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This study assesses the current structure of the Turkish electricity industry, and its standing in terms of the evolving competitive restructuring and regulatory environment. The study also offers several recommendations for achieving a workable competitive structure in the industry that can be achieved through the ongoing restructuring process.

Turkey has undertaken reforming its electricity industry in the last two decades. The reform process started in the mid-1980s with the opening of much of the generation segment of the industry to private sector participation. However, the first steps were without solid legal footing. Rather than resulting from a long-term restructuring plan, liberalization of the electricity industry stemmed from high demand growth, and a corresponding urgency for investment needs. Lacking a clear legal framework, the process has been subject to interruptions and reversals. The overall outcome of the past decade's reform efforts can be summarized as comprising a moderate level of private capital inflow into the generation segment. Under conditions of regulatory uncertainty and a less than favorable investment climate, new generation investment has endured high-risk premiums, which have resulted in elevated energy costs.

Esat Serhat Guney

Esat Serhat Guney is an economist at the Massachusetts Department of Telecommunications and Energy.