Brain Drain in Turkish Energy Markets

On Sunday evening, October 23,2016 in Istanbul Zorlu PSM concert hall Hungarian pianist Havasi's concert started at 20:00 hours. We observed that 2200+ spectators filled the hall. The seat prices were sold for 100-150-200 liras. Istanbul's "crema de la crema" riches, star artists, celebrities, intellectual columnists were there. On the seats a fancy envelope had already been left for the spectators. Prior to the intermission, the artist talked about an incentive in the context of this envelope. The opportunity is as follows:

You pay 300 thousand Euros, you buy 5-year tenure Hungarian government bonds. You additionally pay an additional 60 thousand Euros for the expense. You get a residence permit in Hungary. 5-years later you give back the government bonds, then you get your money back. You get Hungarian citizenship, now you are a citizen of European community. Details were explained on their web address.

Classic music audiences are highly educated, so they were skeptical respond to this marketing. Most of them have other connections, possibilities and other associations.

It is not possible to live in capitalism and complain. Those who live abroad know very well. Racism and discriminations are very intense there. In fact, the Hungarian economy is in a bad situation. Is Hungary a country to live in? Is it better than us? I do not think so. Are people in Russia, in Shanghai-five countries etc. live in better conditions? Can Russia, China, Hungary be an alternative to Turkey? Does our people want to live like in Russia? No.

Can you take it back once you've delivered your money? If you will give the money and go to Hungary, then we can say, "Go ahead, it is your choice"

The same Hungarians built walls on their borders with barbed wire to avoid crossing of helpless Syrian Afghan immigrants not to carry their burden.

We are informed that the organizers of such a marketing have opened offices in Ankara, Istanbul, Izmir and other major cities.

People want to go abroad to migrate to a better life. Everything at sight is in compliance with the law. But the ethics of these marketing promotions we think are wrong, that is ruining image of our country. With these types of immigration marketing, we are moving out of a highly acclaimed, jealous, envied rich life standard, highly anticipated environment, and we run to a "failed state" where citizens plan to escape to other countries. These are not necessary, and these efforts should be stopped. That is an unnecessary activity of brain drain in our energy markets, sweeping all our young engineering capability.

The marketing of such a commercial business during a classical music concert is an interesting and surprising activity. Of course the desire for immigration in some cases is so desperate.

I read another similar marketing the other day. Real estate agent sells house in Canada. You buy a house at a price of $ 500 thousand, a small 50m2 house. So you are investing in Canada. In return, Canadian immigration give you a residence permit in Canada. You go to Canada and spend 5 years there, finding a job, getting a job or starting a business. You do not interfere any wrong doing in Canada for 5-years, you do not pay even traffic tickets. Then you receive your Canadian citizenship.

The possibility of receiving residence permit was applied in Florida Florida property sales earlier. The same procedure is now promoted in real estate markets in Portugal, Spain and Ireland. The small countries of the European Union have made this practice a revenue source.

"If we would have promoted the same marketing of the residence permit in our country for the Middle-Eastern immigrants, we would have sold them a 5-year Turkish Treasury bill for the residence permit."

So, instead of the poor, helpless, uneducated, desperate people who have consumed our resources, we could have rich young educated people to contribute to our economy. Our hospitals would not be operated over capacity, our health services would not collapse. We would not have Tuberculosis, smallpox, polio. Our streets would not be full of beggars.

Other than Europe and North America, Uruguay, who does not want visa from us, is a very popular immigration country these days. But in Uruguay you need to learn Latin Spanish accent special for Uruguay.

New Zealand's English, like our authentic local speaking, is a difficult accent to understand separately. You need to learn the new accent there.

We hear conversations to buy homes in North Cyprus, or in Greece Western Thrace. If the war on our south border leaps to us, there is a saying, "If there is a malfunction, we can go to North Cyprus or Western Thrace as the last resort"

These are all nonsense. You can not live in another country with their residence permit so easily without getting job or building an enterprise to earn money. You can stay in any other country not more than 3-6 months.

You can go abroad to sell your goods and services, you buy and sell, you promote your business, visit, for sightseeing . This is all normal for business people. Long-term immigration is a separate case.

One has to think very well while taking this decision. There is nothing as beautiful as living in peace with their loved ones in their own country.

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Haluk Direskeneli, 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 with thermal power plants basic/ detail design software expertise for private engineering companies, investors, universities and research institutions. He is a member of ODTÜ Alumni and Chamber of Turkish Mechanical Engineers Energy Working Group.

This article is written for the "EurasiaReview" news web site.

http://www.eurasiareview.com/author/haluk-direskeneli/

Prinkipo, November 24, 2016

Diversification Visa, or DV-lottery for USA,

This is the official name of the US Green card lottery in English. If you wish to be doing the google search, use these words. You will then find the US DV-lottary official site, asking you to upload your biometric photo first. Your both ears will be visible, head open, no glasses, no earrings. Then you respond to the questions on the screen. Do you have any criminal record? What is your education? Did you use drugs, narcotics in the past? Are you deported from any country? Registration then is over. There is no charge for lottery application. There is no need for an intermediary firm to help.

Last weekend we were sitting in front of the computer to see what it was. We had internet page open. So we looked at it to understand what was going on. We looked for a place for ourselves as if we have already won the lottery. Kids preferred California, Florida, whereas I preferred less populated places like Montana, Oregon, Wisconsin, Colorado, with plenty of natural resources, fewer populations. Educational health services are relatively better, and racism is relatively less.

Next morning I looked at Wikipedia information. The US is looking for young population and diverse ethnic identities. They upfront eliminate applications from Britain, Bangladesh, Mexico, Vietnam, as such countries that have already sent many immigrants earlier from the lottery list.

In 2013, from Turkey we had 1600+ lottery winners out of 170 thousand applications. Last year, we had 3000 lottery winners out of 300 thousand applications. This year they are expecting 500 thousand applications from Turkey. There are 6-7 million applications per year in the whole world. 100 thousand lottery winners comes out, half of them are eliminated due to various reasons, impossibilities. Eventually each year 50 thousand people can go. In other words, there is chance of 1% lottery in the world average. So there is no need to be overly optimistic.

There is no burden on the US budget due to this lottery. At the beginning, lottery organizers already make a pre-selection. Why should they accept people with old age, or at retired age, or unable to speak English. Young, healthy, English speaking people are probably their first choice.

I looked at those who had won DV- lottery around my friends. Those winners are all in this category, all young, all educated people. We spend their education expenses here, we send those educated young bright people there. Sad to say, we can not create the environment to keep those trained people here. Is this place where they will be immigrating any better than here? Social security, proper health care coverage, I doubt it. Here, there is your friend circle, you have your dentist, your family doctor, your car mechanic, plumber, electrician. Good or bad, you have public transportation here. There is train, subway, municipality transportation. In the US there is only car transportation, if you do not have a private car, you are miserable. Do they have democracy in the United States? Is it a paradise to live in? I do think that Europe's democratic practice is much better.

When lottery results are announced, within a certain period of time those lottery winners are expected to sell all their properties here, accumulating all in cash, paying airplane tickets from their pocket and they will be going. They will have working and living permit in the USA. They live in the US for 5- uninterrupted years, they do not get out of the US for 5-years, they do not get involved in any criminal offense, they even pay attention not even to get traffic tickets. They get citizenship after 5 years. But all in all they are the first generation immigrants. In order to be a real US citizen, they should be born in the USA.

After Donald Trump won the US elections in November 8, large number of US citizens applied to the Canadian immigration website. Canadian internet page has collapsed. Would you like to live in a country run by Donald Trump? Consider this new situation as well. It is an ironic situation. There are sarcastic news that "Migration is starting backwards". Canadian residence permit applications are under 26-month review. Canadians make jokes that they will be building a new wall between the United States to stop illegal immigrations.

Having lived abroad for a long time earlier, being a long-time immigrant does not please me. My age is getting old. It is not easy to rearrange it, find a new job, get a job, build a new business to earn money, all not so easy.

There are news in the local media that special passport coverage will be expanded. Special Passports do not have any meaning for most countries. Whether it is special or normal passport, there are no passport visa exemptions for USA, UK, Canada, Australia, China, Russia anyway. What will happen soon if foreign countries exempt visa exemption of all passports altogether?

Russian market has not been opened yet, visa applications continued. Do not believe in the media news as prepared at the table without any backup proof.

Already after 8-November US presidential elections, Obama and his team are going to leave public duty. Public duties do not last forever.

There are certain wear and tear times. Life is cruel. Human life has a limit. Everything ends in one day, all ends are renewed.

It is unchanging the change itself. Someday everything will change.

Payback of everything, bonus, honor, reward and punishment are given and taken while living in this world.

You should not be discouraged in facing of prevailing economic difficulties. We're not going anywhere, we are not leaving. We had difficulties in this country in the past. We have suffered so much. We have worked, created jobs, money, property, wealth, we have established and run business.

Tough days will pass one day. We will make more production, generate more wealth. This country is ours. Stronger and richer Turkey is waiting for us. All will be created within Democracy and thanks to the Republic.

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Haluk Direskeneli, 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 with thermal power plants basic/ detail design software expertise for private engineering companies, investors, universities and research institutions. He is a member of ODTÜ Alumni and Chamber of Turkish Mechanical Engineers Energy Working Group.

Prinkipo, November 23, 2016

Where are Imported Coal Prices going? In Turkey

In our country, investors put money in coal-burning thermal power plant projects, which are relatively cheap at upfront cost. The reason for their investment depends on the fact that imported coal is cheap in longterm in investment reports. Is it correct? It is very difficult to answer this question immediately as "True" or immediately "False". Why hard? Because this is an high risk gamble. Imported coal prices may increase- decrease over time depending on the market supply-demand situation. The price at the spot market of imported coal with the upper heat value of 6600 kcal/ kg HHV or 12,000 BTU / lb HHV can be as high as 160 US$ per metricTon as it was appeared in previous years.

Currently Australian coal (Australian thermal coal, 12000- btu / lb HHV, less than 1 sulfur%, 14% ash, FOB Newcastle / Port Kembla, US Dollars per metric ton) per ton is at 99 US $, South Africa 84 US $ (South African coal export price, US Dollars per metric ton), the cheapest is Columbia 6000 kcal / kg coal FOB price of imported US $ 78 per metric ton. 
Ref: http://www.indexmundi.com/. 
So add 6-8% for transport to your seaport.

Today fuel cost is around 3.1-3,3 UScent per kW-hr. We may end up 4,3-4,6 UScent marginal cost which is just coinciding with daily market price of around 5 UScent. With the addition of amortization, that level is around 6,2-6,6 UScent. However with the lower utilization factor, capacity factor, amortization portion will add up more to reach 7-8 UScents whereas the prevailing domestic market electricity price is around 5-6 US cents per kW-hour. The cost of imported coal electricity production is above the market unit prices. So what happens then? The producer declares "commercial victimization". In a sense, they declare "force majeure", and stop electricity generation. Imported coal tax was tied to a certain formula with a new decision. If the prices on the ICE Rotterdam stock exchange are below $ 70, the difference between $ 70 and prevailing price in US$ will be taxed. It is currently around US$ 80. So at the moment there is no tax on imported coal for power plants.

Let's come to the actual price of imported coal. Market professionals calculate the price of the fuel in US$ per "1 million British Thermal Unit BTU (MMBTU)" at higher heat value (HHV). As of November 2016, imported coal with 6000-6600 kcal / kg higher heating value (HHV) or 12,000 BTU/lb HHV is today between FOB 78-99 US dollars at spot price of world markets quota RichardsBay- South Africa, NewCastle- Australia or Rotterdam delivered in MetricTon. Add transportation costs of 6-8% FOB-CIF at seaport delivery and then recalculate your US$ price per 1 million BTU with surcharges. Simple arithmetic yields you 4-5 US Dollars per MMBTU at today's prices.

On the other hand, in the local Afşin-Elbistan open pit coal fields, the price of 1000-1,150 kcal / kg (LHV) of low-value indigenous lignite mine is 7.50-8.00 US per ton. This figure gives you 1.10 -1.20 US Dollars / MMBTU unit price. The central quarry in Manisa Soma underground mine has a price for 2100 kcal / kg HHV sub-bituminous domestic coal mine, as 24.00 US dollars per ton. This gives you 2.00 US Dollars / MMBTU unit price. Also check the prices of Çayırhan, Seyitömer, Kangal, Soma, Yatağan lignite mines, the price is around 2.00-2.50 US$ per "1 million BTU". The price of local lignite fuel in public power plants is very low. Similarly in coal-based thermal power plants in the US, it is expected that the price of coal will be below US$ 2,00 per MMBTU. On the other hand, our domestic coal has high ash, too much water or moisture. So, total output may be 10% lower than imported coal pulverized coal firing power plants, but this will never change the price advantage for domestic coal.

"Are Imported coal prices in Russia cheap?", Russia's imported coal sales prices have never been cheaper than the world's imported coal prices. The Russians make their calculations very precise. For coal they produce, they declare their coal price slightly lower than world market prices at that delivery spot, often at the same price. Imported coal may rise uncontrollably. You may have to shut down your plant.

So playing with imported coal is a high risk gamble. Do not gamble, take only calculated risks. You never get surprised by the local coal. Build the domestic coal plant by yourself, do your design yourself. Today, even if the smallest countries can make thermal power plants themselves, we can and we do. However, we have been condemned to foreign designs for years, depended on foreign project finance. There is nothing secret in the design of the thermal power plants. Now there are Turkish engineering companies to do the thermal power plant construction, fabrication, basic and detail design. To reduce your energy dependence, to have your supply security, you should also have reasonable number of imported coal power plants. But this amount should never rise to the levels that will increase the current deficit. Imported coal plants must be built to be away from forests, agriculture, sites, tourism areas.

All of the imported coal power plants are established by the seaside, to ensure cheap bulk transportation, as sea transportation is necessary. According to my rule-off- thump humble calculations, for an imported coal plant with a capacity of 1400+ MWe, we need to burn 700+ tons of imported coal per hour based on different initial parameters. At the seashore harbor 2-3 km away from the power plant, there must be at least 500 thousand ton capacity coal stock area, at 30 days capacity at full load. The transport capacity of coal bands could be 2000 tons per hour minimum.

The cheapest imported coal is available now from Columbia. Imported cargo from Columbia now costs 78 US Dollars per metric ton, plus a 6-8% CIF carry price. If the coal stockpile is full, then bulk cargo ships with 100 thousand tons capacity would be waiting for a month and can not download. Since most plants do not work due to the price of imported coal alone because cost is expensive. Cost of electricity generation is high above prevailing market prices. So producer declares themselves as "victim of commerce", sort of "force majeure". So imported coal thermal power plants do not work for weeks, 30-day capacity coal stockyard is full, coal Cargo ships are waiting for a month for unloading order.

Are all of these real? What is the status of other imported coal plants after all this? Sugözü, Çanakkale, İskenderun, Zonguldak imported coal plants, do they work in this market conditions? Or did we lock the imported coal plants? What are the conditions of the investors who are installing the new imported coal power plants? What is the status of the new investments in coal-fired thermal power plants? Are they suddenly stopped?

Thermal power plants at seaside are explaining their status as technical failure as the reason why they are not operating at full capacity. There is a breakdown in the coal mills, a fault in the turbine generator and they had to reach to complete stop. however they were working last week despite their high cost against lower prevailing market prices. They are now out of the system. Now we can track the daily electricity generation of the individual plants through public web site, seffaflik.epias.com.tr from the web. Here you can see the latest data.

Commercially we are sure that they had passed through a period of relaxed imported coal prices for the power plants. But for those months in which they do not work, at least the prices now are higher than in the spring months, they will soon suffer with greater harm.

Imported coal is not cheap. It was never cheap in the past, it is a gamble, it can be expensive. The US$ price per metric ton can be cheap if it goes below 60 US$. Today imported coal is very expensive compared to domestic coal unit prices per MMBTU. Do not look at what is written in the popular media, do your own calculations, and see the end result.

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Haluk Direskeneli, 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 with thermal power plants basic/ detail design software expertise for private engineering companies, investors, universities and research institutions. He is a member of ODTÜ Alumni and Chamber of Turkish Mechanical Engineers Energy Working Group.

This article is first released by the "EurasiaReview" news web site.

http://www.eurasiareview.com/author/haluk-direskeneli/

Prinkipo, November 21, 2016

How is Turkish trade with China going?

Mr. Wang Yi, Minister of Foreign Affairs of the People's Republic of China, came to Turkey early last the week. According to the protocol, he first met with Turkish Foreign Affairs Minister, then the Prime Minister and then he visited Presidential Palace for courtesy. In order to clarify the main objective of his official visit, the Chinese Foreign Minister Wang Yi, then had a long meeting with the Turkish Minister of Energy and Natural Resources on November 14, 2016 in Ankara.

Commenting on the Chinese news agency website (turkish.cri.cn), as well as in China MFA official web page ( http://www.fmprc.gov.cn/), Chinese FM Wang Yi positively assessed the development of China-Turkey relations, saying that bilateral cooperation in economy and trade, security and combating terrorism are two important areas of bilateral relations. (We understand that there are serious concerns of the Chinese side on line-by-line interpretation, on security and terrorism).

Wang Yi furthermore pointed out that China is ready to deepen cooperation in security and terrorism struggle in order to advance cooperation in economic and trade areas in line with the consensus reached between the presidents of the two countries. In the eradication of the root of terrorist forces such as the East Turkestan Islamic Movement (Chinese people say not to support them in diplomatic language) Ankara confirmed to continue its support to China. (China's concerns have been voiced again).

Turkish Minister said that Turkey-China relations had entered a new turn. Expressing great importance in cooperating with China, Turkish Minister stressed that Turkey will not allow any action that harms the security and stability of China and Turkey will continue to create better conditions for the development of cooperative relations in various fields. (Turkey is giving them the necessary guarantees).

We all know that there are financial difficulties of Chinese firms working in Turkey in the construction of thermal power plants. The risks posed by stopping imported coal plants due to cost over market prices, and the serious concerns of Bank of China's credibility rating for Turkey. We all understand that if China asks to be excused to pause to work in the market. The development status of thermal power plants currently under construction would be "on hold" , which may remain frozen for a while. Soured relations after the suspension of missile procurement, it was difficult to get a visa for the Turkish exporters, and they were subjected to unnecessary questioning when entering China.

According to experts of foreign trade, there is a huge imbalance in bilateral trade with China. With China in 2015, Turkey exported 2 billion US dollars, and imported 20 billion US dollars. The largest scope of Chinese export, covers the thermal power plant equipment supply by the Chinese at cheap prices. At present, the majority of domestic-imported coal-fired power plants, except for Tufanbeyli (SK Korea), are being built by Chinese suppliers at ultra cheap prices. However their quality, proper acceptance tests, compliance with the international norms and long life time expectations are questionable.

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Haluk Direskeneli, 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 with thermal power plants basic/ detail design software expertise for private engineering companies, investors, universities and research institutions. He is a member of ODTÜ Alumni and Chamber of Turkish Mechanical Engineers Energy Working Group.

This article is written for the "EurasiaReview" news web site.

http://www.eurasiareview.com/author/haluk-direskeneli/

Prinkipo, November 20, 2016