TAQA may shelve $12bn Turkey power project

Updated 27 August 2013

TAQA may shelve $12bn Turkey power project

ANKARA: Abu Dhabi National Energy Co. (TAQA) may shelve a $12 billion power project in Turkey amid a deteriorating economic outlook and increasingly difficult financing conditions, Turkish energy industry sources said.
The oil explorer and power supplier agreed in January with Turkey’s state-owned Electricity Generation Co. (EUAS) on a project to build several power plants using lignite coal reserves in Turkey’s Afsin-Elbistan region.
The project was already challenging, Turkish energy sources said, given the low quality of coal in the area.
But a recent emerging market sell-off that sent Turkey’s currency to record lows has dampened its growth outlook and the possibility of further capital outflows has concerned TAQA.
“What we have been picking up from them recently is that they are looking at an eventual pullout,” an energy industry source said. “This was such a large-scale project, whose future was very much dependent on market conditions.”
Appetite for emerging market investments has been hit by fears of higher global borrowing costs and a reduction in the flow of cheap cash as the US Federal Reserve prepares to rein in its monthly bond-buying program.
Turkey is particularly vulnerable, being heavily dependent on foreign inflows to finance its current account deficit, which is running at over 7 percent of national output.
“It was never realistic to see this project as something that one company alone could carry out ...Now with the changing climate toward emerging markets and Turkey, investors question the return,” one source said.
TAQA said it had decided to defer the investment decision in Afsin-Elbistan until 2014, citing “other spending priorities.”
A TAQA spokesman declined to comment on the potential cancelation of the project.
Turkey’s Afsin-Elbistan region holds about 4.4 billion tons of lignite, around 40 percent of Turkey’s total reserves, and could provide up to 8,000 megawatts of power production capacity in southeast Turkey, if the coal potential is fully exploited, according to the Turkish energy ministry.
Construction of the TAQA project was originally scheduled to start in mid-2013 and was aiming to create a combined power generation capacity of up to 7,000 megawatts.
Sources also cited tensions between Turkey and Gulf states as one potential reason behind the possible cancelation.
“Due to the very high investment cost, if the tensions in the region could have been eased, progress might have been possible,” another energy industry source said.
Turkish Prime Minister Tayyip Erdogan’s criticism of the ouster of Egypt’s President Muhammad Mursi — which Turkey deems a coup — has antagonized some Gulf states, which remain divided on the issue.
A spokesman at TAQA, 75-percent owned by the government of Abu Dhabi, declined to comment when asked if the delay could be linked to politics.
Turkey is keen to make the most of its own coal resources so it can reduce its dependence on imported natural gas. Lignite’s role in power generation is set to expand alongside rapid growth expected in electricity demand.
The country was looking to issue an international tender for the Afsin-Elbistan region, a Turkish energy official said, once TAQA formally pulls out of the project.


China suspends planned tariffs on some US goods

Updated 15 December 2019

China suspends planned tariffs on some US goods

  • Chinese tariffs were supposed to target goods ranging from corn and wheat to vehicles and auto parts
  • Beijing agreed to import at least $200 billion in additional US goods and services over the next 2 years

SHANGHAI: China has suspended additional tariffs on some US goods that were meant to be implemented on Dec. 15, the State Council’s customs tariff commission said on Sunday, after the world’s two largest economies agreed a “phase one” trade deal on Friday.
The deal, rumors and leaks over which have gyrated world markets for months, reduces some US tariffs in exchange for what US officials said would be a big jump in Chinese purchases of American farm products and other goods.
China’s retaliatory tariffs, which were due to take effect on Dec. 15, were meant to target goods ranging from corn and wheat to US made vehicles and auto parts.
Other Chinese tariffs that had already been implemented on US goods would be left in place, the commission said in a statement issued on the websites of government departments including China’s finance ministry. “China hopes, on the basis of equality and mutual respect, to work with the United States, to properly resolve each other’s core concerns and promote the stable development of US-China economic and trade relations,” it added.
Beijing has agreed to import at least $200 billion in additional US goods and services over the next two years on top of the amount it purchased in 2017, the top US trade negotiator said Friday.
A statement issued by the United States Trade Representative also on Friday said the United States would leave in place 25% tariffs on $250 billion worth of Chinese goods.