US embassy cable - 04ANKARA6948

UNCLAS SECTION 01 OF 02 ANKARA 006948 
 
SIPDIS 
 
SENSITIVE 
 
E.O.12958: N/A 
TAGS: ENRG, EINV, TRGY, TU 
SUBJECT: TURKEY NUCLEAR ENERGY - ANNOUNCE IT AND THEY WILL 
         COME 
 
REFS: A. ANKARA 6802 
      B. ANKARA 6867 
 
1. (SBU) SUMMARY: Turkey is pursuing the ambitious goal of 
adding nuclear energy to its power mix over the next decade, 
and is seeking U.S. or French know-how as its technology of 
choice.  Raised earlier this year when PM Erdogan visited 
France, nuclear energy cooperation was also hastily added to 
the energy laundry list for President Putin's recent visit. 
Given a strong environmental lobby and the challenge of 
gaining either private or government financing, it is not 
clear that Turkey's nuclear dream will be realized.  End 
Summary. 
 
2.  (U)  As mentioned in his September 21 meeting with 
Secretary Abraham and following up on statements made during 
 
SIPDIS 
PM Erdogan's July visit to France, Turkey Energy Minister 
Hilmi Guler announced in November that Turkey intended to 
build three nuclear power plants that would come into 
operation in 2011-2012.  Guler asserted that the three plants 
would diversify Turkey's energy mix and stem an electricity 
shortage forecast for 2010 and beyond.  He said the plants 
would meet up to 10% of Turkey's total energy consumption. 
Turkey has tried on two other occasions in the last thirty 
years to build a nuclear power station, but cancelled the 
tenders each time for cost and environmental reasons.  In 
2000, the GOT decided to abandon a planned - but oft-delayed 
- $4 billion 1,300 MW nuclear power plant at Akkuyu on the 
southern coast due to financial problems and opposition from 
environmental and anti-nuclear groups. 
 
3.  (SBU) Turkish Atomic Energy Authority (TAEK) President 
Okay Cakiroglu told EmbOffs in a December 3 meeting (Ref A) 
that the GOT was targeting three to four nuclear plants with 
5,000 MW of generating capacity.  He said the GOT's 
application of a special model for projecting technical 
limits and energy mix for hydroelectric, wind, coal, and gas 
generation had yielded the above amount of nuclear power as 
output.  Cakiroglu said the plan was for the plants to come 
on line 2012-2015, but admitted that this was an aggressive 
schedule.   The TAEK head stressed that the GOT would target 
only U.S. or French technology and that the negotiations 
would be "short and focused", aiming for financing by 2006 
and construction start by 2007.  Cakiroglu said they were 
talking to Westinghouse and other companies, focusing on the 
pressurized water reactor type.  He noted the French were 
ahead because they were putting in place this technology in a 
new plant in Finland, whereas Westinghouse's new design was 
not yet licensed.  In response to EconOff's query on 
financing, Cakiroglu recognized that private investors would 
have limited appetite for nuclear in general and this size of 
a project in particular.  Therefore, he said that they would 
have to depend on government financing.  Finally, Cakiroglu 
noted that TAEK now reported directly to the Energy Ministry, 
rather than the previous direct line to the Prime Ministry. 
 
4.  (SBU) In the aftermath of President Putin's visit, 
nuclear cooperation was included in the broad list of general 
energy cooperation (Ref B).  The press reported that the 
Russian Energy Minister promised to send Russian nuclear 
experts and to help Turkey begin construction of nuclear 
plants. 
 
5.  (SBU) At a meeting at Baymina natural gas fueled thermal 
power plant in late November, plant management claimed that 
the government had "cooked" its model to gain the nuclear 
result.  They described this as a political, rather than 
economic, decision, and contrary to the free market. 
Moreover, they noted it would increase Turkey's inflexible 
base production (to the detriment of natural gas, which is 
more flexible).  The managers were skeptical of the GOT's 
ability to finance nuclear power plants. 
 
6.  (SBU) COMMENT: The GOT does seem serious about pursuing a 
nuclear option, but we agree that this is more for political 
than economic reasons.  The assumption that the Turkish 
Government would provide the sizeable financing seems 
particularly unrealistic given Turkey's current IMF-supported 
efforts to reduce government spending and high debt.  At the 
same time, Turkey's track record of unresolved problems with 
foreign investment in the energy sector make it similarly 
unlikely that foreign firms will be ready to fund expensive 
new nuclear plojects.  Nevertheless, with strong economic 
growth seemingly set to continue and some observers 
predicting that electricity demand will outstrip supply by 
2007, Turkey does need to start thinking creatively now about 
how to increase its production base.  End Comment 
 
7. (U) Baghdad minimize considered.  EDELMAN