TURKEY: New BOO law to be introduced

18 April 1997

A law aiming to overcome legal obstacles to the build-own-operate (BOO) method for private power stations will be introduced in late April, Energy Minister Recai Kutan said on 7 April. The Energy Ministry will evaluate tenders for six BOO plants with a total output of 5,200 MW and an estimated cost of $4,600 million once the law is introduced, Kutan added.

The country's supreme administrative court, the council of state or Danistay, recently rejected an appeal by the ministry against an injunction on the tender process for the six plants (MEED 4:4:97). The injunction was sought by the Council of Electrical Engineers, on the grounds that the six projects were not introduced by valid legislation. Tenders were returned on 28 February from 15 consortia for the six plants.

In a separate move, the constitutional court on 3 April ruled an article of a law invalid for the build-own-operate (BOT) method. The article provided the council of ministers (cabinet) with authority to determine whether BOT contracts signed were concessions or not.

BOO was introduced in June 1996 to circumvent this issue, after another constitutional court ruling earlier in the year directed that all BOT projects were concessions. Concession status disadvantages foreign partners in BOT ventures by excluding access to international arbitration in case of contractual dispute.

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