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legal entities who apply to engage in electricity generation activities, a
preliminary license will be issued for a certain term in order for those
entities to obtain the necessary documents like permits, approvals and
licenses and to acquire the property and the usufruct rights of the lands
to be utilized for the establishment of the generation facility. The term
of the preliminary license cannot be more than twenty four months
including the force majeure events. EMRA is entitled to extend this
term as per the source type and the installed capacity.
It is stipulated in the Draft Law that the legal entities who could
not obtain the above mentioned documents, certify the acquisition of
the property or usufruct rights of the lands or fulfill other legal require-
ments shall not be granted a generation license. In addition, until the
grant of the generation license, in case of any direct or indirect change
in the shareholding structure with the exception of inheritance, real-
ization of any actions of transaction which will lead to transfer of
shares or non-fulfillment of other legal requirements, the preliminary
license will automatically be null. Moreover, the expiry of the license
term and the bankruptcy of the legal entity, which holds the prelimi-
nary license are also listed as the circumstances, which lead to auto-
matic nullity of the preliminary license. In case of nullity of the pre-
liminary license, the license holder entity or other legal entities hold-
ing at least 10% (or in case of public companies 5%) of the preliminary
license holder entity cannot apply for another preliminary license for
the same location within one year as of the date of revocation.
As per the above, indicated situations with respect to the automat-
ic nullity of the preliminary license, there is no clarity in the Draft Law
regarding the time of such nullity. On the other hand, as explained
below, while the requirement to obtain approval of EMRA for the share
transfers of the license holder legal entities is no longer preserved, rul-
ing that any share transfer will lead automatic nullity of a preliminary
license is a contradictory proposition.
Distribution License Holders and Other Market Activities:
In accordance with the current EML, companies who hold distrib-
ution licenses can establish generation facilities by obtaining genera-
tion license and can enter into affiliation with the legal entities who
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NEWSLETTER 2012