The Amendments to the Electricity Market Licensing Regulation

Contact: Özgür Kocabaşoğlu; Erdem & Erdem (Turkey)

The Administrative Regulation on the Amendment of the Electricity Market Licensing Regulation (“The Regulation”) published in the Official Gazette with the number 27896 on 05.04.2011

and entered into force as of the date of its publishing. The amendments set forth by this Regulation are as follows:

 

Transfer of Generation and Auto Production Licenses

Pursuant to the Regulation, the legal entities who are the holder of generation and auto production licenses are allowed to transfer their rights and obligations to their successor legal entities through the takeover or spin-off. In this framework, the successor legal entity will obtain a license which maintains the consecutive effect of the former one. However, if the shareholding structure of the legal entities has been restructured by virtue of a share transfer, the licensing application will be rejected under the stipulation introduced by the Regulation. The approval of the Energy Market Regulatory Authority (“EMRA”) is mandatory for this transfer.

Payment of 1% of License Fee to Emra’s Account in Advance

According to article 8 of the Regulation, an upfront payment of 1% of the license fee to the statutory Authority, EMRA, imposed on the license applicants in order to process the licensing application. Following the payment of 1% of the license fee sum into EMRA’s account and submission of payment confirmation document to the EMRA, the evaluation process for license application will commence.

The Amendments to Minimum Capital Requirements

According to article 10 of the Regulation, while minimum capital of a company for the generation license shall be equal to an amount which corresponds to the 20% of the total investment amount set forth by the EMRA, for the distribution license applications, the relevant minimum capital shall be equal to an amount which corresponds to the 15% of the transfer or sale price of the distribution zone.

The minimum capital of the company shall be 2 million TRY for the wholesale license applications, 1 million TRY for the retail sale license applications and 200.000 TRY if the applications are only for the purpose of performing retail sale services for each distribution zone.

However, in the event that a prevailing license holder applies for a new license, the minimum capital requirement of the company shall be figured out by aggregating the total amount of capitals allocated for each licenses which are pending provisional license with EMRA and approved license by EMRA.

Collection of 1% of License Fee Regarding License Applications for Power Generation Stations Based on Use of Domestic Natural Resources and Renewable Energy Resources

The license applicants for establishment of a power generation stations based on use of domestic natural resources and renewable energy resources will be liable to pay only 1% of the prescribed fee for standard license applications. Moreover, it is also laid down that annual license fee will not be collected from the power generation stations based on use of domestic natural resources and renewable energy resources in the initial first 8 years following the completion date of necessary facilities specified.

The Amendment to License Variation Applications by the License Holder

According to article 13 of the Regulation, for the variations on licenses to be approved upon request of license holder, unless other period of time is indicated explicitly by EMRA, the variation of license will be effectuated upon the submission of payment confirmation document for license variation fee which is required to be made within 30 days following the notification of affirmative decision of EMRA; in addition to the consummation of other obligations demanded for the variation of license. In case of non performance of the aforesaid obligations, the request for the variation of the license shall be deemed to be rejected.

Obligation of Generation License Holders to Submit Progress Reports

Generation license holders are obliged to submit two progress reports regarding their activities effectuated until the completion date in a year: first one shall be submitted in July and second one shall be submitted in January. The content and structure of progress reports will be determined by EMRA.

Amendment Regarding Legal Entities that Provisional Approval is Not Granted within the Scope of License

Legal entities that EMRA did not grant a provisional approval for their power stations , may request the termination of their licenses by a written application which may be made within 1 month from the effective date of this Regulation. In that case, the letters of guarantee will be returned if these legal entities waive their right to resource utilization which is the ground of their licenses. This disposition also encompasses to the legal entities whose generation licenses are approved by EMRA.

Environmental Impact Assessment

Legal entities which had obtained a generation license before the effective date of this Regulation and legal entities which have not applied to EMRA for the decision to be taken within the scope of Environmental Impact Assessment Regulation are obliged to apply to EMRA for the relevant decision within 60 days following the effective date of this Regulation.