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Cablegate: Turkey's Electricity Exports to Iraq - Good News;

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

UNCLAS SECTION 01 OF 02 ANKARA 005310

SIPDIS

SENSITIVE

USDOC FOR 4212/ITA/MAC/OEURA/CPD/CRUSNAK
DOE FOR CHUCK WASHINGTON
TREASURY FOR INTERNATIONAL AFFAIRS - CPLANTIER
STATE ALSO FOR DAS BRYZA
STATE ALSO FOR OPIC

E.O. 12958: N/A
TAGS: ENRG EPET ETRD TU IZ OPIC
SUBJECT: TURKEY'S ELECTRICITY EXPORTS TO IRAQ - GOOD NEWS;
BAD NEWS FOR CURRENT EXPORTER

REF: A. ANKARA 4288

B. ANKARA 5080

SENSITIVE BUT UNCLASSIFIED. PLEASE HANDLE ACCORDINGLY.

1. (SBU) SUMMARY: Turkey's Kartet Company gained GOT
regulatory approval for increasing its exports to Iraq to 300
MW from current 200 MW, but for a limited and indefinite
period, in favor of aiming for a competitive tender for
allocation of transmission capacity for the longer term or
for a larger amount. Kartet also did not gain approval for a
proposed increase to 1200 MW, but remains confident, because
of GOT political support, and despite opposition from the
energy regulatory authority. End Summary.

2. (SBU) Currently exporting about 200 MW of electricity
from its Silopi plant in Turkey to northern Iraq, Kartet
Company has sought to increase its exports to - first - 300
MW, then later to 1200 MW, using electricity from Turkey's
transmission grid (Ref A). Kartet's Orhan Karadeniz told
EnergyOff September 9 that he had good news and bad news
(from Kartet's perspective). Good news: Turkey's Energy
Market Regulatory Authority (EMRA) extended Kartet's export
license to January 2007 for up to 300 MW. Bad news: Kartet's
special export rights will be terminated at the earlier of
January 2007 or at the time of a competitive tender for
allocation of transmission capacity from the Turkish grid
(State Company TEIAS).

3. (SBU) The Kartet rep still expressed optimism that they
could move forward on their increase to 300 MW and that
Kartet was the only company in a position to deliver
electricity to northern Iraq, even in the event of a
competitive tender, because of its existing contract (with
the ITG - and before CPA) and technical capacity. Karadeniz
said that work had been completed or funding had been
identified for improvements at the border and rehabilitation
and improvements on the Iraqi side to achieve 300 MW
sustained transmission capability in about 3 weeks. He was
still optimistic about obtaining an eventual extension from
EMRA for beyond January 2007, based on the legal basis of its
contract and license application.

4. (SBU) With respect to the larger increase to 1200 MW,
Karadeniz admitted that the prospect and timing had been made
more uncertain, but he cited high level support from the PM
and MFA as potential for an ultimate positive solution.
Karadeniz asked for help on keeping Turkish and Iraqi
officials focused on electricity exports from Turkey (he
lamented ineffectiveness of ITG individuals). Karadeniz said
he would travel to the U.S. and be in Washington September
16-19 to meet with DOD and OPIC (possible source for
facilitating financing for Iraq improvements related to the
increased exports project).

5. (SBU) COMMENT: Embassy has previously noted that Kartet
may not be the sole company capable of providing increased
electricity to northern Iraq. As energy sector regulator
struggling to secure its independence, EMRA is determined to
ensure a level playing field among other companies it says
are also interested in competing for scarce transmission
capacity to export electricity. Embassy will keep this issue
on the table; however, strong political interests back
Kartet's project. EUR DAS Bryza raised the issue on August
26 with MENR U/S Sami Demirbilek, who thought EMRA's plans to
auction transmission rights to Iraq from Turkey was not
workable (Ref B).
MCELDOWNEY

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