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Thursday, 25 February 2010

As your self-appointed energy analyst based in Ankara, I tried to forecast the expectations in the New Year in our local Turkish energy markets. As you know, economy and business are governed by expectations. Market expectations are important in the economic forecasts as well as investments.

At this time, there are many economic forecasts made by the newspaper columnists however as we all see there are almost none in energy markets.

So with my humble capacity, I tried to draft a forecast albeit maybe somewhat irrational/ unfair for the New Year. Here are my predictions and expectations,

• There will be some surprise developments in our Public Enterprises of Energy sector including one occurrence dramatically in very near future. Sudden and rapid privatization could be realized.

• Experienced senior GMs of public enterprises will be promoted to upper consultancy posts, and then transferred to upper posts of private enterprise boards. New arrivals to those vacated posts will consume the remaining time rest of the year to get education necessary for the new posts they got; hence they will not take any initiative.

• World Bank and IMF delegations will have more visits to our Energy Ministry, Energy Regulatory Board, State Planning Organization, and Business Associations. Smiling faces will appear in the local media.

• Ministry of Energy will be looking for new projects to follow without considering that any initiative in energy sector gets its response in 10 year time in future. We all know that there is no fast solution.

• Newspaper columnists will continue to write ridiculous articles on energy business and continue to make confusions in "volt� and "watt�.

• Electrical Energy Market Law Nr. 4628 will be changed again. Some Clauses will be deleted. Some new Clauses will be inserted.

• Nuclear power plant tender in Sinop province will be released in June. Locals will always appeal, no one will listen to them as usual, and finally tender will be canceled again in two years time.

• Akkuyu Nuclear Power plant contract which would be a sort of "I did it my way� scheme will be signed with the Russians between government to government agreements. However parliament approval sessions will continue until the general election which is 17 months ahead from today.

• Location search for new nuclear power plants will be moved from hot waters of Mediterranean to Black Sea coast. However Nuclear power plant construction plans in Sinop will be suspended due to stiff local NGO reactions. New options will emerge in Igneada and Hopa since their local reactions would be expected less.

• Nuclear technology education in Istanbul Technical University will lead the national curriculum with their new M.Sc and Ph.D programs. METU will stay behind and continue to say "This subject is not on our agenda".

• Local investors will initiate to build new thermal power plants in Amasra firing "indigenous coal" where we all know that there is no sufficient amount of local coal to run the power plants in the long term. They will soon try to switch to imported coal option. People and NGOs of Amasra will react to thermal power plants. However Chinese companies will occupy the region. They will soon open restaurants, markets, laundries.

• Natural Gas bill will be completed. Pipeline public company will extend a portion of the contract. Termination of the public natural gas monopoly and market dominance is long-term wishful thinking. New General Manager Appointment search will continue.

• Black Sea offshore drilling will be initiated. At least once every month, we shall read "Large quantities of Gas / Petrol found, sufficient for local consumption" in the news media.

• Those who know and those who do not know, those who are capable and not capable, will all apply to get investment license to construct new imported coal firing thermal power plants on the shores of Iskenderun Bay. Public will react to such excessive crowd.

• People and NGOs of Iskenderun, Payas, D’¶rtyol counties will stand up for serious environmental concerns on new excessive number of imported coal firing thermal power plants. Other than environmental concerns, local people will feel that they have all the legal rights to block through local courts since there will be neither participation of local employment nor any local engineering in the new investments.

• In early 2010, Iran will cut-off the Natural Gas flow again due to excessive needs of her own domestic market for at least 1-month. Russians will increase capacity in the Blue Stream for a premium as usual.

• HEPP investments and dam construction activies will be increased on the small beautiful creeks of Eastern Black Sea coast. Our high tempered Black Sea coast citizens will not be so pleased with the outcome. Our NGO "Do not touch my Creek� will have rise in public appearance.

• TV programs will be increased over the Ilisu Dam. All these programs will have Tigris pasture image in the background accompanied with the sheep and pathetic background music. Everyone will memorize these photographs of sheep and the ruins.

• Afsin Elbistan A power plant rehabilitation will be tendered. There will be not sufficient participation and in the end it will be cancelled again.

• Tender for new Afsin Elbistan C-D units will be released. Due to excessive financial risks, participation will be limited and the tender will be canceled again because of high prices.

• Soma thermal power plant will be sold / privatized.

• Ladies of Straw Mountain will react to wind power plants in their Samandag region. No one will listen to them. EIA report will not be needed. There will be no land, slope, hill left without wind towers.

• Wind power plant investments in Cesme Peninsula will continue till the end of this year. Energy Transmission problems will be of high concern.

• Local production of Wind power plants will continue. JV news will increase, for the smallest power generation not less than 3 MW, Prototypes will be displayed with public inaugurations.

• Yenikoy and Kangal rehabilitations will be completed. Foreign OEM companies, who got contracts without competitive tendering, will have good earnings compared to the work that they spent. "Black Coal / Black Energy" court investigations/ prosecutions could start.

• Antalya 1150 MWe CCPP will run at full capacity later this year. Feasibilities for additional 1500 MWe will be initiated. Since the plant cooling system will consume huge amount of drinking water, there will be extreme water shortage in the region in summer time. Investment expansion is foreseen to double the capacity. People of the province will understand the seriousness of the situation soon.

• 900 MW CCPP will be completed in August in Bandirma. Preliminary works for the new 1000 MWe additional capacity second plant will start. Meanwhile Bandirma will have domestic / foreign investor invasion, agricultural areas will be narrowed.

• The local companies that sell their capital equity shares to foreigners will face excessive / unnecessary expenditures in foreign engineering/ foreign equipment. Foreign partners will purchase only from their own home countries with expensive OEM costs. Ultimately, because of excessive unnecessary costs, locals will feel the need reconsideration of the contracts with their JV foreign partners.

• The set up for new thermal power plants in unexploited local coal regions in auctions will result in a kind of absence. The search for new solutions on this issue will be in the agenda again in the second half of the year.

• CCPP investments will continue in Samsun province based on Natural gas firing due to Blue Stream. Energy transmission will have difficulties.

• Solar thermal power plants will appear in Konya plato where agriculture is not so profitable. Local production means will be investigated. In the end, solar panels from China will dominate the local market since they are cheaper than those that manufactured in local industrial zones.

• De-grading due to excessive wear and tear in Chinese made local thermal power plants will emerge. Early rehabilitation requirements will start. Cheap Chinese companies will get rehab and long-term operation contracts in the local market.

• Distribution Privatizations will continue. All public distribution systems will be privatized. Main opposition party will need more office space to accommodate the law firms they will hire in order to apply to the Constitutional Court.

• Public Administration of Environment will continue to approve incoming EIA applications with little worry over local NGO reactions or any scrutiny to the environmental hazards of the new investments due to ever increasing concern over upcoming energy shortage.

• Since Public Administrations of Environments accept all incoming EIA applications with minimum scrutiny, local NGO reactions and their court applications will be alarmingly increased.

• Local energy markets regulatory agency will continue to release licenses to those who know or don’t know the technology, those who have financial capability or those who do not have, but to all those who complete the necessary forms.

• Agency will start to complain that the new building is too small for ever increasing staff. They will start to investigate new land purchase in G’¶lbasi County to move.

• Investors will have investment licenses all expired soon. Renewable energy entrepreneurs will not be able to sell their licenses. The negotiation traffic will get increased in the halls of the Agency.

We were able to predict this much. We shall be too pleased to receive your comments/ contributions in the New Year.

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Haluk Direskeneli, Ankara based Energy Analyst, (born in Ankara, 1951), is a graduate of METU Mechanical Engineering department (1973). He worked in public, private enterprises, USA Turkish JV companies (B&W, CSWI, AEP), in fabrication, basic and detail design, marketing, sales and project management of thermal power plants. He is currently working as freelance consultant/ energy analyst for thermal power plants basic design software for private engineering companies, investors, universities and research institutions.

HalukDireskeneli@gmail.com