Select Committee on Trade and Industry Appendices to the Report


Letter from AMEC plc to the Chairman of the Committee


In view of the TISC forthcoming visit to Turkey, I enclose some briefing notes on the above project which AMEC is pursuing as part of an international consortium of companies, led by the French—Spie Batignolle.

  Kindly note that Spie is a major contracting group in France and 41.6 per cent of the Spie Group is owned by AMEC plc.

  The value of the project is US $838 million (excluding buyer credit premiums) and AMEC's participation amounts to 15 per cent of the civils joint venture. We are seeking ECGD Buyer Credit support for up to US $99 million (being approximately £68 million).

  The ECGD has been provided with extensive information on the project including a full environmental study.

  Enclosed are the following:

    1.  Executive summary of the Coruh River Scheme

    2.  Chronology of events

    3.  Location map and plot*

    4.  Members of the Consortium*

    5.  Organisation Chart*

  The enclosed are extracts of information previously made available to ECGD.

  The current status of the project is that we have agreed the price with the client and are seeking to put forward a committed financial offer with export credit loans constituting the back-bone of the financing $454 million out of a project total cost of $838 million.

  ECGD and the other ECAs (France, Belgium and Spain) will not indicate a firm commitment until the newly introduced ECA support criteria has been satisfied. As you will be aware from the experience to date with the Ilisu Dam, the difficult area is the environmental requirements, principally resettlement of the people that will be affected by the Dam's construction.

  The ECAs, led by COFACE, have examined the environmental report and will have travelled to Turkey to hold discussions with the client (DSI) and to visit the site, prior to your visit date of 20 November 2000.

  As you will see from the chronology of events, it has been a long and involved process to bring this project to point of financing. In so far as we agreed the contract price and contract conditions earlier this year, DSI is becoming increasingly concerned with regard to the lack of a committed financial offer with particular reference to the ECA terms of support. We are now involved in a chicken-and-egg situation where the ECAs are reluctant to formally commit to the terms of support until they are satisfied that the new criteria for support (mainly environmental) are satisfied. There is a risk that ECGD will be seen as the ECA that is most difficult to satisfy.

  As you may well be asked about HMG's support for projects in Turkey and dams in particular, we felt it important that you should be briefed about our opportunity. Further, as we discussed, the TISC should also be briefed by the ECGD on its support for opportunities in this market and dams in particular.

3 November 2000

*Not printed.

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