Istanbul, Turkey – Unprecedented sanctions against Russia over its invasion of Ukraine have led to fresh concerns about Turkey’s first nuclear power plant, which is being built by Moscow’s state-owned nuclear company.
The first reactor of the Akkuyu Nuclear Power Plant, located on the Mediterranean coast near Mersin, is due to start production next year, but potential blocks on financing and equipment from third countries have threatened to delay the $20bn project.
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Rosatom, the Russian firm behind Akkuyu, has so far escaped sanctions but the option has reportedly been discussed by the United States. Banks such as Sberbank, Russia’s largest financial institution and a major backer of the nuclear plant, have been hit.
Akkuyu aims to provide Turkey with 10 percent of its energy needs when all of its four 1,200-megawatt reactors come on line. According to Turkey’s Nuclear Regulatory Authority, the project is wholly financed by the Russian capital.
Sberbank has provided Akkuyu NPP, which is mostly owned by Rosatom, with loans worth $1.2bn since 2019. Sovcombank, another Akkuyu creditor subject to sanctions, gave loans valued at $300m in March last year.
Possible sanctions against Rosatom could also affect the flow of equipment to Akkuyu, barring suppliers from providing energy industry equipment, technology and services.
In an interview with Turkish broadcaster NTV, aired on February 23, Akkuyu CEO Anastasia Zoteeva highlighted the “large amount of equipment” produced for the plant in countries such as the Czech Republic, Hungary and South Korea. A key component was manufactured by GE Steam Power, a branch of General Electric, in France while French company Assystem is also involved in construction supervision.
Neither General Electric, Assystem nor other third-country companies contacted for comment by Al Jazeera responded.
Turkish and Russian officials have discussed potential problems, including finance and procuring equipment from third countries, according to a March report by Bloomberg News, which cited senior Turkish officials involved in the project.
“The Akkuyu project is the first in the global nuclear industry based on a build-own-operate model,” said Sinan Ulgen, director of the Istanbul-based Centre for Economics and Foreign Policy Studies. “It means Russia is responsible for all capital expenses during the construction phase.
“With sanctions, this model is at risk because it is more difficult for Russia to allocate funding. There is now more pressure on its international reserves – half of them have been frozen – so whether Russia can continue to spend these amounts for a reactor in Turkey is unclear.”
Russia is likely to pressure Turkey to find local companies to take up to a 49 percent stake in Akkuyu, Ulgen added.
However, talks with three Turkish firms failed in 2018. Turkey’s current economic crisis makes it seem unlikely domestic finance would be available and international investors would be wary of a Russian-controlled project.
“In the long run that’s a huge problem at Akkuyu: the sharing of the financing of the project with Turkish investors,” said Kerim Has, a Moscow-based analyst on Turkish-Russian relations.
He added: “I don’t think any Western company will invest in a Russian project in Turkey. A new Cold War is already here.”
Akkuyu has proved to be a controversial project since its inception 12 years ago. The plant will be owned by Russia for its first 25 years, growing Turkey’s energy dependence on its northern neighbour.
Far-reaching concessions to Rosatom, such as the building of a nearby port and tax exemptions, have led commentators to compare the project with the one-sided trade benefits granted to European powers by the Ottomans.
Environmental issues, the plant’s location near an earthquake fault and complaints about working conditions have all shadowed construction. Anti-Nuclear campaigner Emre Uresin said the plant had grown to “become a Russian port in the Mediterranean”.
Moscow will strive to fulfil next year’s deadline so it can get revenue from the plant flowing, according to Has, but also because of Akkuyu’s status as a “priority project” – a Russian nuclear facility in a NATO country with which Moscow enjoys close relations. Ankara has not imposed sanctions on Russia.
“Russia has an interest to maintain its geopolitical clout with Turkey through energy interdependence,” said Madalina Vicari, an expert on energy geopolitics at the Eurasian Energy Chamber.
“Also Russia wants to prove that she still can deliver on nuclear exports despite the sanctions. Ultimately, if the first unit is not ready in 2023, there will be huge disappointment from the Turkish side and that disappointment, most likely, will translate into Turkey’s foreign policy approach to Russia.”
Akkuyu Nuclear’s Ankara office did not respond to requests for comment but in a previous statement the company said it was putting all its “efforts and resources” into completing the first unit in 2023.
It added that it has all “the necessary resources and tools for the successful delivery of the project”.