PRE-RELEASE j TURKEY POWER 2015 Global Dusıncss Report� The state, the market, and the state of the market Opportunİties İn the Turkish energy sector İn the context ofsector reform Emerging markets, even those that seek to defy it, are i nextricably the product of their past. The role that the legacy of bureaucracy plays in shaping institutional power structures and the way in which cronyism manifests itself are determined by the historical shape ofa country. Real junctures in a country's development are rare. Opportunities for a country to decidedly separate itself from the past - to reform, transform and democratize it -do not come often. Turkey, and as an extension of it the country's energy sector, has long stood at one such juncture. Today, the path which Turkey chooses will determi ne the country's ability to answer one of its most pressing macroeconomic concerns: the dual challenge of possessing one of the world's most rapidly growing energy markets while containing little known hydrocarbon resources. Already this dilemma has built a $42.9 billion current account deficit. Of equal importance to the current political administration, the path which Turkey chooses at this juncture will also determine to what extent the country is capable O Global Business Reports I ı ı , , ıı of accomplishing its Centennial Goals, one of current Turkish President Recep Tayyip Erdoğan's flagship projects. More ambitious than realistic and stemming from Turkey's larger goal of becoming one of the world's ten largest economies by 2023, these targets for the energy sector include the establishment of 20,000mW of wind energy, 600mW of geothermal energy and the construction and operation of three nuclear power plants within the next eight years. The extent to which Turkey will be able to progress with these projects will be shaped by its ability to reject its past. Though the modern structure ofTurkey's energy market was first formally established in 2001 through the creation of Turkey's Energy Market Law, the dynamics underscoring the Turkish energy sector of today far predate this, tracing their roots to the first point i n modern Turkish history where the country came across another such a juncture in its development: the establishment of the Republic ofTurkey i n 1923 led by Mustafa Kemal Atatürk, the Republic's first president whose theory of social and political governance has dictated the course of the country's growth until now. Advocating a statist approach to economic planning, Atatürk established the political structures that would guide the expansion of Turkish energy; structures that only today are finally beingdismantled. Public works established the early rudiments of Turkish energy, constructing many of the country's largest power generation facilities, including the eponymously named Atatürk Dam, which currently generates 8,900mW of energy annually and stands as one of the world's largest hydroelectric power projects. Only in 2004 did privatization begin for the energy sector in earnest. Murat Çolakoğlu, partner at PriceWaterhouseCoopers explained: "The late 90s were marked by a fundamental need for more energy production facilities. Greenfield investments were needed to address an issue that underscored many Turkish industries: the need for a consistent and secure power supply. This was reflected in strong incentives issued by the central government and the
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