Final Countdown For Privatization of Electricity Distribution Facilities

Perhaps the most challenging privatization project is due by the end of this year, as the privatization of electricity distribution facilities in 2005 is among Turkey’s undertakings to the IMF. Although a privatization in the electricity market was foreseen in the Electricity Market Law introduced in February 2001 (“EML”), the Government had some significant constraints to overcome. With unpleasant experiences in cancelled privatizations, the Government has been taking very cautious steps in order to ensure success in the final privatization of what has been the busiest year in the Privatization Administration’s (“PA”) history.

Unlike Erdemir, Türk Telekom and TÜPRAŞ, the PA was told that a block sale of distribution facilities was not possible. In March 2004, the Council of State rendered an opinion that as per Article 168 of the Constitution, natural assets and resources were under the ownership of the State and that the State had an exclusive right to operate these assets and