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Turkish Energy Market Law and Governance: How to Mobilize Investments

Turkey is still highly dependent on foreign energy resources and the supply of electricity is still not sufficient to meet current demand. Therefore, attracting local and foreign investments is vital in order to ensure supply security and establish a competitive and transparent market in the future. In this respect, fundamental regulatory changes have been made in the Turkish electricity market, previously dominated by the state. However, Turkey still lacks a sufficiently attractive energy market for foreign and local investors. It is the duty of the Turkish government to render attractive energy market conditions and regulatory environment for investors. This article looks into the structure of the Turkish electricity market. Various issues under the current system which may facilitate or hinder investors will also be evaluated, along with recommendations to improve the current market conditions.

 

The global energy market fundamentals, coupled with the increasing price of oil and natural gas, have prompted further development of local production and use of alternative resources. These changes have also entailed liberalization in energy markets aimed at establishing a competitive energy market on a cost-based pricing mechanism. 

The Turkish electricity market has also gone through fundamental regulatory changes, moving away from its past of an entirely state controlled system. Some regulatory changes introducing the participation of the private sector were made after 1984. These changes – especially with the enactment of the Electricity Market Law, dated February 20th, 2001 and numbered 4628 (the “Electricity Law”) – paved an essential way for private sector investments, terminating the state monopoly over the electricity market. 

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