Law Amending the Electricity Market Law, Certain Laws and Decree No. 375 the("Omnibus Law") was published on the Official Gazette dated 28 December 2022 numbered 32057 and entered into force on the same day.

This Monthly Updates aims to provide a brief explanation on the Omnibus Law and highlights the essential novelties introduced therein.

Scope of The Omnibus Law

Within the scope of the Omnibus Law important changes has been especially made in the Law on Privatization Applications numbered 4046 (the "Law on Privatization Applications") and the Electricity Market Law numbered 6446 (the "Electricity Market Law"). Those important changes are summarized below.

Amendments on The Law on Privatization Practices

Firstly, the Constitutional Court has been cancelled the extension of the agreements term of less than 49 years signed as a result of the privatization of certain ports belonging to Turkiye Denizcilik Isletmeleri ("TDI") and the General Directorate of the State Railways Enterprise of the Republic of Turkey ("TCDD") through the method of granting/transferring operating rights, up to 49 years with its decision numbered 2022/92 and dated 20 July 2022. However, according to the relevant provisions of the Law on Privatization Applications by Omnibus Law, agreement with a term of less than 49 years that has been signed as a result of the privatization of certain ports belonging to the TDI and TCDD by granting or transferring operation rights will have their term extended up to 49 years for a single time from the starting date of the right, provided that the application conditions are fulfilled.

Arrangement of the Additional Agreement

It has been regulated that a period not exceeding three months will be given to sign the additional agreement (the "Additional Agreement") to the operator companies that have applied following the evaluation to be made within 15 days by the Privatization Administration based on the documents attached to the application. Also, it has been regulated that the operator companies must have fully fulfilled all their financial obligations arising from the agreement giving rise to operation right and waive all lawsuits arising from the agreement regarding operation right in order to be able to sign an Additional Agreement.

The Additional Agreement regarding the extension of the agreement term for granting the operation right or transfer the operation to 49 years will enter into force provided that it is signed within three months at the latest following the invitation of the operator companies by the Privatization Administration. Also, it has been regulated that there will be no provision in the Additional Agreement that may cause amendment of the main agreement except for the issues related to the extension of time, contract price and payment terms. The provisions regarding the privatization price and other payments in the privatization agreement will continue as it is.

Moreover, in addition to the investment required in the privatization agreements, operator companies are obliged to invest in port activities at the rate of 10% of the Additional Agreement price and to make these investments within five years starting from the date of signature of the Additional Agreements.

At the end of the period, the operator companies are required to submit a report on the realization of investment, the information and the documents certifying the situation to the TDI and the TCDD. In case of it is determined at the inspection that the investment obligation has not been fulfilled, the Additional Agreement will be deemed as terminated. In this case, no refund will be made to the operator company, including the fees paid in accordance with the Additional Agreement.

Moreover, as stated in the preamble of the article, with this new provision, it is aimed that the port investors will make the necessary investments on time, protect the competitiveness of Turkiye with the logistics and tourism sector, and thus ensure the public benefit and also investor companies will be able to sign agreements under the same conditions by paying only the Additional Agreement price, without making any changes, except for the extension of the operating right periods of their articles of association as stated in the preamble of the provision.

Amendments on The Electricity Market Law

In line with the amendment made to the Electricity Market Law, the concepts of "aggregator" and "aggregating" were introduced by Omnibus Law. Accordingly, aggregator means a legal entity holding a collector's license or supply license that has entered into an agreement with one or more network users to carry out gathering activities on the electricity market on behalf of such network users; and aggregating means the market activity carried out by the collector within the scope of the combined operation of the consumption or production of one or more network users. According to the new amendments;

  • The aggregator will be authorized by the network users through the agreement.
  • Network users will not be able to authorize legal entities holding supply licenses with whom they have contracted to supply energy as aggregators.
  • The aggregator will manage the consumption or production programs of the users with whom it has contracted, carry out market transactions related to the purchase and sale of electrical energy or capacity on behalf of such users, and participate in the procurement processes related to ancillary services.
  • The aggregation activities shall be carried out by legal entities that have an aggregator license or a supply license.

Restructuring of Past Turkish Electricity Distribution Corporation ("TEDC") Debts

In line with the Omnibus Law, it has been regulated that the receivables arising from the electricity consumption of the TEDC and transferred to the TEDC during the privatization transfer transactions will be waived from the receivables whose original receivables do not exceed TL 2,000 as of the date of entry into force of the Omnibus Law.

Conclusion

As a conclusion, with the Omnibus Law, significant changes have been made in various laws, especially in the field of economy. In this context, the scope of regulation of the laws mentioned above has been expanded and put into practice with more detailed contents.

Originally published March 2023

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.