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Additional information on an export credit guarantee for the hydroelectric power plant Ilisu
5 December 2006
The Interministerial Committee for Export Credit Guarantees has offered to cover tunnelling work related to the hydroelectric power plant Ilisu worth almost EUR 100 million following Züblin's application for an Export Credit Guarantee (Hermes Cover). The Turkish buyer, a department of the Turkish ministry of energy, agreed to accept a number of obligations and conditions, which the three state export credit agencies involved from Switzerland, Austria and Germany drew up following extensive and careful investigations in cooperation with international experts. The Federal Government's offer of cover is linked to these agreed obligations and conditions. Their purpose is to guarantee that the planned project in the southeast of Turkey will conform to international standards. Due to the construction period of at least seven years there is ample time to comply with most of the obligations. However, some conditions have to be met before a final decision on the granting of Hermes Cover will be taken.
According to Turkey's projections the project on the river Tigris with a total capacity of 1,200 MW will contribute considerably to meeting the country's increased energy demand; at the same time infrastructure and the economy of Anatolia are to be stimulated. In addition to the actual construction costs of roughly EUR 1.2 billion, the project costs of about EUR 2 billion include some EUR 800 million to be spent on resettlement and the protection of cultural assets and the environment.
The list of conditions and obligations includes extensive and detailed regulations concerning all critical aspects of the dam. For the population affected by the construction of the dam (about 55,000 persons will be directly or indirectly affected) measures such as income support, transfer of land of equal value, construction of new villages with modern houses and infrastructure, etc. are planned. They are designed to maintain or even improve their livelihood. All plans and measures are modelled on the internationally acknowledged standards set by the World Bank.
Other conditions and obligations are related to the relocation of cultural monuments according to the guidelines drawn up by archeological excavation and cultural experts on the basis of a new law, which is to be passed in the near future. This law will make it possible, for example, to rescue and relocate the works of art of the town of Hasankeyf, which are threatened by dilapidation, to a new cultural park. According to the judgement of independent experts, sufficient funds will be available to meet high standards.
The investigation of fauna and flora affected by the project and studies of their possible preservation showed that measures have to be taken to minimize the effects on the ecosystem as far as possible. Turkey undertook to have additional detailed investigations carried out, in which international experts are to be involved. They are to form the basis on which the necessary steps will be taken.
A committee of experts will control the implementation and provide support on all fields. Some internationally renowned experts could already be recruited for this committee. One of their tasks will be to regularly inform the export credit insurers about the project's progress. That will guarantee that the export credit insurers involved can resolutely react if any obligations are not fulfilled.
It is of great importance to the governments of Switzerland, Austria and Germany that Turkey provided Iraq and Syria, as riparian states at the lower course of the river Tigris, with ample information and offered to consult them.
Other obligations include the construction of three-stage sewage treatment plants in three towns on the upper course of the river Tigris, detailed budget plans for each project step, the installation of a complaint mechanisms for the population affected, a pledge by the ministry of agriculture to make sufficient land available to resettlers for cultivation, the guarantee that, at any time, a minimum amount of water will be discharged into the lower course of the river Tigris and the pledge to recruit at least 60 % of the workforce needed for the construction work among the people affected by the dam.
The Federal Government is convinced that the intensive and constructive cooperation with the foreign buyer and other Turkish government agencies contributed to a substantial and lasting improvement of the project. This close cooperation will continue to be a top priority at the future realization of the project.
