The Turkish Energy Ministry has devised a scheme to simplify contracts with private power developers. This involves standardization of contacts signed with the winners of international project tenders and the contact sent to the Council of State.
Existing contracts have a clause which states that all disputes arising during project implementation should be resolved by the Council of State, Turkey’s senior administrative court, rather than at international arbitration as is more common world practice. In addition, according to the Turkish constitution, all government projects involving concessions must be examined by the Council of State, a process that can take several years.
Under the new arrangement, the concession contract will not contain an clause referring to international arbitration. The scope of the agreement will be narrowed to remove some technical areas that do not need Council of State inspection.
The new contracts will be introduced when the Turkish government leases eight power plants to consortia involving both local and foreign companies. The government hopes to attract more foreign investment into the power sector.
