Turkey: foundations for energy bridge firm up
Long-planned pipeline and electricity links between Turkey and Romania are moving closer to realisation, argues Turkish Ambassador Ayse Sinirlioglu
Oct 2009, The Diplomat Bucharest
Turkey and Romania plan to work as partners on the Nabucco gas pipeline project to diversify Europe’s energy supply routes and Turkish Ambassador to Romania Ayse Sinirlioglu argues that the link between central Asia and western Europe is a “top priority” of the Turkish Government.
Turkey is also supporting the “Caspian Development Corporation” joint venture with the European Commission, which aims to enable the partner companies and countries, together with the financial institutions, to negotiate with the source countries to purchase the gas.
Firstly Azeri gas is foreseen as the most plausible source for gas. In the following stages, Iraqi gas may play a substantial role in the success of the Nabucco Project, says the Turkish Ambassador. “When the circumstances permit, Iranian gas may also be transported to Europe via the Nabucco pipeline,” adds the Ambassador.
Although some critics believe the pipeline is too politically loaded to ever happen, the Ambassador states that the Ankara-Baumgarten section will be completed by 2014, when the first gas will flow. Then a second section will be constructed between 2014 and 2016 on the eastern Turkish borders.
The Turkish government is also in negotiations with Romania to set up an undersea electrical cable between the two countries. The Black Sea High Voltage Direct Current (HVDC) project, which envisages to export electricity from Constanta to Istanbul through underwater cables is still at the project stage.
In June 2009, the feasibility studies for the project was awarded to a Swedish company. “The outcomes of the preliminary works of feasibility are expected to be announced at the end of this year, and the final outcomes are expected to be reported in mid-2010,” says Sinirlioglu.
Recently the Turkish Government has decided to waive the visas for the Romanians going to Turkey to further promote business and tourism between the two countries. “We are pleased to see that the Romanian Government is also exploring the possibilities of easing the procedures for visas and residence permits required from Turkish citizens,” says Sinirlioglu. Now Turkish businesspeople need to complete a lot of paperwork to enter Romanian territory, which can delay the need to cross borders by up to a week.
Crisis forces investor downscale
The economic crisis has been felt at full capacity by the Turkish businesspeople in Romania, according to Guven Gungor, general secretary of the Turkish Businessmen Association (TIAD). Firms have started to cut costs and reduce activity since the end of 2008, especially in real estate and construction.
“Even though there are not many Turkish businessmen who came to Romania to develop some specific real-estate projects, many were involved in this sector as collateral activity besides their core business and now they have to abandon or postpone everything,” explains Gungor.
A worrying tendency is that developers who are desperate for cash try to withdraw this from the bank accounts of their sub-contractors. In a contractual loophole, developers can state that their construction companies have failed to honour their contracts. They then go to the bank of the firms asking to “liquidate a warranty letter” - this is a letter of guarantee the constructor made with the developer in the event of a default in the deal.
This ‘liquidation’ allows them to help themselves to the accounts of their sub-contractors. “As the warranty letter is irrevocable and unconditional, the banks never question why someone liquidates it,” says Gungor. He explains that even if the constructor has respected the contract to the letter, he has to prove this in a court of law, which can take up to one year.
“If a constructor loses a warranty letter, he loses all credibility in the bank’s view and, if he wants to start another project, his chance to obtain another financing line, the chances are slim, because he has a high risk profile,” says Gungor. “In such cases, it is better for the constructor to just close down the business.”
This situation has been exacerbated by the recent judges’ strike, because after a building job is finished, a constructor has to go a judge to ask for the annulment of any warranty letter.