In a joint statement today, the three agencies of Germany, Austria and Switzerland said that their export credit guarantees were withdrawn because, despite ‘some significant improvements’ in environmental, cultural heritage and resettlement matters, there had not been enough by yesterday’s deadline, which was set last year.
The export credit agencies of Germany, Austria and Switzerland are, respectively, Euler Hermes Kreditversicherungs, Oesterreichische Kontrollbank and Swiss Export Risk Insurance (Schweizerische Exportriskoversicherung – SERV). They agreed over two years ago to take on the warranties for the project with conditions related to environment, resettlement and archaeology.
Ilisu involves construction of a 135m high by 1820m long dam on the Tigris river, and a powerhouse with six Francis units. The project is part of the Southern Anatolia Project masterplan, and was due to be completed around 2014-15.
In the third quarter of 2007 a consortium of European companies received a contract for supply and engineering services to the Ilisu project, which is being developed by the General Directorate of State Hydraulic Works (DSI). The consortium includes andritz, alstom, Ed Zublin, Stucky, Colenco and Maggia.
Other companies involved with the project include local firms Nurol, Cengiz, Dolsar, Rast and Temelsu.
The export credit agencies noted that there had been ‘some significant improvements’ on the environmental, cultural and resettlement aspects of the project. However, they said there had not been enough to continue to secure the insurance cover provided by their export credits to consortia with construction and supply contracts.
In a statement following the agencies’ move, Andritz said: ‘It is very unfortunate that the intense efforts that Turkey has made in the past months to implement the accompanying measures in the environmental, resettlement and cultural areas did not receive adequate recognition’
Andritz added that many of the pending items and requirements set by the agencies had been fulfilled, as noted by their own review. But the company said that it is waiting to learn how the Turkish Government plans to proceed with the project.
At the end of last year there was a suspension of the support for construction contracts at Ilisu due to the exports credit agencies concerns over the environmental, cultural and resettlement issues.
The statement said the move in December was made to drive their insistence on international standards being met ‘against the backdrop of repeated delays in implementing the measures’.
It continued: ‘Although some progress was made, several visits to the project region and exchanges with the project management appointed by the builders invariably revealed deficits in implementing the requirements to be fulfilled during the previous project phases.’
Official groundbreaking for the project was in August 2006 and the original completion deadline was 2013.
Andritz said it had booked only a small part of the order value so far and therefore there would be no material financial impact to its performance due to the exports credits agencies’ decision today.
