World Bank Supports Electricity Generation
Tue, 06 Jun 2006 18:09:37 -0400
World Bank Supports Electricity Generation Rehabilitation and
Restructuring Project in Turkey
WASHINGTON, June 6, 2006--The World Bank today approved a EURO
280 Million (approximately US$350 million)
Electricity Generation Rehabilitation
and Restructuring Project Loan for Turkey. The loan will be to Elektrik Uretim AS
(EUAS), the government-owned electricity
generation company that owns and operates
about 25,000 MW of thermal and hydro generation
capacity in Turkey. The loan to EUAS will
be guaranteed by the Republic of Turkey.
The development objective of the project loan is two-fold. The first objective is to mitigate the
risk of electricity supply shortages during
the period of energy reform transition
until around 2010.
The second objective is to support
the restructuring of the state-owned generation
sector operated by EUAS into corporate
entities and prepare them for operation
in the electricity market and for subsequent
To support the achievement of these goals the project will finance:
* The rehabilitation of the Afsin-Elbistan A Power Plant. Afsin Elbistan A has a design capacity
of 1,355 MW with four generating units
that were commissioned between 1984 and
Presently, the plant cannot operate
at more that about 75 percent of its design
capacity and its efficiency has declined
by about 25 percent. The project will repair and upgrade the power plant systems
to restore reliability, availability,
power output and to improve plant efficiency.
In addition, new environmental
protection systems, specifically electrostatic
precipitators (ESPs) will be installed
to reduce dust and particulate emissions,
which is the major environmental impact
of the Afsin-Elbistan A power plant.
EUAS staff's capacity will also be prepared in modern maintenance
practices to keep the plant in good operating
condition with higher capacity after rehabilitation.
New systems for frequency control
will be installed that would allow the
power plant to meet the standards established
by the Union for the Coordination of Transmission
of Electricity in Europe (UCTE). Meeting these standards would help Turkey in being certified
to operate synchronously with the South
East European Electricity network.
* Support for the financial and operational restructuring of
generation business: This will focus on strengthening the
portfolio generation companies that will
be created by the reorganization of EUAS
generation assets, and enabling these
companies to function effectively in the
competitive electricity market.
This aspect will also focus on
the design and implementation of mechanisms
to attract private investment in generation
to ensure adequate electricity supply.
On the occasion of the approval of the project loan, Andrew Vorkink,
Country Director for Turkey stated, "Turkey
faces a risk of potential shortfall of
electricity between 2008-2010 depending
on prospective economic and demand growth.
To mitigate these risks and reduce
the possibility for economic dislocation
resulting from power shortages, it is
important that two steps are taken. First,
the competitive electricity market under
implementation needs to establish an operating
track-record to remove the uncertainties
that investors perceive.
Second, cost--effective generation
sources and underperforming assets need
to be developed and rehabilitated to provide
capacity and energy to fuel Turkey's private
enterprise and household needs.
This project loan will complement
the on-going program of World Bank support
to Turkey's energy sector by addressing these two priorities."
The World Bank loan to EUAS for the Electricity Generation Rehabilitation
and Restructuring Project has a 15-year
maturity, including a 5-year grace period.
It will be a variable spread loan with
level repayments of principal.
For more information about the World Bank's
work in Turkey, visit:
more information about this project, visit:
Ankara--Tunya Celasin: Tcelasin@worldbank.org
In Washington--Miriam Van Dyck: Mvandyck@worldbank.org