Recent Development
The Energy Market Regulatory Authority (“Authority”) amended the Natural Gas Market Licensing Regulation (“Regulation”). The amendment was published in the Official Gazette No. 30394 dated April 17, 2018 (“Amendment”) and entered into force on the same date.
What’s New?
1. Conclusion of Applications Allocated Between the Authority and the Board
Prior to the Amendment, following their submission to the Authority, all natural gas license and renewal applications were concluded by the Energy Market Regulatory Board (“Board”).
The Amendment partially abolished this two-level approval process and gave the Authority the power to conclude license and renewal applications regarding the market activities listed under sub clauses (a), (b) and (c) below (“Group 1”).
a. Wholesale (including wholesale liquefied natural gas (“LNG”) for vehicles);
b. Compressed natural gas (CNG); and
c. LNG transportation.
The license and renewal applications as to the activities not listed above (import, export, distribution, storage and pipeline transportation) (“Group 2”) will continue to be concluded by the Board.
2. Amendments to the Transfer of Distribution Company Shares to Municipalities
a. Pursuant to the Regulation, the following are subject to the Board’s approval (“Approval”): (i) direct or indirect acquisitions of the shares representing 10% or more (5% in the case of public companies) of the share capital of a license holder by a real person or legal entity; or (ii) acquisitions which cause a shareholder’s shareholding to exceed or fall below 10% of the relevant company’s share capital.
b. Pursuant to the Amendment, transfers of distribution company shares to municipalities or municipal companies (“Municipality Transfers”) are no longer subject to the Approval; however, license holders must give prior notice to the Authority and have their licenses amended pursuant to the share transfer.
c. Pursuant to the Amendment, these license amendments due to Municipality Transfers are now concluded by the Office of the Head of Natural Gas Market Chamber and are no longer subject to license amendment fees.
3. Amendments to Transactions Subject to Board Approval
a. Pursuant to the new regulation under the Amendment, shareholding changes of indirect shareholders due to capital increases in license holder legal entities are no longer subject to the Approval; however, license holders will have to give prior notice to the Authority regarding the changes.
b. The Amendment provides that transfer of the privileged shares in a license holder’s direct shareholding is subject to the Board’s approval, regardless of the qualified percentages for Approval. However, the Amendment also provides that the following are not subject to the Board’s approval:
i. The transfer of preferred shares in a license holder’s share capital to another shareholder that owns preferred shares, except if the transferor ceases to be a shareholder; and
ii. The transfer of preferred shares within the shareholders that directly or indirectly own the share capital of a license holder, except in situations requiring Approval.
In the above situations, license holders must notify the Authority regarding the relevant changes.
Conclusion
The Authority continues to demonstrate its commitment to making the license and renewal application processes easier, quicker and less costly. Companies should take into account the new procedures in connection with the Amendment. Reduced filings and the elimination of approvals for certain transactions are expected to incite the ever- growing appetite towards the natural gas market in Turkey.
