CDB contributes $460 million to $1.381 billion syndicated buyer’s credit for 1320 MW Coal-Fired Emba Hunutlu Power Station Construction Project (Linked to Project ID#91516 and #91517)

In June 2012, Emba Elektrik Üretim applied to build a 1200 MW coal-fired power plant in Yumurtalık district, where numerous other proposed coal-fired power plant projects are located. An environmental permitting meeting held in Sugözü in September 2012 was met with protests from locals and environmentalists. There was no news on the project for several years, and it seemed possible that it had been abandoned. Along with numerous other proposals, the proposal was revived in 2014 as the 1,200-MW, two-unit Hunutlu plant. The project began the public comment period for environmental permitting in June 2014. In 2015, the land was expropriated, with the price being set at 100 lira per square meter. The Turkish Energy Market Regulation Authority (EPDK) finally permitted the project construction and issued a 49-year generation license on July 9, 2015. Then, on June 29, 2016, Adana Bar, Turkish Bar Associations, Medical Chamber of Adana, Agriculture and Engineers Chamber of Adana and Doğu Akdeniz Çevre Dernekleri (East Mediterranean Environment Associations) filed a lawsuit against seven coal-fired power plant projects in the region, including the Emba Hunutlu power plant. Eighteen months later, on January 30, 2018, the expert report for the court case filed by Adana Bar, Turkish Bar Associations, Medical Chamber of Adana, Agriculture and Engineers Chamber of Adana and Doğu Akdeniz Çevre Dernekleri (East Mediterranean Environment Associations) was published, acknowledging that the Emba Hunutlu power plant would harm the public health and agricultural production in the area. Then, on October 30, 2018, the hearing of the court case by Adana Bar, Turkish Bar Associations, Medical Chamber of Adana, Agriculture and Engineers Chamber of Adana Doğu Akdeniz Çevre Dernekleri (East Mediterranean Environment Associations) was held in Ankara. Despite the expert report, which stated the harmful effects of the plant, the Ankara District Administrative Court decided not to cancel the permit of the Emba Hunutlu power plant. In April 2019, China Development Bank, Industrial and Commercial Bank of China, Bank of China signed a $1.381 billion syndicated buyer’s credit facility (loan) agreement with EMBA Elektrik Üretim A.S. (also known as ‘EMBA Electricity Production’) — a special purpose vehicle and joint venture of Shanghai Electric Power (SEP, 50.01%), AVIC International Project Engineering (2.99%), and two local Turkish investors (47%) — for the 1320 MW Coal-Fired Emba Hunutlu Power Station Construction Project. All three banks acted as joint-lead managers and bookrunners and each bank contributed USD 460 million to the overall syndicated loan. See #91516 for ICBC’s contribution and #91517 for Bank of China’s contribution. The loan carries a 15-year maturity. It is a senior secured amortizing term loan that matures on March 29, 2034. Sinosure provided two overseas investment (equity and debt) insurance policies, with a maximum underwritten amount of $280 million for the equity component and $2.04 billion for the debt component (covering the loan’s principal and interest). Both insurance policies covered the risks of inconvertibility and transfer restrictions, expropriation, war and political violence, with an insurance liability period of 180 months. The proceeds of the loan were to be used by the borrower to partially finance a $1.7 billion commercial (EPC) contract between EMBA Elektrik Uretim A.S., CLP Power Engineering Co., Ltd (CPIPEC or 上海能源科技发展有限公司), and AVIC-INTL Project Engineering Company, which was initially signed on October 26, 2017 and subsequently revised and updated on April 25, 2019. The 1320 MW Coal-Fired Emba Hunutlu Power Station Construction Project is being financed as an independent power project (IPP) and financed with a debt-to-equity ratio of 80:20. The purpose of the project is to construct a 1200MW supercritical coal-fired power plant — with two 660MW power generation units (‘Unit 1’ and ‘Unit 2’) — in the village of Sugözü village, the district of Yumurtalık, and the province of Adana near the Syrian border. The project will feature two seawater desalination systems to provide 7,320m³ of desalinated water per day for the plant’s operations. A selective catalytic reduction (SCR) DeNOx system will be installed at the plant for the efficient conversion of harmful oxides of nitrogen into N2 and H2O using ammonia. Additionally, facilities such as flue gas desulphurization unit along with dry and wet electrostatic precipitator system will be installed to minimize the dust and particulate emissions from the plant. The primary infrastructure at the project site will include a turbine building, a crusher house platform, a comprehensive building platform, and an intake platform. In addition, the plant will feature a jetty and associated facilities, and a trestle with a connected road. The power generated by the Hunutlu thermal power plant will be evacuated through 380kV transmission lines and transmitted to the national grid operated by Turkish Electricity Transmission Corporation (TEIAS). The plant will be connected to the electricity transmission line between the Mersin 380 substation and the İsken TPP. A transmission line connecting Hunutlu TPP and Adana 380kV substation will be constructed as part of the project, in addition to three feeder displacement works at Adana 380kV substation. The project also includes the construction a port to receive coal. Upon completion, the plant will reportedly be capable of delivering up to 11.5 billion kilowatt-hours (kWh) of electricity to the country’s national grid annually. It is expected to contribute an estimated 3% of all electricity supplied across Turkey. The project also expected to provide employment opportunities for 4,000 employees during construction and 500 employees during production phase. CLP Power Engineering Co., Ltd (CPIPEC or 上海能源科技发展有限公司) and AVIC-INTL Project Engineering Company are the general EPC contractors responsible for project implementation. However, several subcontractors are also involved, including Anhui No.1 Electric Power Construction Co., Ltd. (a subsidiary of China Energy Engineering Group), Ilk Construction, Hyflux Newspring Construction Engineering (Shanghai), ÇİMTEK Mühendislik Mimarlık, HNM Zemin Yapı, and ESI Eurosilo. Preliminary excavation works began in July 2018. Then, a logistical voyage ceremony took place in Shanghai on August 25, 2019, but on-site construction activities did not begin until September 22, 2019. In 2020, Turkey was the worst-hit country by COVID-19 in the MENA region, with over 1.8 million infections. However, altogether 1,831 Chinese and Turkish personnel chose to stay and continue working on the project. In August 2020, to speed up the construction, 455 Chinese staff members flew to Turkey and joined the project, despite the health risks. On February 17, 2020, the project’s first truss gantry crane was successfully hoisted into place. On March 21, 2020, the first steel structure of the Unit 2 boiler was successfully hoisted into place. On July 22, 2020, the power plant’s Unit 1 boiler was successfully hoisted into place. On March 10, 2021, the power plant’s Unit 2 boiler water storage tank furnace was successfully hoisted in place. On April 29, 2021, the steam turbines for Unit 1 and Unit 2 were successfully installed. On September 3, 2021, Unit 1 passed a hydraulic test, thereby laying a foundation for its commissioning. On June 18, 2022, Unit 1 began operations. In June 2020, this project became a subject of local controversy when more than 20 non-governmental organizations called on Chinese banks to withdraw financial support for a coal-fired power plant under construction in Turkey, citing environmental damage and a disregard for the “green” pledge of China’s Belt and Road Initiative. The groups sent letters to China Development Bank, Bank of China Ltd., and Industrial & Commercial Bank of China Ltd., asking them to halt financing for the 1320 MW Coal-Fired Emba Hunutlu Power Station Construction Project. A related online petition garnered more than 19,000 signatures.

Additional details

1. This project is also known as the 2 x 660 MW Hunutlu Thermal Power Plant Project, the 2×660MW Supercritical Coal-fired Power Plant Project, the Emba Hunutlu Project, and the 1.32GW Hunutlu Thermal Power Plant (HTPP) Project. The Chinese project title is 土耳其胡努特鲁燃煤电站项目 or 胡努特鲁燃煤电厂项目 or 胡努特鲁2×66 万瓦燃煤电站项目 or 胡努特鲁项目. The Turkish project title is Emba Hunutlu Termik Elektrik Santrali. 2. King & Wood Mallesons’ PRC and Australian teams acted as PRC and English counsel to Shanghai Power and the borrower. Sunshine Law Firm acted as legal counsel to EMBA Power Generation and Mirze Rencber was the Turkish legal counsel to the project. 3. The Hunutlu coal-fired power plant is a part of Turkey’s Middle Corridor and is also supported by the Chinese Government’s Belt and Road Initiative (BRI).

Number of official sources

14

Number of total sources

29