ISTANBUL — The Moscow city government has accused Zorlu Enerji Elektrik Uretim of failing to deliver two power plants valued at more than $1 billion on time and demanded that the Turkish energy producer start up the plants immediately.
"The primary conditions of the investment contracts weren't fulfilled," First Deputy Mayor Yury Roslyak said. "The plants were supposed to come online in 2007. The deadline was moved back to 2008, but that wasn't met either."
Zorlu must complete the plants "as soon as possible," he said in an e-mailed response to questions Monday.
An Istanbul-based representative for Zorlu Enerji, who spoke on condition of anonymity in line with company policy, declined to comment.
The two gas-fired plants would be the first privately owned power stations in Moscow — an example of how the capital will upgrade its aging infrastructure — the city said in 2005, after blackouts cut power to about 2 million people.
The initial price of the projects in the Moscow suburbs was $200 million, though this has soared to $1.2 billion, said a city official who declined to be identified because he was not cleared to speak to the media.
In November, Mayor Yury Luzhkov ordered the government to fine the contractor and to calculate the amount of the penalty from July 1, 2008, according to the city government's web site. The fines have not been imposed, the official said.
Luzhkov also set a construction deadline of Sept. 30, 2010. If this date is not met, the mayor told the government to take measures to alter or terminate the contract. Roslyak's comments indicate that the city may be increasing pressure on Zorlu to deliver the plants.
"We understand that the economic crisis may have affected the construction of these two vital facilities, but bringing these gas-fired stations online is the investor's firm contractual obligation and must be fulfilled as soon as possible," Roslyak said. "The city is waiting."
Zorlu fell 20 kurus, or 7 percent, to 2.64 liras in Istanbul on Tuesday.
Koray Pamir, an analyst at Istanbul-based Ata Invest, said Roslyak's comments appeared to be "negative" news for Zorlu as they suggest "tension between the involved parties."
Roslyak's comments come as the company is being sued in the United States by Invar International and Talex International, its partners in ICFS International, a joint venture formed in 2005 to build the power plants.
The lawsuit could slow the completion of the plants, an Invar official, who declined to be identified citing company policy, said by e-mail.
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