MEPSO Organization Structure

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"Impacts of Turkey's Integration with the
Southeast Europe Energy Market and the Wide
European Energy Market Dr. Willy Kotiuga,
Director, Power Systems Consulting SNC-Lavalin
International Inc. Toronto23 October 2006
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SEETEC Project

• 20 million technical assistance project funded
  by the Canadian International Aid Agency (CIDA)
  Canadian contribution to the Stability Pact
• Started in June 2001 until mid 2007
• Involved in Romania, Bulgaria, all ex Yugoslavia
  Republics, Albania and Moldova
• Always try to take a regional approach
• Greece and Turkey invited to regional meetings.

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European Energy Market Forces and Political
Incentives
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European Energy Market Forces and Political
Incentives
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Principles of European Energy Market
Liberalization

• European Directives
• Unbundling of competitive (production/supply)
  versus monopolistic activities (networks)
• Accounting, Managerial, Legal
• Third Party Access for all participants
• Independent authority for regulation
• Competition on generation and supply
• Market opening
• 2004 for industry and commercial
• 2007 for all
• Concept of regional markets

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Recent Southeast Europe Development

• Treaty signed between all SEE countries and the
  European Commission in summer 2005 now in force
• Creation of an Energy community Secretariat in
  Vienna
• Bulgarian/Romania to join European Union in
  January 2007
• Turkey was a participant in the Treaty
  negotiation but has not signed yet
• Turkey is moving at the same speed in terms of
  market reforms creation of TSOs, unbundling of
  production, etc.

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Interconnected power system are doors for trading
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Interconnected SEE systems
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UCTE feasibility study

• Turkey is physically connected to Europe
  transmission grid but does not operate in
  synchronous mode
• This means, more complicated to export-import
• Turkey used to import from Bulgaria
• With market reforms currently no transactions
  BUT will change in the future

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Interconnected Power Systems
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SEE and Turkey
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Turkey and European Energy markets post 2008

• When Turkey will be synchronized, possibilities
  for large import-export between Turkey and
  European companies
• Less political interference-market based
  principles
• Turkish companies will import when prices are
  cheaper in Europe exports when prices are
  higher hourly and seasonal variations
• Turkish construction companies (e.g. Sabanci)
  have moved into the energy sector and should
  become large participants
• Possibilities to invest in Turkey need for USD
  billion in new power generation investments
  (e.g..Sabanci to invest USD 3 bn in new
  generation)

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Current Turkish energy hot topic privatization
of discos

• 20 new distribution companies have been
  established from within the body of TEDAS (the
  Turkish Electricity Distribution Company owned by
  the state) in 2004
• The Privatization Administration has started the
  privatization process with the simultaneous
  tender of 3 companies
• Baskent Elektrik Dagitim A.S.
• Istanbul Anadolu Yakasi Elektrik Dagitim A.S.
  (AYEDAS Region 14)
• Sakarya Elektrik Dagitim A.S. (SEDAS Region
  15) 
• Gencos to be also privatised later after
  restructuring (except large hydros)

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Since 2001 Improved FDI climate and increased
investments

• December 2001 Decree on Improving the Investment
  Environment in Turkey creation of the
  Coordination Council for the Improvement of the
  Investment Environment (CCIIE) with the mandate
  to identify and remove regulatory and
  administrative barriers to private investment
• Has helped bring FDI
• With privatisation of strategic assets like
  electricity distribution networks bring Turkey
  even closer to European energy markets
• Discos privatisation should bring USD 10-15 bn

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.and a few words on gas

• Istanbul is the site of the SEE Gas Forum for
  creation of a SEE regional gas market
• Turkey has strategic position for gas transit
  many projects- Blue Stream (gas from Russia),
  Nabucco (to bring Caspian gas to Europe),
  pipeline to Greece, etc
• Europe needs to diversify its sources of gas
• Potential for transit through Turkey but also for
  re-sales and re-exports of gas already contracted
  to the Turkish market in sale and purchase
  agreements (possibility to get a gas supplier and
  export license from EMRA-the regulator) since
  Turkey has over-contracted in the early 2000s .
• Need for gas storage construction

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For more information

• Power Systems Consulting Group
• Willy.kotiuga_at_snclavalin.com
• 1 514 393-1000
• SNC-Lavalin International
• Ronald.Denom_at_snclavalin.com
• 1 514 393-1000