New Thermal Power Plant investment 4x660 MWe in Amasra County of BARTIN Province

Dear Colleagues, Dear Energy Professional,

I learnt the latest announcement of a new thermal power plant investment in Amasra County of Bartin Province, which will utilize a nearby relatively high LHV local bituminous mine. We understand that a local engineering company has already prepared the environmental impact assessment (EIA) study for the new investment project; it was recently released on the internet page of Bartin province for public information and awareness.

The local investor has applied to acquire 49-year long-term concession rights for exploitation of local bituminous proven coal reserves of approximately 573 million metric tons, to fire 932 tons of coal per hour in 4 boilers, at approximately 7000 hours of annual availability. Lower heating value of available bituminous coal is around 5800 kcal per kg (plus/ minus 10%).

The local Turkish investor company is planning to construct two new thermal power plants in the Gomu and TarlaAgzi villages of Amasra county, each to generate 2x660 MWe electricity based on pulverized coal firing technology and sell the generated electricity in IPP scheme.

They are preparing to apply to the Ministry of Environment for EIA approval prior to their investment license application from the Local Regulatory Board, EMRA.

However, since EIA permission has not been granted yet, prior to their EIA application, they will be organizing a "Public Information Meeting". Details are on their web site.

I am pleased to get such news on new energy investments in our local energy market, provided that

- They are designed environmentally friendly, to enable low CO2 emissions with CCS,
- They have E/Ps, FGD, CCS fully installed and operated,
- They have completed all obligations for Environmental Impact Assessment Reports,
- They receive their license from the Local Regulatory Board,
- They are designed by local engineering companies or in-house engineering as much as possible,
- They are fabricated in the local fabrication plants as much as possible,
- They are installed by our local contractors,
- They are commissioned and supervised by our local engineering power,
- They are operated by our own local staff, and
- Regularly checked by our own Labor force in programmed maintenance.

I sincerely feel that energy investors deserve all our support to complete those power plant investments. They deserve this since they risk their own property in order to get proper "Corporate Financing" at reasonable interest rates, and payment terms.

They will be investing 1,400 million Euros equivalent money, which is a huge sum to finance in our terms in the international markets. That will release the unit investment cost and will be approximately 800 US Dollars per installed kW electricity generation. Only Far East companies can declare such a low price. If the contract would be placed to a Chinese company, then we would expect poor design, poor performance, and all turnkey construction which means all employees from Mainland China, mostly soldiers or convicts, and with almost minimum wage. That decision will create no employment for the local population.

On the other hand, there is great risk in project finance of such investments due to public response. Those companies, who are ignorant of local workforce employment expectations, and neglecting local engineering contribution, neglecting environmental limitations, will surely deserve the highest level of local resistance in legal platforms.

They will have too much of a headache during project execution; therefore, the project finance institutions should make their risk assessments carefully; otherwise, they pay the consequences heavily.

I warn them not to make any technical mistakes in their power plant design, avoid incorrect selection of the necessary equipment, and wish them to operate the plant for many years, to generate electricity which will push our economic prosperity.

After reading the EIA Project Information Report on the web page, we are very uncomfortable since the said document is ill-prepared, full of technical mistakes, unprofessional charts, diagrams, and simple translation of documents without any project commitment.

We feel that they are not yet prepared on their behalf. There are not many project details; only already known general information is disclosed.

We learned that the output capacity is 2x660 MWe at each of two different sites in Bartin Province. We understand that they will install a seawater cooling system. This means they will not use much underground water. That is good for nearby ongoing agricultural activities. As a matter of fact, seawater cooling is also difficult to handle without any harm to sea life.

We do not know details of the manufacturer for the selected steam turbine, pulverized coal firing technology, cooling system, heat balance diagrams, fabrication, construction, site installation contractors, whether they are local or foreign, details of budget figures for each item, or the timetable for project execution.

It is my humble feeling that we should help and warn the investor not to repeat negative past examples in Antalya, Denizli, Yatagan, Yenikoy, Kemerkoy, Afsin Elbistan.

The local investor should feel comfortable that we shall be warning them in proper design, sourcing fabrication, site installation, logistics, and public approvals. We all expect that these energy investments will bring prosperity, employment and peace to the site.

Maximized local manpower, as well as maximized local engineering/ fabrication/ site installation capabilities should be employed.

After brief review of the project, we feel that we need answers to the following questions,

- We need to learn the OEM suppliers of the basic equipment,
- We need to know the details of steam turbine, steam generator, condenser, cooling system, coal mills, fans, pumps, E/P, FGD, CCS, I&C.
- Who will be making the basic design (Pulverized Coal firing Boiler, CMEC China?), who will be the fabricator, who will be the construction company for site installation?
- It is our understanding that they have not applied yet to EIA certification or to the Local regulatory board for licensing. What is the timetable?
- There should not be any deviation of the information they will be declaring in the local information meeting and the information they will be furnishing to the public administrations.
- We would be too pleased to learn the details of the boiler design, supplementary firing burners, burner management systems, and emission controls. Local emission limitations are not so stringent. They should be all in compliance with EU standards.
- We shall be too pleased to learn where they will be purchasing the cooling system design and equipment.
- We need to know who will be the site constructor, what is the budget figure? They should be local companies. Local labors should be employed at the construction site. If you promise to have employment for 1000 workers, then you should avoid the use of foreign workers.
- If a project does not create employment for the local people, it is our sincere feeling that there is no need for that project.
- If a project promises to utilize the local bituminous coal, hence there should be no change to the imported coal option in the long term.
- We need to know the project implementation period, the important milestones; we expect that 36-40 months could be a reasonable period.
- We need to know who will be making and paying the new 154 or 380 kV transmission line to the plant site.
- We need to know when the major equipment land transportation will be made; do we have sufficient roads/ seaports for that transportation, who will be making the road reinforcement to enable the transportation?
- Do they have long term electricity sale agreements with TETAS?
- Do they consider any capacity extension in the long term in 10-20 years time? Do they have enough space/ land for that extension??
- Do investors consider any IGCC application in future by gasification of indigenous bituminous coal mines based on clean coal technologies?
- We will be too pleased to learn if the local party is thinking to create a local engineering department to carry out necessary basic engineering in the long term.

I hope for all the best, and the success of the investors in their new venture. Your comments are always welcome.

Happy and Prosperous New Year and Merry Christmas to you all!
--
Haluk Direskeneli, Energy Analyst,
Hamburg, 26th December 2009