Cablegate: Turkish Energy Ministry Views On Electricity To

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

231440Z Jul 04



E.O. 12958: N/A

1. Summary: According to Energy Deputy U/S Cimen, Turkey
remains interested in exporting electricity to Iraq.
However, a necessary first step is for private companies to
conclude a long-term supply contract with Iraqi officials.
Turkey has excess generating capacity for a few more years,
but exports to Iraq would require construction of a
transmission line and new generation capacity in Turkey. He
said the new Electricity Law makes it easier for Turkish
state and private companies to cooperate on electricity
exports. End Summary.

2. Econoff met with Deputy U/S Selahattin Cimen July 22 to
review Turkey's policy on electricity exports to Iraq. In
2003, the Ministry was instrumental in assisting Turkish
energy firm Karadeniz Energy export 75 MW of electricity to
Iraq from dedicated generators near the Iraqi border.
Karadeniz is installing additional generators this year to
increase exports to 180 MW, the maximum that can be exported
over the existing transmission line to Iraq. Cimen said
Turkey is eager to help again, but because exports would
require construction of a new transmission line, any scheme
to supply more electricity to Iraq must be initiated by
private companies and be based on a long-term supply contract.

3. As for the length of a contract, Cimen cautioned that a
decision to proceed should not be based on the assumption of
continuing excess electricity supply in Turkey. At present,
Turkey has a usable surplus of about 4,000 MW that could be
exported to Iraq. However, the Ministry expects that surplus
to evaporate by 2008. If an agreement were reached today,
Cimen pointed out, it would take a year to build the
transmission line, leaving about three years of declining
surplus available for export. Instead, a plan to supply Iraq
must include not only transmission lines but investments to
increase generation in Turkey.

4. Cimen assured econoff that the Ministry had examined the
idea in detail. He said the GOT would look to a private
company to finance and build the transmission line, but he
allowed that the state electricity transmission company
(TEIAS) could also build and operate the line, if a long-term
contract were in place. He pointed out that it was not as
simple as just building a transmission line connecting the
Turkey and Iraqi power grids. Some interim arrangement would
be necessary: either supply Turkish power to a limited
region in Iraq -- effectively disconnecting the region from
the Iraqi grid and including it in the Turkish system -- or
designate one or several generating plants to supply directly
to the Iraq grid, such as the Karadeniz plant in SE Turkey
that currently supplies electricity to Iraq.

5. Comment: Cimen noted that the administrative hurdles for
such a project have been reduced. The Electricity Market
Law, which entered into force earlier this year, liberalized
the market and allows the state electricity trading firm
(TETAS) to sell power to private companies and allows private
companies to export electricity. If there is a company
interest and Iraq is prepared to conclude the long-term
arrangements needed to make projects viable, we see no reason
not to continue tot pursue this option with the Turks. End

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