Some Thoughts on the Turkish Electricity Distribution Industry

Over the past decade or so, the electricity industry of the Republic of Turkey (and indeed the world) has undergone profound reform in its structure, ownership and mindset. Increasing public concern about efficiency in the sector has led Turkey to discard the traditional model of a vertically integrated industry subject to cost-based regulation in favor of the unbundling of activities and the introduction of competition where it is possible. The industry has been structurally separated into generation, transmission, distribution and retail segments. The competitive segments of the industry (generation and retail) are planed to progressively expose to competition; the monopoly segments (especially, distribution) are to be reoriented to foster competition. Further, the ownership of the industry is under increasing pressure to move away from the public domain into the private one. The present article not only presents an analysis of the Turkish distribution sector and proposed privatization process but also provides some guidelines for policy makers.