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Privatization of the Turkish Electricity Syndication Companies

 Privatization with the Turkish Electricity Distribution Firms Essay

Companies Energy, Utilities & Exploration Sector

Privatization of the Turkish Electricity Division Companies

Desk of Items 01

02 Executive Overview 03 General Outlook to Privatization 05 The Turkish Electricity Marketplace 14 TEDAfi 17 Privatization of the Electrical energy Distribution Corporations 27 Appendix 1: Electrical power sector approach paper twenty-eight Appendix 2: Cost-Based Prices Mechanism 30 Appendix three or more: Amendment Pitch to the Rules no . 4628 30 Abbrevations 31 List of Tables and Exhibits 32 References 33 Contacts

02 Executive Overview

Growing requirement for energy generally driven by increasing level of urbanization and industrialization, in conjunction with the financial imperatives from the state told the government authorities to take cement actions to involve the private sector in energy infrastructure assignments by the early on 1980s. However , the lack of legal and regulating framework root a consistent change strategy stalled the personal sector involvement in the electrical power industry assignments. Indeed the subsequent legal arguments resulted in a general negative impression of the investment climate in Turkey. Based upon the lessons learned over the last more than 20 years, a more structured transformation procedure is in the making. Indeed the enactment in the Electricity Market Law number 4628 in 2001 plus the establishment of the Energy Marketplace Regulatory Power (EMRA) stand as vital steps in the right way, with the fundamental goal to devise a competitive platform in the market by establishing costs mechanisms that reflected you see, the cost of the service so as to minimize the market-related role of the state-owned organizations. In line with the 2004 Technique Paper depicting the plan for the liberalization method in the European Electricity Industry, the initially round of privatization composed of three circulation companies, namely BASKENT, SEDAS and AYEDAS, was going have been finished by Drive 2007. However , the aforementioned tenders were made defunct and delayed to get an indefinite schedule just before the tender time. Apart from constituting a vital criterion for the EU membership process, the grim truth of looming power shortages from 2009 urged the Turkish federal government to take serious actions by beginning with this year. For the first time since 2003, the controlled electricity contract price substantially increased in January 2008, even if still struggles of in the spiraling gas costs. Then, a small portion of 141 MW in the EUAS portfolio was privatized in February 2008, the highest wager of US$510mn for which was submitted by the Zorlu Enerji. The third step in row has been the launch from the " competition” for the construction and operation of the country's first nuclear power plant, timetabled to take place about September, twenty-four 2008. Root all the sectoral developments would be the amendments towards the Electricity Industry Law number 4628, which are still staying negotiated by sub-committees from the Turkish Parliament. And now, the latest link to actions chain is the resumption in the defunct young processes to get the electricity distribution corporations, in two consecutive stages:

1 . Resumption of the tenders for BASKENT and SEDAS with the previously pre-qualified bidders 2 . Initiation of new tenders for MERAM and ARAS To support this kind of privatization current by lessening the concerns regarding the charges for the rest of the Transition Period until 23. 12. 2010, a recent decision by the Excessive Planning Authorities entails a Cost-Based Costs Mechanism (CBPM) to be applied by the state economic corporations (SEEs) within the energy sector as of one particular July 2008. The current sequencing of privatization in the industry - which gives the same priority to distribution possessions, is considered productive, depending on the reality most efficiency gains by privatization are required to be achieved by the privatization of potentially competitive segments of the industry, instead of by the privatization of organic monopoly segments. The...

Recommendations: 1 . GГјney, Esat Serhat; 'Restructuring, Competition and Control in the European Electricity ' TEPAV Publications, December june 2006 2 . Bebiroglu, Alen; 'The wires will be humming ', Standard Unlu Securities Fairness Research as well as Electricity Sector Report, January 2008 3. ICCI Convention Book, 2008 4. www.teias.gov.tr 5. www.tedas.gov.tr 6. www.epdk.gov.tr 7. www.emo.org.tr 8. www.oib.gov.tr 9. www.ise.gov.tr 10. www.menr.gov.tr 11. www.treasury.gov.tr 12. www.dpt.gov.tr 13. www.oecd.org 14. www.eva.ac.at

Contacts 33

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