US embassy cable - 04ANKARA4116

UNCLAS ANKARA 004116 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG, ETRD, IZ, PREL, TU 
SUBJECT: TURKISH ENERGY MINISTRY VIEWS ON ELECTRICITY TO 
IRAQ 
 
 
1.  Summary:  According to Energy Deputy U/S Cimen, Turkey 
remains interested in exporting electricity to Iraq. 
However, a necessary first step is for private companies to 
conclude a long-term supply contract with Iraqi officials. 
Turkey has excess generating capacity for a few more years, 
but exports to Iraq would require construction of a 
transmission line and new generation capacity in Turkey.  He 
said the new Electricity Law makes it easier for Turkish 
state and private companies to cooperate on electricity 
exports.  End Summary. 
 
2.  Econoff met with Deputy U/S Selahattin Cimen July 22 to 
review Turkey's policy on electricity exports to Iraq.  In 
2003, the Ministry was instrumental in assisting Turkish 
energy firm Karadeniz Energy export 75 MW of electricity to 
Iraq from dedicated generators near the Iraqi border. 
Karadeniz is installing additional generators this year to 
increase exports to 180 MW, the maximum that can be exported 
over the existing transmission line to Iraq.  Cimen said 
Turkey is eager to help again, but because exports would 
require construction of a new transmission line, any scheme 
to supply more electricity to Iraq must be initiated by 
private companies and be based on a long-term supply contract. 
 
3.  As for the length of a contract, Cimen cautioned that a 
decision to proceed should not be based on the assumption of 
continuing excess electricity supply in Turkey.  At present, 
Turkey has a usable surplus of about 4,000 MW that could be 
exported to Iraq.  However, the Ministry expects that surplus 
to evaporate by 2008.  If an agreement were reached today, 
Cimen pointed out, it would take a year to build the 
transmission line, leaving about three years of declining 
surplus available for export.  Instead, a plan to supply Iraq 
must include not only transmission lines but investments to 
increase generation in Turkey. 
 
4.  Cimen assured econoff that the Ministry had examined the 
idea in detail.  He said the GOT would look to a private 
company to finance and build the transmission line, but he 
allowed that the state electricity transmission company 
(TEIAS) could also build and operate the line, if a long-term 
contract were in place.  He pointed out that it was not as 
simple as just building a transmission line connecting the 
Turkey and Iraqi power grids.  Some interim arrangement would 
be necessary:  either supply Turkish power to a limited 
region in Iraq -- effectively disconnecting the region from 
the Iraqi grid and including it in the Turkish system -- or 
designate one or several generating plants to supply directly 
to the Iraq grid, such as the Karadeniz plant in SE Turkey 
that currently supplies electricity to Iraq. 
 
5.  Comment:  Cimen noted that the administrative hurdles for 
such a project have been reduced.  The Electricity Market 
Law, which entered into force earlier this year, liberalized 
the market and allows the state electricity trading firm 
(TETAS) to sell power to private companies and allows private 
companies to export electricity.  If there is a company 
interest and Iraq is prepared to conclude the long-term 
arrangements needed to make projects viable, we see no reason 
not to continue tot pursue this option with the Turks.  End 
Comment. 
DEUTSCH