human rights office (OHCHR) on Sunday together with the UN chief, strongly condemned the “escalating violence” and called for an immediate end to the use of force... More>>

Syria: Economic Decline, Rising Hunger And Surging Humanitarian Needs

Syria’s fragile economy has “suffered multiple shocks” over the past 18 months, with its currency plummeting and joblessness swelling as people struggle to cover their basic needs, the UN Emergency Relief Coordinator told the Security Council ... More>>

OECD: Final Quarter Of 2020 Shows Continued Recovery In G20 International Merchandise Trade

G20 international merchandise trade continued to rebound in the fourth quarter of 2020 ( exports up 7.2% and imports up 6.8%), following the sharp falls seen in the first half of 2020, as lockdown measures affected trade globally. Although growth ... More>>


Focus On: UN SDGs


UNFCCC: Greater Climate Ambition Urged As Initial NDC Synthesis Report Is Published

UN Climate Change today published the Initial NDC Synthesis Report, showing nations must redouble efforts and submit stronger, more ambitious national climate action plans in 2021 if they’re to achieve the Paris Agreement goal of limiting global temperature rise by 2°C—ideally 1.5°C—by the end of the century... More>>


2021: Critical Year To ‘reset Our Relationship With Nature’ – UN Chief

During this time of “crisis and fragility”, the UN chief told the United Nations Environment Assembly on Monday that human well-being and prosperity can be vastly improved by prioritizing nature-based solutions. Painting a picture of the turmoil ... More>>


Paris Agreement: UN Secretary-General António Guterres To Mark U.S. Reentry With Envoy For Climate John Kerry

Watch live at webtv.un.org UN Secretary-General António Guterres will join U.S. Special Presidential Envoy for Climate John F. Kerry at an event marking the United States’ reentry into the Paris Agreement this Friday. The discussion with the Secretary-General ... More>>