The “Energy Security” Chapter in the New 64th Turkish Government Program

The new 64th Turkish Government's Program was released in a 162 page document on November 25th, 2015 by the Prime Minister with a parliament speech. Let us read and review together pages 92 through 95 in the "Energy Security" section.

Turkey Energy Strategy

“Energy Security” (Pages 92-95)

We shall take the principles of diversification of energy sources at minimum cost and high quality for continuous and safe delivery to the final consumers of energy. As a rapidly developing country, our current energy resources are not sufficient to meet the needs of our demand. On the one hand we need to ensure security of supply, and on the other hand we need to mobilize our indigenous renewable energy sources, and increase energy efficiency. In addition, we need to investigate the necessary activities to ensure overseas energy sources for long-term and sustainable basis. We anticipate that our evaluation of domestic and renewable energy sources at the highest levels possible, and we shall use nuclear technology for electricity generation. The waste energy utilization will strengthen the strategic position of our country in international energy trade and we shall minimize the environmental impact at competitive energy system.

By taking concrete steps in nuclear energy, we signed agreements to build nuclear power plants at two sites, 4,800 MW in Akkuyu, and 4,480 MW in Sinop respectively. We shall start negotiations for the third nuclear power plant beginning this year.

We plan to complete the natural gas transmission infrastructure for housing sector in all provinces.
We will increase the natural gas storage capacity. Within this context, the construction of Salt Lake Underground Storage will be completed in our period.

We signed the international agreement with the government of Azerbaijan, to implement the Trans-Anatolian Natural Gas Pipeline (TANAP) project within in this period.

Trans-Adriatic Gas Pipeline Project, gas to reach Italy via Greece and Albania, and Iraq-Turkey Natural Gas Pipeline Project, are aimed at the realization of gas delivery to Turkey and Europe.
Karapinar Industrial Zone for Energy Generation is planned for allocating land to interested investors in 2016 with 4,000 MW of capacity on 6,000 hectares of empty land that cannot be used for agricultural purposes.

We shall complete the 1,200 MWe Ilısu Hydro Dam, to generate 3.8 billion kWh per year.
We shall complete Artvin Yusufeli Dams at the height of 270 meters, which will be the 3rd highest in the world, and the highest in Turkey.

We shall increase the capacity of electricity trade with neighboring countries.

Our efforts will continue to convert our national grid system into a modern network by strengthening the infrastructure of the electricity transmission network.

Electricity generation privatization, which was being launched in 2010, will continue.
Increasing use of energy-efficient products will be encouraged, compared to the existing inefficient consumption.

We shall initiate new investments in big lignite basin at Afsin-Elbistan region, to allow the evaluation and exploitation of similar other reserves.

We shall increase oil and natural gas exploration and production inside and outside of the homeland.
Exploration activities for new coal reserves for the determination of the potential of local resources such as geothermal will be maximized.

We shall implement comprehensive research on shale gas resources.

We shall give priority to exploration and production of iron ore, and other industrial raw materials domestically, mainly marble and boron.

We shall create strategies to secure basic supplies of raw materials which are critical for Turkey’s economy. We shall establish a system that will increase the added value of critical raw materials, minerals, and mining ores for export.

We will start an exploration program for the production of rare earth elements, located in Turkey.

We will improve the compliance with environmental regulations in the mining sector.

We will implement in an effective way for occupational health and safety in the mining industry, with the new measures to improve mining law and other relevant laws and regulations.

We will provide necessary measures to increase the added value of chrome and marble processing mining products domestically.

We will support competitiveness of high mining companies on a global scale.

Our priority will be in major reform in the new era of our ‘Power Generation Transformation Program” based on domestic resources. The aim of this program is to mobilize domestic resources in homeland to reduce our dependence on foreign energy.

We aim to increase our competitiveness with less input on one hand, and by improving “Energy Efficiency of Primary Transformation Program” on the other, while protecting the environment with less carbon emissions.

We will promote energy efficiency programs, especially in public buildings and facilities while reducing the primary energy intensity.

“Balance of Payments” (page 74)

Due to the nature of the energy sector, we will support the local fabrication in the requirement list of investments to provide high value-added products.
We will increase the share of domestic fabrication of machinery and equipment for wind, solar, and alternative energy sources, such as hydroelectric plants.

We shall ensure that mining activities of Mineral Research and Exploration Directorate (MTA) to move abroad.

We will reduce the dependence on the input of scrap iron and steel industry.

We will promote R&D activities for inorganic chemistry and biofuels in areas such as alternative composite materials.

We will realize the prototype battery production/fabrication/development for electric vehicles.

We will increase the attractiveness of free zones to attract investment to our country for high-tech products.

We will create mechanisms to improve competitiveness of domestic machinery manufacturers with appropriate financial incentives.

“Environmental Protection” (page 130)

We will apply environmental awareness of small hydroelectric power plants (HPP) at the highest level to implement these objectives in effective way by making the necessary arrangements. In principle, we will not promote hydroelectric power plants under 10 MW.

“Regional and International Cooperation” (page 152)

In our terms, the most important event will be “UN Conference on Climate Change” in Paris between November 30 to December 11, 2015 period in combating climate change. This event would be a test for our participation effectively to the efforts of the international community’s respective joint efforts. We will continue our efforts to create positive outcome from the COP21 Climate Change Conference in Paris.

Turkey has already announced a 21 percent reduction in greenhouse gas emission in accordance with “National Contribution to reduce Global Warming”. However, this rate may be revised with a detailed analysis in time.

We, the people of the business world, want our government to be successful. We want political stability, economic stability, and comfort and confidence in the markets. If the political authority becomes successful, then the market becomes relaxed, business flourishes, and we work better and earn more.

We create employment, competitive products and services; we create welfare and a better quality of life for our children. The first noticeable detail of the 64th Government was that the sentences in the “Energy Security” section were inconsistent with the text flow. They were a very scattered narrative.

Government policies are political preferences. Political preferences of the ruling party are a democratic right. These preferences are authorized by the majority of voters to put into practice. However, in the international financial markets, there are established rules and expectations to which all governments must conform in today’s society and working environment. Political choices cannot contradict those market rules and expectations.

For the implementation of political choices, there are a few items which must be taken into account: compliance with the risk appetite of the investors, the framework terms and conditions of project finance institutions, strict environmental rules, internationally accepted principles, fair competition, transparency, and the rule of law.

The political will for more investments on fossil fuels, natural gas, imported coal or shale gas is not very high under COP21 Global warming sensitivities, and further political enforcement does not bring desired results. Even Gulf capital (Qatar, UAE, Dubai, Bahrain) wants these minimum capital requirements to be met.

We notice that fewer figures are used to explain the wording in the 64th Government Program’s “Energy Security” chapter. We notice that when it comes to target figures, installed power, availability, demand, generation, annual increase etc., all figures are missing in the text. Some concepts are too vague, too round, too estimated. The text is disconnected from technical language. The language used is completely in compliance with social scientist jargon. The program wording has a lot of editorial errors. There are serious technical errors. Technical advisers should be employed to fix the technical details of the program.

We feel that the text has been prepared in a hurry. Some important sentences, initiatives, measures and decisions are added to different places inconsistent with the text flow. The final wording has not been as good as we expected. Everyone in the energy market will read this text and it will be translated into many foreign languages. Foreign investors, experts in international financial institutions, will carefully read and evaluateit. If there are no sufficient numbers or figures, then we have no targets. We were expecting a much more mature document to present to our international partners to work for new joint investment projects.

The Government’s program will be discussed, evaluated and critiqued in the parliament shortly, and then will go to a confidence vote. Since the ruling party has an absolute majority, it will probably be accepted as is.