A major change took place on the regulatory side of the Turkish electricity market following the enactment of the Electricity Market Law No. 6446 on 30 March 2013, which replaced the former law No. 4628.
The law features a pre-license mechanism and the creation of an electricity stock exchange, the Energy Market Operation Company (“EPİAŞ”), responsible for the operation of the wholesale market and the financial settlement of activities in the electricity market. The prelicense mechanism is expected to increase investment in the electricity market, particularly the renewable electricity generation.
The EPİAŞ is based on the European Energy Exchange model. The Turkish Energy Market Regulatory Authority (EMRA) hosted a meeting on 19 July 2013 to review the main charter of the EPİAŞ. Its shareholder structure will be as follows: 30% allocated to the stateowned Turkish Electricity Transmission Company (TEIAŞ), 30% to Istanbul Stock Exchange and a 40% allocation to private energy companies.
Looking ahead, once the Turkish Supreme Planning Council decision to name TEAİŞ as a shareholder is made, private energy companies will officially be invited by EMRA to apply for a shareholding in EPİAŞ. The EPİAŞ is expected to start operations by 2014.
The Turkish natural gas market is also expecting some major changes. In September 2012 the Turkish Ministry of Energy and Natural Resources proposed a new gas market liberalization bill calling for the state-owned Petroleum Pipeline Corporation (BOTAŞ) to be unbundled. Now the bill is with the Turkish Prime Ministry office awaiting approval to be introduced to the Turkish Council of Ministers.
The proposal is for BOTAŞ to be unbundled into three distinct entities: an LNG trading group, a gas transmission system operator and a storage facility operator. Gas import and export rights would be transferred to private companies under this new bill. Other proposals include the establishment of a balancing and settlements market similar to the Market Financial Settlement Centre (PMUM) in the Turkish electricity market, and LNG investment incentives to private companies wishing to invest.
Finally, the most anticipated privatization of the Turkish natural gas market is expected to be announced soon. Istanbul Gas Distribution Company (IGDAŞ) is Turkey’s largest gas distribution company. IGDAŞ is a highly sought after asset by Turkish and international investors, the Azerbaijani State Oil Company SOCAR and the Turkish Akfen Holding having already shown interest. IGDAŞ holds the largest customer base of the gas distribution companies in Turkey and is the only one yet to be privatized.