The Law No. 7451 on the Amendment of the Law on Organized Industrial Zones and Certain Laws (the "Amendment Law") was published in the Official Gazette dated 10 April 2023 and numbered 32159 and entered into force on the same day introducing significant amendments to the Organized Industrial Zones Law, as well as the Laws on Mining, Electricity Market, Natural Gas Market and the Utilization of Renewable Energy Resources for Electricity Generation.
This Monthly Updates aims to provide a brief explanation on the amendments to energy legislation and the Law on the Organized Industrial Zones and highlights the essential novelties introduced therein.
Scope of the Amendments to Energy Legislation and the Law on Organized Industrial Zones
Within the scope of the Amendment Law, important changes have been especially made in energy legislation and the Law on Organized Industrial Zone (the "OIZ") relating to the use of renewable energy resources in electricity generation and natural gas market and the term "Green OIZ'' is introduced.
Amendment to the Natural Gas Market Law
Pursuant to Articles 11,12,13 and 14 of the Amendment Law, significant changes for the liberalization of natural gas market have been introduced:
It is stated that the activities of BOTAŞ, which is a state-owned crude oil and natural gas pipelines and trading company in Turkey, will be unbundled. The reason of unbundling is to ensure that natural gas supply and infrastructure activities are carried out by different legal entities to be established. Moreover, principles regarding the companies to be established for this purpose and the matters regarding the change in the shareholding structures of these entities will be regulated by a presidential decision. The vertically integrated legal entity of BOTAŞ will continue its activities until BOTAŞ is restructured as a horizontally integrated legal entity.
In addition, the transfer of BOTAŞ's natural gas purchase contracts or the amounts that are subject to these contracts will become possible with the permission of the Ministry of Energy and Natural Resources (the "Ministry''). In connection with these transfers, BOTAŞ will not be subject to the market share limitations stipulated under the Natural Gas Market Law until the transfer procedures are completed. Finally, BOTAŞ's Treasury guaranteed obligations will be reserved.
Besides, the Energy Market Regulatory Authority (the "EMRA") has been authorized to determine procedures and principles for transit and export transmission tariffs, subject to the opinion of the Ministry. It is ensured that such transmission tariffs are not subject to the rules and principles applicable to the domestic transmission tariffs.
Amendment to the Mining Law
According to Article 2 of the Amendment Law, in order to meet the electricity consumption required within the scope of mining activities, license-exempt electricity generation facilities based on renewable energy resources were included within the scope of the definition of infrastructure facility. Therefore, mining license holders will be able to establish license-exempt energy generation facilities based on renewable energy sources within their mining sites. By this amendment, usage of renewable energy is encouraged in the mining sector.
Amendments to the Electricity Market Law and the Utilization of Renewable Energy Resources for Electricity Generation
Pursuant to Article 15 of the Amendment Law, pumped storage hydroelectric power plants are entitled to benefit from the Turkish Renewable Energy Resources Support Mechanism (the "YEKDEM"), which is a support mechanism from renewable energy sources and domestic contribution price support, regardless of the reservoir area. In addition, it is clarified that the termination and cancellation of charging network operator licenses will be determined by the EMRA.
Amendments to the Organized Industrial Zones Law
Following amendments have been introduced:
- The OIZ area will be finalized without the OIZ site selection process in places designated as industrial areas in the applicable zoning plans as long as the opinion of the local administration which approves the zoning plans are taken and geological and geotechnical surveys based on the zoning plans are carried out.
- Owners of the parcels who undertake to make investments within periods and with the conditions stated in the relevant regulation will be granted space by the OIZ administrations in the selected area without any expropriation. Nonetheless, the properties of those who do not fulfill their commitments will be expropriated.
- Lower limit of the size of the common areas within the OIZ is reduced from 8% to 5%, and the maximum size of the service and support areas is increased from 10% to 15%.'
- For the OIZ areas where the borders are determined by the Ministry of Science, Industry and Technology, the OIZ management will be able to commence infrastructure construction and allocate and provide the licenses and permits for the investments following the deposit of the property value appraised by the court to the bank account based on the expropriation decision.
- The OIZ managements are entitled to build superstructures on parcels located in the industry or service support area and to rent or sell the same to investors who undertake production.
- Participants of the OIZ will be able to lease their facilities to one or more tenants for production purposes only.
Introduction of the "Green OIZ" Concept
The concept of Green OIZ is defined by Article 4 of the Amendment Law as follows:
"The Green OIZ is an OIZ certified by the Turkish Standards Institute within the framework of the environmental, economic, social and administrative criteria determined by the Ministry of Science, Industry and Technology, within which resource and energy efficiency, lean production, industrial waste cooperation and environmentally friendly practices stand out''
Pursuant to the amendments, projects prepared to meet the Green OIZ criteria will be evaluated by the Ministry of Science, Industry and Technology with priority.
Conclusion
In short, the Amendment Law has introduced significant changes to energy sector to encourage the use of renewable energy and pave the way for OIZ investments within the framework of the green concept to support green transformation.
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.