Institution: EBRD, World Bank Group
IFIs pull out of Turkish coal project - NGO pressure integral
Bankwatch Mail | May 14, 2014
Coal power plants are mushrooming all over Turkey, there’s no doubt about that. With the government’s plan to reach 120,000 MW of installed capacity by 2023, double that of today, a 1350 MW power plant in the already heavily industrialised and polluted peninsula of Aliaga in western Turkey could easily have gone unnoticed.
This article is from Issue 59 of our quarterly newsletter Bankwatch Mail
This was probably what the project promoters, SOCAR Aegean Refinery, were counting on.
In 2010, SOCAR Aegean Refinery received a 'pre-licence' to start developing a USD 5.5 billion project involving the construction of a greenfield refinery in Aliaga, as well as a 'secret' 1350 MW coal plant associated with the SOCAR refinery, though not included in the environmental and social impact assessment for the project.
Looking back a few years, SOCAR, the state oil company of Azerbaijan, purchased the Petkim petrochemical plant from the Turkish government in 2007. The plant is located in the Aliaga peninsula of Turkey's Izmir region. The developer, owner and operator of the Aegean Refinery is STAR Rafineri A.S. ('STAR'), a joint stock company incorporated under the laws of Turkey which is now 81.5 percent owned by SOCAR TURKEY Enerji A.S. (a 100 percent subsidiary of Azerbaijan's oil company) and 18.5 percent owned by TURCAS Rafineri Yatirimlari A.S (a 99.6 percent subsidiary of Turcas Petrol A.S.).
New website for coal campaigners in Turkey and the Balkans
Because of some investors' undiminished appetite for financing coal power, Bankwatch published a multilingual website that explains how to contact the investors behind a project, which policies guide their decisions and how best to influence them.
As designed, the refinery and coal power plant would restrict access to a valuable geothermal energy resource. The geothermal reservoir is owned by the Turkish state, and the renewables promoting company Buhar Enerji was granted a 30 year operating licence at least one year prior to that given for the refinery. The refinery EIA makes no reference to the geothermal reservoir and no stakeholder consultations have been held.
In 2013 the EBRD announced its intention to invest USD 150 million into the project, and an EBRD board decision had been scheduled for April 2014. By involving itself in this project, the EBRD would have been both going against recent commitments – “to support the low-carbon transition in countries of operations; this entails promoting alternatives to carbon-intensive coal-fired generation” – and also putting down an important marker in Turkey, as Turkish banks would be expected to lend under any conditions should the EBRD have put its name to the loan package.
The case of a 'secret' coal plant in Turkey suggests a polluted future for the country
A Bankwatch blog discussing a March fact-finding mission to Aliaga featuring a selection of photos
However, in March this year, both the EBRD and the International Finance Corporation (IFC, the World Bank's private lending arm) announced that they had withdrawn from funding the refinery project.
This took place not long after a February letter from Bankwatch – supported by nine other international NGOs including BankTrack, Greenpeace Mediterranean and Friends of the Earth – was sent to EBRD president Sir Suma Chakrabarti, EBRD executive directors and the IFC, calling on the potential lenders to reject this project, or at least delay its approval until proper due diligence and satisfactory public consultations had been carried out, as well as the successful resolution of legal disputes.
Unsurprisingly, the banks made no mention of NGO pressure – and argumentation – in this case, putting the withdrawal of their combined USD 300 million support for the project down to differences in the inter-creditor policies of the various lenders involved, which apparently scould not be resolved within the project's timeline. In a PR crisis, go technical – it's always a good option.
Only a few days after this announcement, SOCAR Turkey's chief executive Kenan Yavuz told Reuters the company had agreed fresh financing of USD 500 million with a commercial bank to replace the anticipated EBRD and IFC finance. Yavuz declined to name the commercial bank in question, but sources close to the deal have suggested Turkey's Denizbank, owned by Russia's Sberbank, has stepped in.
With international finance institution (IFI) support now dead, the commercial banks now expressing interest in the project should seriously consider their involvement in this type of regressive investment, with all its detrimental environmental and health impacts.
Turkey holds multiple opportunities for investments in energy efficiency and renewable energy – the country is currently among the top 10 wind energy producers in Europe, according to European Wind Energy Association – and it is to be hoped that commercial banks take up interest in these areas. Having stepped out of this Turkish coal project, the IFIs could play a major role by focusing their engagement firmly on the country's clean energy potential.
A Bankwatch blog discussing a March fact-finding mission to Aliaga, featuring a selection of photos, is available at:
Theme: Energy & climate