Türkiye, Russia find new financing solution for Akkuyu nuclear power plant

Russia is in discussions to use natural gas as a form of payment for the construction of a nuclear power plant in Türkiye, as a way to bypass sanctions that have disrupted traditional cross-border transfers.

The proposal involves Türkiye covering part of the $20 billion Akkuyu plant's construction costs, originally managed by state-run Rosatom, Caliber.Az reports per foreign media. 

In exchange, Rosatom would transfer an equivalent amount in rubles to Gazprom PJSC, the gas exporter, who would then offset the cost from Türkiye’s monthly gas import bill. This arrangement would serve as an alternative to the standard international bank transfers previously used to finance the project. 

Although Rosatom, Gazprom, and the Akkuyu project are not sanctioned, payments to and from Russia have increasingly encountered delays as foreign banks worry about potential exposure to US penalties. This has been particularly challenging since June when Washington announced plans to target third-party financial institutions involved with Russia’s war economy.

This move reflects Russia's ongoing efforts to circumvent Western sanctions aimed at isolating Moscow due to its actions in Ukraine. It also highlights how sanctions have affected a major energy project in Türkiye, a key NATO member that has tried to maintain a neutral stance between Russia and Ukraine.

Türkiye's monthly gas payments to Russia typically range from 300 million euros to 800 million euros, depending on consumption, according to one of the sources. Both Rosatom and Türkiye's energy ministry declined to comment, and Gazprom did not respond to inquiries.

In 2024, the US froze $2 billion of Russian payments to Türkiye for the Akkuyu nuclear project, suspecting that the transfers were being used to bypass sanctions on Russia's central bank. Rosatom expressed confidence that the issue of “funds unjustly withheld through third parties' influence” would be resolved, a company spokesperson said. 

The Akkuyu nuclear power plant, Türkiye's first, has already faced several delays. The commissioning of the first reactor, originally scheduled for 2025, may now be postponed to 2026, according to Turkish officials. Additionally, Rosatom had to turn to China for alternative parts for the project after a previous deal with Germany's Siemens Energy fell through due to US export controls. 

In 2023, Russia was Türkiye's leading gas supplier, accounting for 42 per cent of the country’s total gas imports, according to Türkiye's Energy Market Regulatory Authority. Late last year, Türkiye received a sanctions exemption from the US, allowing it to continue importing Russian gas after Gazprom's banking arm was sanctioned. 

Once operational, the Akkuyu plant is projected to meet 10 per cent of Türkiye's electricity needs. Ankara aims to construct two additional full-scale nuclear plants along with small modular reactors, targeting a total nuclear power generation capacity of 20,000MW by 2050. The country has engaged in discussions with Russia, China, and South Korea regarding these future projects.  

By Naila Huseynova