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Legal Alerts

Important amendments made to the Electricity Market Law and the Law on Privatization Practices

Legal Alerts
EMI
Energy, Mining & Infrastructure

New development

The Law Amending the Electricity Market Law, Certain Laws and Decree Law No. 375 (“Omnibus Law“) entered into force through publication in the Official Gazette dated 28 December 2022 and numbered 32057. You can access the text of the Omnibus Law here.

What does the Omnibus Law entail?

In particular, the Omnibus Law introduces significant amendments to the Electricity Market Law and the Law on Privatization Practices. These important amendments are summarized as follows:

        1. Amendments regarding the Electricity Market Law “Aggregation” as a new market activity:

A new market activity that can be realized by the aggregator by operating within the scope of combining the consumption and/or generation of one or more grid users is envisaged in the following way:

  • The aggregator will be authorized by the grid users through an agreement. Grid users will not be able to authorize legal entities holding supply licenses with which they have an agreement to supply energy as aggregators.
  • The aggregator will manage the consumption and/or generation programs of the users with whom it has an agreement, carry out market transactions regarding the purchase and sale of electricity energy and/or capacity on behalf of such users, and participate in procurement processes regarding ancillary services.
  • Aggregation activities can be carried out by legal entities holding an aggregator license or a supply license.
  • The procedures and principles regarding aggregation activities will be regulated by a regulation to be issued by the Energy Market Regulatory Authority.
  1. Amendments to the Law on Privatization Practices
  • With the Omnibus Law, agreements with terms of less than 49 years that were entered into as a result of the privatization of certain ports belonging to Türkiye Denizcilik İşletmeleri Anonim Şirketi (i.e., the Turkish Maritime Enterprises Joint Stock Company) and the General Directorate of State Railways of the Republic of Turkey through the method of granting or transferring operation rights will have their term extended up to 49 years for a single time from the starting date of the right, provided that the application conditions are met.
  • In order to be able to sign an additional agreement (“Additional Agreement“) following the evaluation of the applications, the operator companies must have fully fulfilled all financial obligations arising from the agreement giving rise to the operation right and waive any lawsuits arising from this agreement.
  • The operating companies will pay an Additional Agreement fee with respect to the Additional Agreement. Moreover, in addition to the investment condition in the privatization agreements, the operator companies will be obliged to make investments related to port operations at a rate of 10% of the Additional Agreement fee and to realize these investments within five years from the date of signature of the Additional Agreement.
  • At the end of the term, the operator companies will be required to submit a report on the realization of the investment and information and documents certifying this situation. If it is determined at the inspection that the investment obligation has not been fulfilled, the Additional Agreement will be deemed terminated. In this case, no refund will be made to the operator company, including the amounts paid pursuant to the Additional Agreement.
  • In addition to the Additional Agreement fee, the operator companies will pay a revenue share to be calculated in accordance with the Omnibus Law every year during the extended operation right period.

Conclusion

The Omnibus Law amended the Electricity Market Law to define “aggregator” and “aggregation” and to define their scope. Moreover, the agreement terms of less than 49 years entered into as a result of the privatization of some ports belonging to the Turkish Maritime Enterprises Joint Stock Company and the General Directorate of State Railways of the Republic of Turkey through the method of granting or transferring operation rights will be extended up to 49 years if the conditions are met. As you may recall, a similar amendment was made by adding Provisional Article 30 to the Law on Privatization Practices with Article 1 of Law No. 7350 dated 6 January 2022, but the amendment was annulled by the Constitutional Court (Please see decision numbered 2022/22 E. 2022/92 K. and dated 20 July 2022). In this context, the Omnibus Law that entered into force on 28 December 2022 introduces a similar regulation once again by expanding its scope and providing more detailed content.