Jan. 3 (Bloomberg) -- Abu Dhabi National Energy Co., the United Arab Emirates-based utility known as Taqa, is starting exclusive negotiations with Turkey’s electricity provider for the development of a coal-fired power project.
Taqa will study developing coal mines and power plants to boost output at the project fivefold to 7,000 megawatts, Vice Chairman Abulla Saif Al-Nuaimi said at press conference in Ankara today. Al-Nuaimi signed a memorandum of understanding for the project in southern Turkey’s Afsin-Elbistan region.
The agreement is part of an intergovernmental accord between the U.A.E. and Turkey to advance the coal project, the two countries’ energy ministers Mohamed bin Dhaen Al Hamli and Taner Yildiz said at the press conference today. Investment in the project may total $12 billion, Yildiz said Dec. 26.
“This is a strategic long-term investment,” Al Hamli said, adding that the U.A.E. was evaluating more investments in Turkey. Yildiz said Turkey aimed to raise power production from coal to 18,000 megawatts. Demand for the commodity will grow at a rate faster than the pace of economic expansion, he said.
Taqa, owned 75 percent by the Abu Dhabi government, generates power and produces oil and gas across the Middle East and North Africa, as well as in Europe, India and North America. Last month it bought stakes in oil and gas production in the North Sea and Iraq’s northern Kurdish region to boost output.
The U.A.E. utility and Turkey’s Electricity Generation Co. will work together on developing the power plant projects, Taqa said today. The plan involves buying and modernizing an existing 1,400 megawatt coal-fired facility and starting work on another and on the mines, Frank Perez, Taqa’s head of global power, said in an interview today. The project could eventually arrive at the 7,000 megawatt capacity target, he said, without giving a time frame for that increase.
Taqa and partners will seek project financing to fund development of the mining and power facilities once they agree on a corporate structure and plans for expansion, Perez said on a conference call.
The $12 billion figure cited by Yildiz was “an appropriate estimate” for the cost of the entire project, with mine works and construction expenses for each 1,400 megawatt plant averaging about $3 billion, he said. The first new facility developed in the project would likely be generating power by 2018, he said.
Turkey is developing its coal, or lignite, deposits to cut reliance on imported natural gas as a fuel for power plants. The Afsin-Elbistan basin holds about 40 percent of Turkey’s lignite deposits, Taqa said.
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