Articles

Dynamics of Privatization in Turkey with a Focus on Energy

Third, Anamur, Bozyazı, Mut- Derinçay, Silifke and Zeyne Hydroelectric Power Plants are also collectively included in the privatization program for granting the right to operate these power plants.

Legal Framework

The Privatization Administration (“Administration”) explains the purposes of privatization in Turkey as being able to reduce the State’s role in industrial and commercial activities, to create a more competitive economic environment, to reduce the financial burden of State Economic Enterprises on the national budget, to transfer privatization revenues to infrastructure projects, to expand and deepen the existing capital market by promoting wider share ownership and to provide efficient allocation of state resources.

The main piece of legislation regarding privatization in Turkey is the Law on Privatization Applications No. 4046, which has been in effect since November 27, 1994 (“Law”). Pursuant to the Law, State Economic Enterprises, their subsidiaries, affiliates, business enterprises, assets, public shares and Treasury shares in business entities, public services provided by administrations with general and supplementary budgets may be included in the privatization program with the Administration’s proposal and the Privatization High Council’s (“Council”) approval. The Council will also include in its decision whether the said entity will be directly added to the privatization program or whether it will first be subject to legal and financial preparations and also the method of privatization to be used.

According to the Law, the following privatization methods may be used by the Administration:

• Sale 
• Lease 
• Grant of operational rights 
• Establishment of certain property rights (except for ownership)
• Profit sharing model, or 
• Other methods to be determined depending on the nature of works.