August 29, 2013 7:50 pm

Abu Dhabi energy group to delay $12bn Turkey investment

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A $12bn deal between Turkey and the UAE for the development of a coal power project turned sour this week after Abu Dhabi’s national energy group, Taqa, said on Tuesday it would delay its investment until 2014 “due to other spending priorities.”

Although Taqa has since said the postponement was due to economic concerns, the Turkish government has suggested the move was political.

“I wish that Taqa’s choices weren’t based on political reasons,” the country’s energy minister Taner Yildiz remarked on Tuesday, following media reports that the company would pull out of the deal completely.

“It seems like the latest incidents in Egypt and Syria have put Taqa in a position to make choices about its energy investments from its perspective,” he added.

The project, which involves building four new coal-fired power plants, modernising an existing plant and developing coal mines, was heralded at the beginning of the year as one of the biggest energy deals in Turkey’s history.

Turkey has regularly condemned the military coup that removed Egyptian president Mohamed Morsi from power on July 3 this year, and recalled its ambassador from Cairo in August.

The UAE, meanwhile, has pledged $3bn in oil, cash, and central bank deposits to the transitional government.

A Turkish energy analyst speaking on condition of anonymity suggested additional factors were at play in Taqa’s decision.

“My personal reading is that Taqa was well aware that the project was not only a financial challenge but also a technical challenge exceeding their experience,” he said. “So they were trying to get out of the project and the latest developments helped them to find that exit.”

Whatever its motives, Taqa’s decision comes as “a significant blow to Turkey’s plans for energy diversification away from imported energy” and for reducing its $55bn annual energy import bill, Tim Ash of Standard Bank said in a note on Thursday.

Taqa declined to provide further comment.

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