HN: Turkish coup attempt could lead to CZK 12 billion loss for CR

The recent failed coup attempt in Turkey could cost the Czech Republic dear. A loan of CZK 12 billion from the Czech Export Bank linked to a power plant in the county is in danger following the arrest of executives at the company that commissioned it, Hospodářské noviny reported on Wednesday.

Yunus Emre thermal power plant, photo: archive of Vítkovice Machinery GroupYunus Emre thermal power plant, photo: archive of Vítkovice Machinery Group The Czech firm Vítkovice Machinery Group (VMG) was selected by Turkey’s Adularya, part of the group Naksan Holding, to build the Yunus Emre thermal power plant in the north west of the country.

The Czech Export Bank then lent VMG some CZK 12 billion in connection with the project. It is by some way the largest loan the bank has made in several years.

If the project – which has long been beset by problems and has had its completion date put back a number of times – were to collapse, the Czech state export insurer EGAP would be left holding the can, Hospodářské noviny said.

The threat of that happening has increased markedly after the detention of three Naksan board members as part of an enormous wave of arrests in the wake of the recent failed coup attempt by elements of Turkey’s army. Other members of the board have fled the country.

Turkey’s president, Recep Tayyip Erdogan, accuses the US-based cleric Fethullah Gulen of being behind the unsuccessful putsch and the Naksan executives are suspected of supporting Mr. Gulen. A government inspector has now been installed at the firm.

The Czech Ministry of Foreign Affairs has become involved in the matter. Deputy Minister Martin Tlapa told the daily that it was still a very fresh issue and that the Czech Republic would need to hold talks on the situation with Turkey.

Mr. Tlapa himself met the Turkish ambassador to Prague on Tuesday while officials at the Czech Embassy in Ankara are due to discuss the matter with representatives of Turkey’s ministries of energy and justice.

Jiří Skuhra, the head of Vítkovice Power Engineering, which is doing the actual building work, said they had no other information apart from what had appeared in the Turkish media.

Mr. Tlapa told Hospodářské noviny that the best option for all concerned would be to finish the project. This would prevent the Czech state budget from being adversely affected, he said.

Work on the Yunus Emre thermal power plant got underway in 2010. The Ostrava-based VMG blames repeated postponement of the completion date on the Turkish side’s difficulty in complying with conditions surrounding the financing set by the Czech Export Bank.

In 2014 the Czech media reported that the export bank had suspended disbursement of the loan in the wake of disputes between the Czech and Turkish companies involved over rising costs and other issues.

VMG put the first bloc at Yunus Emre into operation in January of this year and it began supplying power. However, even then a completion date was not known.