Turkey: The Energy Regulation And Markets Review - Edition 3


Over the past decade, Turkey's energy consumption has substantially increased. At the beginning of 2013, Turkey was ranked second in the list of countries with the world's highest energy consumption increases. According to the International Energy Agency, energy consumption in Turkey is expected to double over the next decade, while electricity demand growth is expected to increase at an even faster pace.1 The Energy Minister declared that approximately US$128 billion of investment (more than double the total amount invested in the past decade) will be needed to meet energy demands by 2023.

Turkey's strategy and targets for 2023 are:2

  1. increasing installed power to 120,000MW;
  2. increasing the share of renewable energy sources from 25 to 30 per cent;
  3. maximising the use of hydropower;
  4. increasing wind-power installed capacity to 20,000MW;
  5. installing power plants with 600MW of geothermal and 3,000MW of solar energy;
  6. extending the length of electricity transmission lines to 60,717km;
  7. reaching a power distribution unit capacity of 158,460MVA;
  8. extending the use of smart grids;
  9. raising the natural gas storage capacity to 5 billion m3;
  10. establishing an energy exchange; commissioning at least two nuclear power plants;
  11. building a coal-fired power plant with a capacity of 18,500MW; and
  12. eliminating its costs for importing petroleum and gas, currently as high as US$56 billion.

Among these targets, establishment of an energy exchange will only support market liberalisation but also ensure transparency and help maintain a healthy balance between supply and demand. Turkey enacted the new Electricity Market Law3 (EML) in 2013.4 The EML stipulates the creation of an electricity exchange market, which will be administered through a newly incorporated company, EPİAŞ. EMRA5 completed the preparation of EPİAŞ's draft articles of association. According to the draft, EPİAŞ's shareholding structure will be as follows: 30 per cent will be owned by TEİAŞ;6 30 per cent will be owned by the Istanbul Stock Exchange (ISE); and 30 per cent will be owned by private energy companies. The ISE will own the remaining 10 per cent, on the condition that it will transfer this 10 per cent to a strategic purchaser.

The Turkish electricity market is one of the fastest-growing in the world, with an approximately 9 per cent annual increase on average. Natural gas consumption in Turkey is increasing as well. According to the MENR,7 natural gas demand is expected to increase with a growth rate of 2.9 per cent until 2020. Due to insufficient petroleum and natural gas sources, Turkey is dependent on imports. It imports petroleum mainly from Iran, Russia, Iraq, Saudi Arabia and Kazakhstan and natural gas from Russia, Turkmenistan, Azerbaijan and Iran, in addition to LNG imports from Nigeria and Algeria.

With the enactment of the Natural Gas Market Law8 (NGML) in 2001, BOTAŞ9 lost its monopoly rights on natural gas imports, distribution and sales. However, BOTAŞ remains a key player in the market, as it owns and operates the gas transmission network and still imports approximately 80 per cent of the natural gas consumed in Turkey. After BOTAŞ's natural gas agreement with Russia expired in 2011, four privately owned companies – Enerco, BosphorusGaz, Avrasya Gaz and Shell Gaz – signed agreements with Gazprom and obtained import licences.

Turkey enacted the new Turkish Petroleum Law10 (TPL) in 2013. Then, the Turkish Petroleum Law Implementation Regulation11 entered into force in early 2014. An amendment law proposing substantive amendments to the Natural Gas Market Law (the Draft Amendment Law) was also prepared in 2013. However, at the time of writing, these amendments have not been enacted.

In line with Turkey's substantial potential and its renewable energy targets, in 2013 Turkey also introduced the Regulation Regarding Generating Electricity without a Licence;12 the Regulation on Documentation and Support of Renewable Energy;13 the Regulation on Technical Evaluation of Solar Energy Based Licence Applications;14 the Contest Regulation on Pre-Licence Applications Regarding Generation Facility Based on Solar and Wind Energy;15 and the Regulation on Renewable Energy Resources For Electricity Generation.16


i The regulators

The MENR is ultimately responsible for preparing and implementing energy policies, plans and programmes in coordination with its affiliated institutions. The national regulatory authority, EMRA, is responsible for the regulation and supervision of the operation of the electricity, downstream petroleum and downstream natural gas markets.17 It exercises its powers through the EMRA Board.18 With its capacity to regulate and supervise the energy markets, EMRA has the following duties:19

  1. issuing licences;
  2. drafting, amending, enforcing and auditing performance standards, as well as distribution and customer services;
  3. setting out the pricing principles indicated in the law; and
  4. ensuring the development and implementation of an infrastructure.

The primary legislation for the electricity market is the EML and the Electricity Market Licence Regulation.20 While the Petroleum Market Law,21 the Liquefied Petroleum Gas Market Law22 and the Petroleum Market Licence Regulation23 govern downstream petroleum activities, the NGML and the Natural Gas Market Licence Regulation24 govern downstream natural gas activities. As for the upstream market, the TPL governs upstream oil and gas activities,25 and the Law on Transit Passage through Petroleum Pipelines26 (the Transit Law) governs the transit passage of oil and gas.

ii Regulated activities


In order to conduct any one of the following market activities, companies must obtain a licence from EMRA:

  1. generation;
  2. transmission;
  3. distribution;
  4. wholesale;
  5. retail;
  6. trade;
  7. import; and
  8. export.

The recently enacted EML abolished the 'auto-production licence' system. Existing auto-producer licences are going to be ex officio converted to generation licences. However, individuals or legal entities (1) generating electricity for their own needs, and (2) having facilities or equipment that are not operating in parallel to the transmission and distribution network, are not required to obtain a licence, as long as they remain disconnected from the transmission and distribution networks and do not engage in wholesale or retail activities.

The EML introduces a new type of licence, called the 'supply licence', which combines wholesale and retail sale licences. The EML also introduces the 'preliminary licence' mechanism for generation licence applications. A preliminary licence is issued for a specified term, to those having submitted an application to EMRA to conduct electricity generation activities.

Under the Regulation on Generating Electricity without a Licence,27 generation facilities with an installed capacity of up to 1MW based on renewable energy resources are exempt from the requirement to obtain a licence.

Downstream petroleum and natural gas

The following downstream petroleum market activities require a licence:

  1. refining;
  2. processing;
  3. lube oil production;
  4. storage;
  5. transmission;
  6. eligible consumer;
  7. bunker delivery;
  8. distribution;
  9. transportation; and
  10. dealership.

Under the NGML, the following activities require a licence:

  1. import;
  2. export;
  3. transmission;
  4. storage;
  5. wholesale;
  6. distribution; and
  7. sale, distribution and transmission of CNG.

iii Market restrictions


In the downstream petroleum market, a distributor's market share cannot exceed 45 per cent of the total domestic market and a distributor's sales through dealers under their ownership cannot exceed 15 per cent of the distributor's total domestic market share.

Another restriction regarding distributors and dealers derives from the Competition Board's interventions. Non-compete undertakings for indefinite terms or terms exceeding five years can no longer be granted a block exemption from the prohibition of agreements, concerted practices or decisions that restrict competition in a specific market. According to the Competition Board's latest decisions, all personal or real rights such as loan contracts, equipment contracts and long-term lease contracts and long-term usufructs, which relate to dealership agreements, must be limited to five years.

Natural gas

Under the NGML, import companies cannot conclude new natural gas purchase agreements (except for LNG) with countries that currently have existing natural gas sale and purchase agreements with BOTAŞ. The barrier to market entry is actually even higher, because under EMRA Board Decree No. 725 (Decree No. 725), EMRA must obtain BOTAŞ's opinion on whether such import activity will affect the performance of BOTAŞ's obligations arising out of its existing contracts (in BOTAŞ's 'gas importer' capacity). In addition, Decree No. 725 requires consultation with BOTAŞ (in its transmission system operator (TSO) capacity) on the technical suitability of such import.

The NGML imposes storage-related obligations on applicants for import and wholesale licences. Import licence applicants must obtain commitments and guarantees from storage licence holders, regarding their capacity to store 10 per cent of the yearly imported natural gas in Turkey within five years. A similar obligation is imposed on wholesale licence applicants. Accordingly, wholesale licence holders must take the required storage-related measures within five years of the licence's issuance.

Under the NGML, the MENR's opinion is not required for natural gas market licences. However, if the Draft Amendment Law is passed as is, then the NGML will have a provision whereby EMRA will have to obtain the MENR's opinion for granting import and export licences.

Under the NGML, no company can sell natural gas corresponding to more than 20 per cent of the estimated national consumption determined by EMRA. Moreover, import companies cannot import natural gas corresponding to more than 20 per cent of estimated national consumption. The Draft Amendment Law will not change these market share restrictions.

iv Transfers of control and assignments

Licence holders must obtain EMRA's approval for any of the following transactions:

  1. transfer of 10 per cent or more (5 per cent or more in publicly held companies) shares in licence holding companies;
  2. any transaction, resulting in the change of control of a licence holding company; and
  3. any transaction resulting in the change of ownership or usage right on licensed facilities.

This article was first published in The Energy Regulation and Markets Review Edition 3 by Law Business Research Ltd.

To read this Review in full, please click here.


1. US Energy Information Administration, Countries, Turkey, Full Report: www.eia.gov/countries/analysisbriefs/Turkey/turkey.pdf.

2. Invest in Turkey, Energy: www.invest.gov.tr/en-US/sectors/Pages/Energy.aspx.

3. Entered into force on 30 March 2013.

4. In addition to the EML, many long-awaited regulations entered into force in the last quarter of 2013 and in early 2014, such as the Electricity Market Licence Regulation, the Electricity Market Distribution Regulation and the Electricity Market Connection and Use of the System Regulation.

5. The Energy Market Regulatory Authority.

6. TEİAŞ is the state transmission entity.

7. The Ministry of Energy and Natural Resources.

8. Entered into force on 2 May 2001.

9. The Petroleum Pipeline Corporation. BOTAŞ is a state-owned company.

10. Entered into force on 11 June 2013.

11. Entered into force on 22 January 2014.

12. Entered into force on 2 October 2013.

13. Entered into force on 1 October 2013.

14. Entered into force on 1 June 2013.

15. Entered into force on 6 December 2013.

16. Entered into force on 27 November 2013.

17. The General Directorate of Petroleum Affairs is the regulatory authority responsible for upstream market.

18. The Energy Market Regulatory Board.

19. Invest in Turkey, The Energy Sector: A Quick Tour for the Investor: www.invest.gov.tr/en-US/infocenter/publications/Documents/ENERGY.INDUSTRY.PDF.

20. Entered into force on 2 November 2013.

21. Entered into force on 20 December 2003.

22. Entered into force on 13 March 2005.

23. Entered into force on 17 June 2004.

24. Entered into force on 7 September 2002.

25. Under the TPL, the definition of 'petroleum' includes both crude oil and natural gas.

26. Entered into force on 29 June 2000.

27. Entered into force on 2 October 2013.

© Kolcuoğlu Demirkan Attorneys at Law, 2014

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Burak Eryiğit
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.