TURKEY suggested that some private power projects will have to renegotiate the pricing, term and guarantee provisions in their power sales contracts.

TURKEY suggested that some private power projects will have to renegotiate the pricing, term and guarantee provisions in their power sales contracts.

October 01, 2002

TURKEY suggested that some private power projects will have to renegotiate the pricing, term and guarantee provisions in their power sales contracts.

Turkey is in the process of deregulating its electricity market. Companies engaged in the generation, transmission or distribution of power are required to apply for new licenses to operate. Regulations implementing the new license requirement were issued in early August.

Remarks by Yusuf Gunay, chairman of the agency that administers the licenses, in September appear to indicate that the government will require changes in certain contract terms for private power projects as a condition to issuing the projects licenses to operate. The changes will be required in contracts to sell power from private projects that were built using one of three ownership models. The three models are TOR for “transfer of operating rights,” BO for “build-operate,” and BOT for “build-operate-transfer.” Companies with existing projects — other than those under the TOR model — have until April 3, 2003 to apply for a license.

Keith Martin