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RR RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHAK #2755/01 3131720
ZNR UUUUU ZZH
R 091720Z NOV 07
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC 4340
INFO RUCPDOC/USDOC WASHDC
RHEBAAA/DEPARTMENT OF ENERGY WASHDC
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHUNV/USMISSION UNVIE VIENNA 0168

UNCLAS SECTION 01 OF 02 ANKARA 002755 
 
SIPDIS 
 
USDOE FOR CHARLES WASHINGTON 
USDOC FOR 4212/ITA/MAC/CPD/CRUSNAK 
STATE ALSO FOR EB/CBA FRANK MERMOUD 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG EINV BEXP TU
SUBJECT:  TURKEY PASSES ITS NUCLEAR ENERGY LAW 
 
REF: A) ANKARA 1177 
B) ANKARA 1121 
C) 06 ANKARA 6056 
 
SENSITIVE BUT UNCLASSIFIED.  PLEASE HANDLE ACCORDINGLY. 
 
¶1.  (SBU) SUMMARY: The Turkish Parliament passed the long pending 
Nuclear Energy Law on October 8, after just two days of debate and 
despite criticism from opposition parties and NGO's.  The law is 
expected to be approved by the President.  The law establishes an 
extremely rapid selection process, under which a tender will be 
issued within two months and bids must be submitted within one 
additional month.  The law also allows for public, private or mixed 
ownership companies.  The speed and lack of transparency in the 
selection process, the possibility of increasing the state's share 
in electricity production and concerns about regulation of nuclear 
waste will be major sources of concern for bidders, and may give 
rise to legal challenges. 
 
¶2.  (SBU) BACKGROUND: The GOT's energy program calls for the 
construction of three nuclear reactors producing 5000 MW.  The 
government has determined that Sinop, a province on the Black Sea 
coast, is the best location for the first nuclear power plant. 
Turkey has rich uranium reserves, and a nuclear power plant has been 
on the GOT's agenda since the early 1960's.  Despite lengthy 
research and detailed preparation efforts, popular opposition, 
environmental concerns, and tender irregularities led to the 
cancellation of four prior tender processes (in 1960, 1968, 1974, 
and 1998). 
 
----------------------------- 
Parliament Passes Nuclear Law 
----------------------------- 
 
¶3.  (U) The Turkish Parliament passed the long awaited Nuclear 
Energy Law on November 8, just two days after the bill's 
introduction.  The Parliament passed an earlier version of the law 
in May, but it was vetoed by then-President Sezer for technical and 
legal reasons.  This revised version addressed Sezer's criticisms. 
It will enter into force once it is approved by President Gul and 
published in the Official Gazette. 
 
The law was passed despite strong criticism of the law from 
opposition parties and from NGOs, including Greenpeace and the 
Electrical Engineers Chamber, who collected 100,000 signatures from 
nuclear power opponents.  In addition to general opposition to 
nuclear power, there was criticism of the lack of transparency in 
the company selection process. 
 
¶4. (U) Here are highlights of the new Nuclear Energy Law: 
 
-- The Turkish Atomic Energy Agency (TAEK) is required to set the 
technical criteria for nuclear plants within one month after the law 
enters into force.  TAEK will also be responsible for regulating and 
auditing the functioning of the plant until a new agency with these 
duties is established. 
 
-- The Ministry of Energy and Natural Resources (MENR) will issue 
regulations within two months after the law enters into force, which 
list the specifications, company selection process, land allocation, 
license costs, incentives for infrastructure, fuel supply, 
production capacity, amount of energy to be purchased, and basis on 
which the energy unit price will be set.  These regulations will 
enter into force after approval by the Council of Ministers (COM). 
 
-- Immediately after these regulations are issued, the State 
Electricity Trading Company (TETAS) will announce a tender and bids 
will be due one month thereafter. 
 
-- Companies will be able to compete for the tender only if they are 
eligible to meet the technical criteria set by TAEK.  TETAS selects 
the company with the best offer, and submits the decision for COM 
approval.  If the COM approves, it will authorize TETAS to sign a 
contract with the winning company.  The Energy Regulator, EMRA, will 
then issue a generating license to the company, after which TETAS 
can conclude an energy sales contract with the company.  The 
contract period cannot exceed 15 years following the date the plant 
becomes operational. 
 
-- In the energy sales contract, TETAS will agree to buy electricity 
from the subject company. TETAS redistributes energy under contracts 
with holders of wholesale and retail trading licenses. 
 
-- MENR and the Treasury Ministry will establish two accounts, the 
National Radioactive Waste Account (URAH) and the Decommissioning 
 
ANKARA 00002755  002 OF 002 
 
 
Account (ICH), to cover expenses relating to waste management, 
including: setting up temporary and permanent storage areas; 
construction of a storage facility; transportation and processing of 
highly radioactive material; research and development activities for 
management of nuclear waste; and dismantling costs.  The company 
will pay a 0.15 cent/kWh contribution to each of the two accounts, 
URAH and ICH. 
 
-- The company is responsible for provision of fuel for production, 
in line with the criteria set forth by TAEK, and for dismantling of 
the facility at the end of the operating period of the plant. 
 
-- The law requires the company to have insurance to compensate for 
any harm caused during construction. 
 
-- In case there is an accident at the facility or harm from 
handling of nuclear fuel or waste, the GOT will implement the 1960 
Paris Convention and other related national/ international 
legislation. 
 
-- The bill allows great flexibility on ownership structure.  It 
allows the GOT to establish wholly public or mixed ownership 
partnerships with the winning company, or to authorize existing 
state companies to participate.  The COM also can establish a 
company to build and operate, or to contract with another company to 
build and operate the plant.  The private sector will hold shares in 
such a company.  The law is subject to the State Economic 
Enterprises Law. 
 
-- The COM may announce incentives for technological investments and 
training of personnel. 
 
-- The GOT will provide an easement on public land for the nuclear 
plant free of charge.  The company will be responsible for 
dismantling the facility and returning the land to the GOT at the 
end of the operating period in an environmentally appropriate state. 
 The ICH account will be used to cover dismantling costs.  If the 
ICH account is insufficient, the Treasury's compensation for 
overruns will be limited to 25 percent of the amount accumulated in 
the account and the company will be responsible for all additional 
costs. 
 
-- The law also provides certain incentives for coal plants with 
more than 1,000MW installed capacity. 
 
(SBU) COMMENT:  The complexity of this new law results from both 
meeting objections raised by President Sezer in his veto of the 
earlier bill and some measures to counter potential opposition.  The 
inclusion of public and private investment models also indicates the 
GOT's determination to eventually realize this project, although it 
also gives rise to criticisms of lack of transparency.  The law sets 
some challenging deadlines for the company selection process, 
particularly the requirement that bidders submit their bids within 
one month after the tender is opened.  Press reports indicated that 
the GOT wants to have construction begin in March 2008.  That would 
only be possible if feasibility studies on the Sinop site already 
have been completed and companies already have their bids more or 
less ready.  The speed and lack of clarity on the selection process, 
the possibility of increasing the state's share in electricity 
production and concerns about regulation of nuclear waste will be 
major sources of concern for bidders, even if the process does not 
face any legal challenges. 
 
Wilson