|By Ozan Karaduman, senior associate at Gün + Partners|
Turkey has been trying to establish nuclear power plants since the 1960s. Five different attempts have been made between 1960 and 2010, but none of them have borne any fruit for political and economic reasons. The Turkish government issued separate pieces of legislation at different times, which together form the legal backbone governing the establishment and operation of nuclear power plants. However, all attempts to establish a nuclear power plant produced no result until 2010. The applicable legislation was not completed and some of the provisions have become obsolete.
In 2010, Turkey signed an international agreement with Russia for a new nuclear project in Akkuyu that was followed by another international agreement with Japan for a new nuclear build in Sinop. These two international agreements have been the most concrete steps that Turkey has taken so far for the establishment of nuclear power plants. It is therefore expected that Parliament will make changes and possibly issue a new law to regulate nuclear activities. In fact, the government has shown signals of such changes, which will be analyzed in detail in this article.
We will first explain the legislation currently governing the nuclear power plants and then describe the international agreements signed with Russia and Japan on the new nuclear build projects. Finally, we will analyze the changes to be made to the applicable legislation and plans for Turkey in relation to nuclear power.
|Rosatom will build four units at the Akkuyu nuclear power project.|
Main Applicable Legislation
Several regulations form the main legal backbone of establishment of nuclear power plants in Turkey: the Law on Establishment and Operation of the Nuclear Power Plants and the Energy Sale dated November 9, 2007 and numbered 5710 (“Nuclear Energy Law”); the Statute on the Granting License to the Nuclear Installations issued by Council of Ministers, dated December 19, 1983 (“Licensing Statute”); Environmental Impact Assessment Regulation dated July 17, 2008 (“EIA Regulation”); the Electricity Market Law dated March 14, 2013 and numbered 6446 (the “EML”); and the Electricity Market License Regulation dated November 2, 2013 (the “EM License Regulation”). Secondary legislation is constantly being issued, such as the Regulation on the Physical Security of the Nuclear Facilities and Nuclear Material of May 2012. Turkey does not have an internal law regarding civil liability in case of a nuclear accident but signed the Paris Convention on Third Party Liability in the Field of Nuclear Energy (the “Paris Convention”). The version of the Paris Convention revised in 1982 is in effect and applies to civil liability issues in case of nuclear accidents.
The Nuclear Energy Law
The Nuclear Energy Law regulates how a license can be granted to establish and operate a nuclear power plant in Turkey. Under the law, TETAS (Turkish Electricity Trade and Contract Corp.) initiates a tender to determine which company will be entitled to establish a nuclear power plant in the place subject to the relevant tender. The requirements for the applicants will be determined and reviewed by the Turkish Atomic Energy Authority (TAEA). TETAS will then present to the Chamber of Ministers its proposal as to the designated operator. Upon the approval of the Chamber of Ministers, the proposed designated operator becomes entitled to establish and operate a nuclear power plant in Turkey.
Although the Nuclear Energy Law sets forth the procedure by which a company can become an operator, this procedure has not been applied in full yet. A tender was initiated based on the law but upon certain objections, the Council of State intervened in the process with certain preliminary injunctions. Considering that these injunctions would prolong the process, the government chose to deviate from the procedure set forth under the Nuclear Energy Law and signed the international Akkuyu Agreement with Russia on May 12, 2010, giving the right of establishing a power plant in Mersin, Akkuyu to the Russian Atomic Corp., known as Rosatom. As international agreements are above internal laws according to the Turkish Constitution, execution of such an international agreement created a shortcut to determine operators of nuclear power plants. The government used the same method for the second nuclear power plant which will be built in Sinop and signed two agreements with Japan on May 3, 2013 and August 22, 2014 both called the “Sinop Agreement.” The agreement gives the right of establishing a power plant to a consortium consisting of Japan’s Mitsubishi Heavy Industries and Itochu Corp. and France’s GDF Suez (the “JapCo”). The Akkuyu Agreement and the Sinop Agreement will be analyzed in further detail below.
Although the Nuclear Energy Law had not been applied and the operators were determined by international agreements, this does not mean that those operators will be exempt from the licensing obligations under Turkish law. The Licensing Statute still applies to the operators designated by the Akkuyu and Sinop Agreements and to all future operators, whether appointed by a bilateral treaty or the procedure of the Nuclear Energy Law. In this respect, the operator must first obtain a site license for the site where it will establish the nuclear power plant.
After obtaining the site license, the operator must prepare a Pre-Security Analysis Report and submit it to TAEA to obtain a construction license. After the Pre-Security Analysis Report is submitted to the TAEA, it goes under a preliminary review. If the result of the preliminary review is positive, the operator will be granted a Restricted Work Permit which entitles the operator to start working on the foundation of the nuclear power plant. During the foundation work, the TAEA continues to review the Pre-Security Analysis Report. If this is positive, the operator will be granted a construction license and only then can the operator begin to construct the nuclear power plant.
Six months prior to the start of operations, the operators must file an application for a permit to go into operation. The operators will then need to obtain a second permit to bring nuclear fuel into the nuclear power plant and start trials for production. After this permit is granted and trials result positively, the operators will apply for a final permit to operate the plant. Only after this final permit is granted will the operators be entitled to operate the nuclear power plants.
The EML and the EM License Regulation
A nuclear plant operator will also have to obtain an electricity production license from the Electricity Market Regulatory Authority (EMRA) to generate electricity. The application to obtain the production license can only be made after the site license is granted by the TAEA. The EML and the EM License Regulation is a two-tier licensing process. The EMRA will first grant a 24-month pre-license to the nuclear power plant operator During this period the operator must obtain the permits required for construction and also apply to the national grid company (TEIAS) to sign the connection agreement and also fulfill other conditions listed under the EM License Regulation. Only after fulfillment of all of those conditions can an electricity generation license be granted to the operator.
The EIA Regulation
During the pre-license period, the operator must get an approval from the Ministry of Environment and Urban Planning (MENUP) for its Environmental Impact Assessment Report. Because of the risks involved in operating plants and society’s concerns and reactions to those risks, this is one of the most delicate processes in the whole licensing procedure.
The TAEA, the core regulatory body for nuclear power, issued several regulations and guidelines on safety measures addressing the requirements expected from investors. The operators must also comply with the safety measures imposed by the TAEA.
The Paris Convention
Currently, the version of the Paris Convention revised in 1982 is in effect in Turkey. The Paris Convention establishes general principles regarding civil liability in case of nuclear accidents that can be directly applied by the Contracting States. However it leaves room for internal laws to regulate specific issues and in fact requires the Contracting States in certain cases to issue internal laws to regulate those issues. However, Turkey has not issued any such internal law. Following the recent steps to establish nuclear power plants, it is apparent that Turkey needs an internal law detailing the civil liability issues in case of nuclear accidents.
The Akkuyu and Sinop Agreements
The Akkuyu and Sinop Agreements are two of the most important agreements – if not the most important ones – that Turkey has signed. Not only because each of those agreements envisages projects worth around US$20 billion but also because they mark a cornerstone in Turkey’s history with nuclear power. After signing these agreements at an international level, it would be more difficult than it has ever been for Turkey to turn back from its way towards having its first nuclear power plants.
The Akkuyu Agreement
The Akkuyu Agreement establishes a joint stock company in Turkey that will be the operator of the plant and imposes a condition for Rosatom and its affiliated companies to hold at least 51 percent shareholding in the company. Rosatom established Akkuyu NGS Elektrik Uretim AS (NGS) and currently holds 100 percent of the shares together with its affiliated companies. The nuclear power plant will consist of four units and NGS has to complete the construction within seven years of the date it obtains all of the permits for construction. Each of the remaining units shall be constructed in one-year intervals of construction of the first unit. The permits have not been obtained in full yet, therefore the seven-year period has not started.
The Akkuyu Agreement provides a sales guarantee for NGS. Through Article 10, NGS and TETAS shall conclude a power purchase agreement within thirty days of the date of obtaining the electricity generation license by NGS from the EMRA. On the basis of this agreement, TETAS shall purchase from NGS a fixed amount of electricity produced in all units of the nuclear power plant for fifteen years. TETAS shall purchase 70 percent of the electricity produced by Unit 1 and Unit 2, and 30 percent of the electricity produced by Units 3 and 4 of the nuclear power plant at a price of US$12.35 per kwh. Additionally, NGS will also be able to offer the remaining electricity it generates to the market by itself or through an energy retail supplier.
The Akkuyu Agreement also requires NGS to train Turkish students in the nuclear field and also to use essentially Turkish companies for procurement, service and construction.
The Sinop Agreement
The Sinop Agreement is a more detailed and complex agreement than the Akkuyu Agreement. In fact it is a set of two international agreements annexed to which is an agreement between Ministry of Energy and Natural Resources and the project company to be established by the JapCo. The Sinop Agreement requires JapCo and the State Electricity Production Co. (EUAS) to jointly establish a project company (the SinopCo) which will become the operator of the nuclear power plant to be established in Sinop. The shareholding percentage of EUAS will be 49 percent in the SinopCo. The nuclear power plant will consist of four units. Unit 1 will become operative in 2023, Unit 2 in 2024, Unit 3 in 2027 and Unit 4 in 2028.
The Sinop Agreement provides a sales guarantee for SinopCo as well. SinopCo and TETAS will conclude a power purchase agreement where TETAS shall purchase electricity from the SinopCo for 20 years as of the date each unit becomes operative and at a price of US$0.11 cents per kwh.
Unlike the Akkuyu Agreement, the Sinop Agreement also foresees a technology transfer to be made to Turkey but does not give specific details on this issue. The Sinop Agreement also foresees training of human resources in the nuclear field.
The Sinop Agreement provides provisions regarding civil liability and refers to the Paris Convention and the Nuclear Civil Liability Law which should be enacted by the Turkish Parliament for civil liability issues.
Legislation to be Implemented
In a constantly evolving electricity market such as Turkey’s, it is never easy to make projections on what legislation will be implemented. Now that Turkey is very close to having its first nuclear power plants, it is now normal to expect certain legislative changes that will have an effect in the nuclear field. Moreover, the government has started to signal such changes.
A draft law has been submitted to the Turkish Parliament, which is related to the organization of the Ministry of Energy and Natural Resources and also energy efficiency. The Draft Law will bring a new directorate under the Ministry of Energy which will be called the Nuclear Energy General Directorate. In addition to its other duties, this will work on taking the necessary steps to ensure that local capacity is developed in terms of technology, human resources and infrastructure so that local input to the nuclear energy facilities can be at the highest level. Eventually, Turkey could operate its own power plant.
The members of the ruling party, the Justice and Development Party-AKP, prepared an outline of a new nuclear energy law called the Project Law. It has not been officially announced yet but was submitted to the press by a member of the main opposing party, the Republican People’s Party-CHP. The Project Law governs the licensing, operation and decommissioning of nuclear plants. It also sets forth provisions introducing a Nuclear Regulatory Authority and a Nuclear Regulatory Board, which will be the managing body of the Authority. The Authority and the Board will be responsible for licensing of the nuclear power plants and all regulatory actions to be taken in the nuclear field. The Authority, together with the Board, will be organized as an independent institution but will also be connected to the Prime Minister’s office. This link to the Prime Minister may hinder the independency of the Authority and the Board and therefore, the Authority should be organized in a way that would secure its independency and ensure that it can operate as a self-governing institution. There are other provisions that can be ameliorated but as mentioned before, the Project Law is in a very early draft stage. These issues can be addressed in the later stages before the actual enactment of the law. The law to be enacted would not be too different than the Project Law; it will be the main piece of legislation governing the activities of nuclear power plants. Various pieces of secondary legislation will be issued based on that law together with that secondary legislation; there will be a set of legislation governing the whole regulatory aspects of nuclear power plants, which will have integrity in whole. This will be a very important step forward on the legislative side as the current legislation is outdated, incomplete and scattered in various pieces of communiqués, statutes and regulations.
A law on civil liability in case of nuclear accidents is to be expected as well. Currently, Turkey does not have any such law; the only applicable legislation in this regard is the Paris Convention. It is apparent that a specific law needs to be implemented to cover civil liability issues. The Sinop Agreement hints that a Nuclear Liability Law will be enacted by Turkey. This law should set forth detailed provisions regarding liability, clearly state how the damaged parties would be compensated when the total damage exceeds the capped amount in the Paris Convention, how the compensations would be distributed among the damaged parties and the insurance policies to be undertaken by the operators along with other issues.
The Third Nuclear Power Plant
Westinghouse Electric Co., China’s State Nuclear Power Technology Corp. (SNPTC) and EUAS, announced on November 24, 2014 an agreement to enter into exclusive negotiation to develop and construct a four-unit nuclear power plant site in Turkey. If the negotiations go well, another international agreement between Turkey, China and/or USA for the third nuclear power plant is expected. The fact that the negotiations have already started shows that the third nuclear power plant will be commissioned through an international agreement rather than the procedure set forth under the Nuclear Energy Law.
A Final Word
Turkey is closer to having its first nuclear power plants than it has ever been. This makes it more important for the government to quickly implement the necessary legislative framework which is clear, has integrity and responds to the needs of both society and the operators. As a resource which is reliable, available on demand and cheaper than fossil fuels, nuclear power is important for Turkey to achieve its economic growth goals. However, considering the risks involved and the complexity of establishing and operating a nuclear power plant, the serious approach in paving the way for having its first nuclear power plants must also be informed in the legislative field and Turkey should have a modern legislative framework similar to those of the developed countries which have nuclear power. Turkey also has clear intentions of its own nuclear technology as the technology transfer clause in the Sinop Agreement and the Draft Law make evidence to that. It is an ambitious goal but one that has to be pursued.