Turkey: Imminent Significant Changes To Turkish Nuclear Energy Legislation

In Turkey, the Law on Construction and Operation of Nuclear Power Plants and Sale of Energy Generated from those Plants1 ("Law No. 5710") governs nuclear energy. The main secondary legislation is the Regulation on the Principles and Procedures for Competition and Contracts within the Framework of Law No. 5710.2 As a result of the country's needs and investors' expectations, the Ministry of Energy and Natural Resources (the "MENR") recently prepared (i) a draft law on liabilities in the field of nuclear energy (the "Draft Nuclear Liability Law") governing the liability regime in the event of a nuclear incident and (ii) a draft law (the "Draft Nuclear Law") on the licensing mechanism of nuclear power plants and the establishment of the Nuclear Regulatory Authority (the "NRA").

While the current legislation states that the Turkish Atomic Energy Authority ("TAEA") is the body authorized to grant licenses (i.e., site license, construction license and operation license) to nuclear power plants' operators, under the Draft Nuclear Law, the NRA will take over this duty. In addition, the Draft Nuclear Law increases the number of activities requiring a license, and also introduces the "permit" mechanism. If the Draft Nuclear Law enters into force as it is, individuals and legal entities will be obliged to obtain the relevant license from the NRA, in order to conduct the following activities:

  1. operating a nuclear power plant;
  2. operating a radioactive waste facility;
  3. conducting transportation activities of nuclear materials and radioactive wastes;
  4. performing duties determined by the NRA in nuclear power plants;
  5. establishing a radioactive waste facility; and
  6. conducting activities determined by the NRA regarding nuclear materials and radioactive wastes.

On the other hand, below is a list of notable activities which would require a permit, from the NRA:

  1. constructing a nuclear power plant or radioactive waste facility;
  2. commissioning a nuclear power plant or radioactive waste facility;
  3. de-commissioning nuclear power plants or radioactive waste facilities; and
  4. importing or exporting nuclear materials and transporting them in Turkey.

Currently, there are two pending nuclear power plant projects in Turkey. The first is the Akkuyu Nuclear Power Plant Project (the "Akkuyu NPP"), which will be built in the Mersin Province, on the Mediterranean coast. An intergovernmental agreement (IGA) was signed between Russia and Turkey on 12 May 2010 and was ratified by a Council of Ministers' Decree dated 6 October 2010. Construction of the Akkuyu NPP, which will have four power units of 1,200 MW each, is expected to start before 2016 and fully completed in 2023. The plant will have a life cycle of 60 years and is expected to generate approximately 35 GW of electricity annually.

The second nuclear power plant project is planned to be constructed in Sinop, on the Black Sea coast. In April 2013, Japan's Mitsubishi Heavy Industries Ltd. and France's Areva SA were selected to build this power plant. The power plant's first unit is expected to commence operation by 2023. On 30 October 2013, a joint declaration was signed between Japan and Turkey. In addition, discussions regarding a memorandum of understanding between Turkey and Japan were concluded and the MoU was delivered to the Japanese Embassy for signature. It is expected that the IGA (signed in May 2013), the Host Government Agreement and the MoU will be submitted to the Turkish Parliament during this legislative year.

Investors ask themselves the following questions: Will it be liable for compensation of damages arising from a nuclear incident at any stage of construction or during the power plant's operation? Will it be worth investing in such a project, if the project company also operates the power plant? In most of the world, including Europe, the nuclear power industry has traditionally operated under specific liability regimes based on international conventions; not only national laws. Law No. 5710 does not include any liability provisions. Article 5(5) of Law No. 5710 directly refers to the 1960 Paris Convention, as amended by the Additional Protocol of 1964 and by the Additional Protocol of 1982 (the "Convention"), in connection with liability related matters. Turkey has ratified the Convention, and by virtue of Article 90 of the Constitution, the Convention bears the force of law under Turkish law.

The Convention principally addresses the liability of operators. According to paragraph 15 of its "Exposé des Motifs", the Convention channels all liability onto one person, namely the operator of the nuclear installation. Thus, the operator is exclusively liable for any nuclear incidents. Similarly, the Draft Nuclear states that during the course of activities that are allowed by the NRA, the license holder or the person who obtained the permit from the NRA will be responsible for adopting security measures. The difference between the Convention and the Draft Nuclear Law is that while the Convention uses the term "operator", the Draft Nuclear Law prefers the term "license holder or the person who obtained the permit from the NRA". Granting a license or a permit does not mean that the NRA shares the liability with the license holder. Thus, the NRA would not be held liable for the license holder entities' acts.

In line with Article 7(b) of the Convention, the operator's maximum liability in Turkey is 15 million SDR (the "Cap").3 The operator will be exclusively liable for third party claims arising from nuclear incidents on a nuclear installation, up to the Cap. All those other than the operator, such as builders or suppliers, associated with the construction or operation of nuclear installations, are exempt from liability.

It should be noted that the scope of the operator's liability covers "damage or loss [...] by a nuclear incident in such installation or nuclear substances coming from such installation". It follows that, for the Convention's provisions to become applicable, there must be a nuclear installation, as defined in Article 1(a)(ii) of the Convention, and being operated by an operator, as defined in Article 1(a)(vi).

The Draft Nuclear Liability Law provides an upper limit to the operator's liability. In addition, it provides the establishment of a nuclear damage determination commission, to determine the amount of damage exceeding the limits of the operator's liability. Further, the Draft Nuclear Liability Law states that operators and nuclear fuel carriers must provide a guarantee and insure the plant for possible damages.

1 Published in the Official Gazette dated 21 November 2007 and numbered 26707.

2 Published in the Official Gazette dated 19 March 2008 and numbered 26821.

3 Turkey has signed but not ratified the 2004 Additional Protocol to the Convention that provides a Euro 700 million as the minimum amount of liability. In addition, although a Contracting Party to the Convention may set a higher Cap under Article 7(b)(i) of the Convention, Turkey has not done so. Therefore, the default Cap of 15 million SDR applies in Turkey.

4 Revised text of the Exposé des Motifs of the Paris Convention, approved by the OECD Council on 16 November 1982, paragraph 2.

© Kolcuoğlu Demirkan Koçaklı 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.

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