The Legal 500

Regulation on Service Quality Regarding Distribution and Retail Sale of Electricity

Industrial, Manufacturing and Service Industries

Amending Regulation on Organized Industrial Zones in the Regulation of Application

Energy & Climate Change

The Communiqué was announced on July, 3 2012. This Communiqué covers the procedures and principles to increase the efficiency of the project and supporting applications for existing systems of industrial enterprises.

Focus items for this edition are: Amendments to Regulation on Electricity Market, Regulation on Nuclear Facilities & Physical Protection of Nuclear Materials, Amendments to the Regulation on Controlling Industrial Air Pollution, Amendment to the Regulation on Distribution and Consumer Services of Natural Gas, Regulation on License Application Competition for Establishing Solar-powered Generation Facilities, Decision Regarding License Applications for Solar Energy Plants.

by Onur ALPER & Serenat BAYTAN

According to Turkish Law, underground resources are subject to the exclusive ownership and disposition of the State and are not deemed as part of the land in which they are located. Pursuant to Article 4 of the Mining Law (published in the Official Gazette dated June 15, 1985 and numbered 18785) (Law No. 3213) (the “Law”), property rights over the land exclude any existing minerals.  

The lack of harmonisation among the various laws addressing PPPs

The long authorisation process

The numerous legal challenges to the relevant tenders

The lack of unity of approach and lack of real “private law spirit” in the Implementation Contracts (“IC”)

According to Turkish Law, underground resources are subject to the exclusive ownership and disposition of the State and are not deemed as part of the land in which they are located. Pursuant to Article 4 of the Mining Law (published in the Official Gazette dated June 15, 1985 and numbered 18785) (Law No. 3213) (the “Law”), property rights over the land exclude any existing minerals.

Focus items for this edition are: Environmental Regulations: Licenses and Permissions, Appointment of Certified Energy Directors and Amendments to Electricity Market Regulations

Turkey’s electricity energy market, which accounts for about 2.5% of the Turkish economy, has been in a state of constant change in recent years. Turkey’s electricity sector is attractive to many investors and shows enormous potential, triggered by the economic and population growth of the country. This recent development has been rapidly changing the rules of the game, pushing the electricity sector towards liberalisation and market actors towards fast adaptation to changing provisions

(1) Renewable Energy Law Amended (2) Regulation regarding Implementation of Mining Activities (3) Amendment to the Regulation on Electric Power Transmission Supply

The closing of 2010 saw the enactment by the Turkish Parliament of the Law Amending the Law on Utilization of Renewable Energy Resources in Electricity Generation (Law No: 6094) (enacted 29 December 2010, published in the Official Gazette dated 8 January 2011 and numbered 27809) (''Amendment Law'').

It has now become eminent that Turkish law-makers are trying to attract foreign and domestic investment by creating more flexible and efficient legal tools, especially for attractive markets such as mining, while creating more competitive yet fair entry-to-market conditions.

After Bulgaria became a member of the European Union at 2007, EU acquis became part of Bulgarian domestic law and although Turkey is not a member to EU, accession process as a candidate country covers legal compatibility therefore making both these jurisdictions closer to each other, however, still not fully compatible.

The Communiqué Regarding Plastic Materials that Contact Food Products (published in the Official Gazette dated 4 July 2005 and numbered 25865) was amended on 25 July 2010 to determine new limits regarding the content of the substances and stipulates new materials and chemicals for the scope of plastic materials that can be in contact with food products.

The Energy Market Regulatory Authority has added a provisional article to the Electricity Market Grid Regulation (published in the Official Gazette on 22 January 2003 and numbered 25001).

The Regulation on the Implementation of Article 16 of the Forestry Law was enacted on 30 September 2010.

The Regulation on the Competition of License Applications Regarding Wind Energy Production Facilities Establishment was published on 22 September 2010 in accordance with the Electricity Market Law No.4628.

The Turkish Atomic Energy Authority announced the Regulation on Principles for the Safety of Nuclear Fuel Cycle Facilities on 30 July 2010.

The “Regulation on the Permits and Licenses required under the Environment Law” (Environment Permit and License Regulation), introduced in April 2009, sets forth the procedures under the Environment Law for obtaining the permits and licenses for activities listed in Annexes 1 and 2. Under this Regulation:

The first effects of private sector involvement in the electrical power sector were observed in 1986 with the enactment of Law No. 3996 regulating the build-operate-transfer model and welcoming the private sector - including foreign capital - into the electricity market.  Prior to that time, the electricity market was run by the state, following passage of the nationalization acts from 1938-44. Whereas the first attempts at liberalizing the electricity market had been observed long before, actual liberalization of the electricity market took place only with the enactment of Law No. 4628 on the Electricity Market in 2001.

The draft of Turkey's long-awaited new law on Public-Private Partnerships ("PPP") is now ready for the parliamentary legislative process.  Although entitled the Law on Public-Private Cooperation Models, the key rationale behind the draft law - as evident from its provisions - is to balance distribution of project risk between public and private parties to contracts. The draft law declares one of its key goals to be allocating risk to the party which can best cope with it, whether public or private.

Over the last few years, economic and legislative reforms – as well as a newly established macroeconomic policy that includes a serious privatization program – have built up a strong private sector in Turkey.

In this paper we focus on the renewable energy potential of Turkey. Currently electricity is mainly generated in Turkey using thermal power plants (which consume coal, lignite, natural gas and fuel oil), geothermal energy and hydro power plants. Turkey has no large oil and gas reserves. The main indigenous energy resources are lignite, hydro and biomass.  Accordingly, Turkey has to adopt new, long-term energy strategies to reduce the proportion of fossil fuels in primary energy consumption. Turkey has also taken another recent step which is consistent with its current long-term energy strategies by announcing that it will sign up to the Kyoto Protocol. By doing so, Turkey will commit to cut greenhouse gas emissions, demonstrating its commitment to "clean" technology. The development and use of renewable energy sources and technologies is increasingly becoming vital for the sustainable economic development of Turkey. The most significant developments in renewable production have been observed in wind, hydropower and geothermal energy production.

The Nuclear Law [1], which provides general outlines for the commissioning, operation and decommissioning of nuclear power plants, was recently enacted after a long period of debates.  The Nuclear Law establishes the general principles and leaves the implementation thereof to ancillary legislation issued by the Turkish Atomic Energy Institution ("TAEK") or the Ministry of Energy and Natural Resources ("MENR").

[1]Law No. 5710 on the Commissioning and Operation of Nuclear Power Plants and on Energy Sales as adopted by the Turkish Parliament on 9 November 2007, and published in the Official Gazette dated 21 November 2007, No. 26707.

Faced with the threat of a serious electricity deficit that may occur in the near future, the Government appears to be encouraging the private sector to invest in the energy industry. Recent developments explicitly demonstrate the private sector's interest and appetite for investing in energy generation, especially for the construction of power generation plants employing renewable energy sources.

The Nuclear Law,[1]which provides general outlines for the commissioning, operation and decommissioning of nuclear power plants, was recently enacted after a long period of debates.  The Nuclear Law establishes the general principles and leaves the implementation thereof to ancillary legislation issued by the Turkish Atomic Energy Institution ("TAEK") or the Ministry of Energy and Natural Resources ("MENR").

[1]Law No. 5710 on the Commissioning and Operation of Nuclear Power Plants and on Energy Sales as adopted by the Turkish Parliament on 9 November 2007, and published in the Official Gazette dated 21 November 2007, No. 26707.

Located at a strategic junction between the world's economic centers and sources of energy, Turkey is poised to become a significant energy hub and energy bridge between major oil producing countries of the Middle East, the Caspian, Africa, and the strong demanding markets of Europe, helping the former to reach out to the markets and the latter to diversify its dependence on a limited number of source countries.

The last quarter of 2006 and the first half of 2007 set the scene for a number of developments in the energy sector, including the initiation and then cancellation of the privatization process concerning the electricity distribution companies and electricity generation facilities. This time frame also encompassed legislative developments concerning renewable energy as well as new steps towards the establishment of the first nuclear power plant in Turkey.