Ümit ENGINSOY Hürriyet Daily News
South Korea has decided not to require Turkey to provide treasury loans, which was the main obstacle preventing the two sides from reaching a final deal on Turkey’s second nuclear deal two years ago, a South Korean official said May 25.
Treasury loans are guarantees to finance well-defined and time-limited business when a country cannot fund the very high costs of a project with its own resources. Turkey’s program to build a nuclear power plant in the northern province of Sinop would cost between $10 billion and $20 billion depending on whether the plant will have two or four reactors.
Turkey and South Korea came close to an agreement on Turkey’s northern nuclear plant in November 2010, but could not agree mainly because of the treasury loans issue. Turkey then launched rival talks with Japan, but these were delayed last year because of the Fukushima disaster. The Fukushima Daiichi nuclear disaster was a series of equipment failures, nuclear meltdowns and releases of radioactive materials at a power plant, resulting from a very strong earthquake and tsunami.
Because of the disaster, Turkey is now engaged in competing talks with Japan, South Korea, China and Canada to build the Sinop nuclear power plant.
“Kepco is much keener about the Turkish deal than it was two years ago, when we could not reach a deal at the last moment,” the South Korean official said. “Kepco has desisted from requiring the treasury loan. It also has agreed to help Turkey find a loan in the international credit markets.”
Turkish officials also said the South Korean company’s decision not to require a treasury loan was a very major development, which would probably lead to an eventual Turkish decision to favor the Kepco option.
Among South Korea’s rivals, China has entered the race quite recently. Turkey and China discussed the matter when Prime Minister Recep Tayyip Erdoğan visited China recently. Of all the candidates, China has the best funding capabilities, but its technology and proven ability to work with third parties is relatively backward.
Japan has decided to close all of its nuclear reactors after the Fukushima disaster, and it would be difficult for Turkey to select Japan to build its plant, when the country itself no longer relies on nuclear power.
Canada generally works on smaller reactors, and has no experience with nuclear plants of the size Turkey plans to install. But it may try to bring in the U.S. nuclear giant Westinghouse, which was reluctant to bid for the Turkish plant itself. Still, the price could be prohibitive.
“We signed at the end of 2009 a $20 billion agreement with the United Arab Emirates, and that shows our experience; we have the safest kind of reactors, operating with the latest technology,” the South Korean official said.
When Russia secured the deal to build Turkey’s southern nuclear power plant, it did not ask for a treasury loan, but its close energy relationship with Turkey was deemed to play a large leverage role.