This record is a partial extract of the original cable. The full text of the original cable is not available.

241339Z Oct 03

UNCLAS ANKARA 006696 
 
SIPDIS 
 
 
SENSITIVE 
 
 
STATE FOR E, EB/CBED,EB/IFD AND EUR/SE 
DEPTMENT PASS OPIC AND EXIM 
NSC FOR BRYZA 
USDOC FOR 4212/ITA/MAC/OEURA/CPD/DDEFALCO 
USDOE FOR CHARLES WASHINGTON 
TREASURY FOR OSIA 
 
 
E.O. 12958: N/A 
TAGS: EINV ENRG ECON PREL TU
SUBJECT: ENERGY MINISTRY DENIES BOT TAKEOVER PLANS 
 
 
REF: A. ANKARA 6612 
     ¶B. ANKARA 6423 
 
 
This message is sensitive but unclassified, not for internet 
distribution.  Please handle accordingly. 
 
 
¶1.  (SBU) Energy Minister Guler issued a statement denying 
the GOT would consider seizing BOTs, but continuing to 
pressure companies over high electricity prices.  Separately, 
in a meeting with Econoffs, the Energy Ministry 
Undersecretary took a similar line.  The ENRON BOT told Post 
it has yet to be contacted by the Ministry.  End Summary. 
 
 
 
 
¶2.  (SBU) On October 23, Energy Minister Guler issued a 
statement denying press speculation that the GOT intends to 
seize BOT facilities (Reftel A). Guler said that there are 
four ways to resolve this issue: 1) mutual agreement; 2) 
buyout; 3) arbitration; and 4) cancellation of contracts. He 
said that the Ministry had been dicusssing these options for 
the past three months, and that nothing has changed. While 
complaining about high electricity prices (Reftel B), he said 
Ministry was intent on getting what it deserved, nothing 
more. He said that he preferred to solve the problems by 
compromise but Turkey reserves the right to seek arbitration 
to eliminate the injustice in this matter. 
 
 
 
 
¶3.  (SBU) On October 24 Econoffs met with Undersecretary of 
Energy Demirbilek to clarify the GOT's position on BOTs. 
Demirbilek also claimed that the Ministry has no intention of 
taking over BOT companies. He said that the Ministry's 
strategy is to allow the Energy Market Regulatory Authority 
(EMRA) to put proposals to BOT's to ease the transition to a 
liberalized market.  He said that if EMRA cannot move 
forward, then the Ministry would step in but the Ministry had 
to be cautious because Turkey recognized that actions that 
might be accepted for a contract party are not acceptable 
when taken by the State.  He said that the MENR has asked the 
BOT companies to voluntarily lower electricity prices, but 
some were more eager for an early buyout.  He argued that it 
would be impractical and costly for Turkey to exercise its 
early buyout option at this time.  From his perspective, if 
the Ministry could lower gas prices to BOT companies by two 
cents and capacity charges by 2-3 cents, the BOT companies 
should be willing to lower their output prices. However, 
Demirbilek claims the BOT companies have rejected this 
compromise. (Comment:  This may not be much of a compromise 
because the contract states that if gas prices are lowered, 
the change would be reflected in electricity prices. 
Moreover, the GOT sells gas to BOT companies at a higher 
price than to State-owned power plants.  End Comment) 
 
 
¶4.  (SBU) While criticizing the contracts, Demirbilek 
stressed that Turkey will not take any action outside the 
framework of the contract.  When asked about the allegations 
of corruption, he explained that the Energy Ministry, which 
signed the orignal contracts, had not fully evaluated the 
details.  He said that the AK Government had not launched a 
corruption investigation but was researching the terms of the 
contracts as any other new government has the right to do. 
 
 
¶5.  (SBU) The General Manager of one of the BOT companies, 
ENRON/Trakya, contacted us on October 24 after returning from 
a Board meeting in London.  She noted that the company was 
following the press reports closely, especially speculation 
that the Energy Ministry would invite companies to 
negotiations next week.  She said that the creditors should 
be present at any such meeting but that the Energy Ministry 
still had not contacted the companies.  The company is 
seeking clarification on the government's next steps. 
EDELMAN