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Turkish energy breaks ground as firms sign landmark deal

09 Sep 2011 17:17:19 | edem

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RWE and Turkey's Akenerji have signed the first electricity trading master agreement in the country, a landmark event that will pave the way towards a liquid, liberal and transparent electricity market in Turkey, the two companies said on Friday.

Another ten companies are tipped to follow suit within a month, and the first financial future deals are expected to be concluded on TurkDEX, the country's derivative exchange, from 26 September.

The standardised contract developed by the European Federation of Energy Traders (EFET) for the delivery and acceptance of electricity has received the backing of the Turkish Electricity Traders' Association and is likely to be adopted by the country's major electricity companies.

The agreement was translated and adapted to Turkish law last month, and its adoption by local counterparties could speed up the launch of a competitive over-the-counter (OTC) traded market (see EDEM 20 July 2011).

Along with Turkish companies, German giant RWE, which is in the process of completing a 775MW gas-fired combined cycle plant in Turkey next year, has been at the forefront of spearheading the liberalisation of the Turkish electricity market.

"As RWE, we have been saying that we are prepared to share the experience we gained in Europe, concerning liberalisation and energy exchanges with Turkey at every opportunity," Andreas Radmacher, CEO of RWE Turkey, said.

Ahmet Ümit Danișman, general manager of Turkish energy company Akenerji, added: "As Akenerji, we are proud to be pioneering the EFET Agreement, an instrument of widespread adoption among European energy traders in Turkey. Our intent is to make the energy market in Turkey more liberal, more transparent and more reliable. We believe our efforts are important steps in this direction."

Earlier this week, Statkraft, another European company active in Turkey, told ICIS Heren that it was in the process of completing the required financial and risk checks, and that it would sign the contract with a major private counterparty within less than a month (see EDEM 7 September 2011).

Companies which have signed the EFET-style master agreement will be able to trade either OTC or on TurkDEX, the financial futures market.

A source told ICIS Heren that counterparties would be able to trade up to 2GW of December Baseload.

Companies eager to establish a presence in Turkey recognise that OTC trading could be hampered by the Turkish stamp duty, a tax that represents 0.825% of a deal's value, and would have to be applied to traded contracts.

However, they are also keen to point out that Turkey is a promising market where electricity demand is set to increase by 7.5% annually through to 2019, and its production is expected to double to 60GW over the same period.

Turkish companies along with their foreign counterparts have now stepped up their efforts to lobby the government and other relevant bodies to help smooth out any impediments that may slow down the development of the Turkish energy market.

ETD has been overhauled to increase its clout when lobbying the government and other related bodies. AS

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