Dams and Civil Structures, Environmental, Europe

European export credit agencies abandon Turkey’s 1,200-MW Ilisu Dam

German, Austrian, and Swiss export credit agencies announced July 7, 2009, they are withdrawing financial support of Turkey’s proposed 1,200-MW Ilisu Dam, citing Turkey’s failure to submit complete evidence it is complying with World Bank environmental and heritage standards.

Turkey said it would continue with the 1.2 billion euro (US$1.68 billion) project on the Tigris River despite the loss of the export credit insurance covering European-based suppliers and contractors.

In December, underwriters Euler Hermes Kreditversicherung of Germany, Austria’s Oesterreichische Kontrollbank, and Swiss Schweizerische Exportrisikoversicherung gave Turkey a final 180 days — expiring July 6 — to submit evidence it was complying with 150 criteria on environmental protection, relocation of villagers, protection of cultural heritage, and resource management with neighboring states. The evidence of compliance had been due December 12, 2008, amid allegations by anti-Ilisu groups that Turkey already was doing more than preliminary project construction.

“Despite some significant improvements, the requirements tied to this insurance cover in the areas of the environment, cultural heritage, and resettlement could not be fulfilled within the contractually stipulated time frame,” the credit agencies said in a July 7 joint statement.

“… As a result, there is no longer a basis for continuing the project with export risk insurance from the three countries, thus ending the export risk insurance cover,” the agencies said.

The agencies said compliance with international standards is an essential element for the acceptance of export risk insurance. Before the risk insurance was accepted, extensive agreements had been made that vastly improved the original project terms, they said.

Turkey had signed a 1.2 billion euro (US$1.68 billion) loan agreement with Swiss, German, French, Austrian, and Turkish financiers in 2007. That was followed by supply and engineering contracts worth 530 million euros (US$711.4 million) with a European consortium of Andritz VA Tech Hydro, Alstom, Ed. Zublin AG, Stucky, Colenco, and Maggia. (HydroWorld 8/16/07)

Turkey: Ilisu project to continue

Turkey’s Ministry of Environment said the government was determined to proceed with the project, despite withdrawal of the backers.

“Turkey sees the Ilisu Dam project as a key plank of the Southeastern Anatolia Project and a driving force of social development,” a ministry statement said. “We want to emphasize that our determination to build the Ilisu Dam continues.”

One of the suppliers, Andritz of Austria, expressed regret and said it was waiting for the Turkish government to decide how it would proceed before deciding whether to remain on the project.

“It is very unfortunate that the intense efforts Turkey has made in the past months to implement the accompanying measures in the environmental, resettlement, and cultural areas did not receive adequate recognition,” Andritz President Wolfgang Leitner said.

Andritz said Turkey fulfilled many of the pending items and requirements set by the agencies. It said progress was acknowledged by an independent Committee of Experts appointed by the export credit agencies, which conducted an in-depth examination in Turkey of the measures implemented.

The dam, 45 kilometers from Turkey’s border with Syria, was set for completion in 2014 along with the power plant, which is to produce 3.8 billion kilowatt-hours annually. The project also includes water storage of 11 billion cubic meters on the Tigris River.

Ilisu is part of the Southeast Anatolia Project, a US$32 billion plan to develop the country’s economically backward southeast and east. However, Ilisu will put about 80 villages and hamlets under water as well as submerge the remains of the ancient city of Hasankeyf.

The government signed a 25 million euro (US$33.8 million) credit to relocate the remains of the ancient city, which dates to Roman times when it was built as a bulwark against the Persians.