Natural Gas Market Legislation in Turkey

What is the main framework law and competent authority in Turkey?

The legal framework of the Natural Gas Market in Turkey is mainly regulated by the Natural Gas Market Law no. 4646 of 18 April 2001 (NG Law). The NG Law covers the activities of import, transmission, distribution, storage, marketing, trade and export of natural gas.

The Energy Market Regulatory Authority (EMRA) is an administratively autonomous public administration in the natural gas market, independent in its decision-making process. It grants licences to legal entities that allow them to engage in natural gas market activities in Turkey.

The EMRA reviews the licence applications to (i) ensure conformity with the objectives set forth in the legislation; (ii) evaluate its impact on the protection of consumer rights, promotion of competition and development in the market; (iii) assess the financial strength of the legal entity and/or its shareholders, and its financial resources and (iv) find out the experience and performance of the applicants in the domestic and international markets (if any).

Which legal entities can operate in the natural gas market?

Under the NG Law, licences are granted only to private (established under the Turkish Commercial Code no. 6102) or public legal entities established to conduct the functions of generation, transmission, distribution, wholesale, importation, exportation, trading or storing of natural gas.

Which activities are subject to licencing and what are the obligations of the licensees?

A licence is an authorisation issued by the EMRA, for each market activity, to legal entities so they may operate in the market. Legal entities willing to engage in natural gas market activities must obtain licences from the EMRA. Legal entities that will engage in Turkish natural gas market activities must obtain (before they start the operation) a licence for each activity and facility if the activities are to be conducted in more than one facility.

Licences and certificates are granted for a minimum of 10 years and a maximum of 30 years and may not be transferred.

The principles and procedures related to the licences to be issued to legal entities engaged in the natural gas market activities are regulated under the Natural Gas Market Licence Regulation, published in the Official Gazette no. 24869 of 7 September 2002 (Licence Regulation). Under the current NG Law and Licence Regulation, legal entities may be granted seven types of licences:

• Import
• Transmission
• Storage
• Wholesale
• DistributionCompressed natural gas (CNG)
• Export

To commence the application evaluation, the applicants are notified by EMRA in writing to deposit one percent of the licencing fee into the EMRA account within five days from the date of notification. Otherwise, the application is deemed rejected.

What are the licence fees for 2014?

The licence fees determined by EMRA for 2014 are as follows:

1. Import activity

• Licence Issuance Fee — TL 123,260
• Annual Licence Fee —  Kuruş 0.0005 per kWh sold

2. Transmission Activity

• Transmission
• Licence Issuance Fee — TL 925,000
• Annual Licence Fee —  Kuruş 0.0005 per kWh transmitted
• Transmission of Liquidated Natural Gas (LNG)
• Licence Issuance Fee — TL 44,900
• Annual Licence Fee —  Kuruş 0.0005 per kWh transmitted

3. Storage Activity

• Licence Issuance Fee — TL 246,500
• Annual Licence Fee —  Kuruş 0.0005 per kWh stored

4. Wholesale Activity

• Licence Issuance Fee — TL 61,630
• Annual Licence Fee —  Kuruş 0.0005 per kWh sold

5. Distribution Activity

• Licence Issuance Fee — TL 61,630
• Annual Licence Fee —  Kuruş 0.0005 per kWh distributed

6. Activity of Distribution, transmission and sale of compressed natural gas (CNG)

1. 1. Transmission and distribution of CNG
      
      • Licence Issuance Fee — TL 12,360
      • Annual Licence Fee —  Kuruş 0.0005 per kWh transmitted and distributed
   2. Sale of CNG 
      • Licence Issuance Fee — TL 12,360
      • Annual Licence Fee —  Kuruş 0.0005 per kWh sold 
   3. Export Activity 
      
      • Licence Issuance Fee — TL 12,360
      • Annual Licence Fee —  Kuruş 0 per kWh exported

As a corridor and transit line between the major natural gas providing countries, Turkey attracts the attention of reputable natural gas market participants. The natural gas market is mainly regulated under laws and regulations that accord with EU legislation.

authors: Sezin Burcu Ozdamar, Murat Kutluğ