Firat Elektrik Dagitim A.S.

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In January 2010, Aksa Electrik [Turkey] won the rights to operate the concession Firat Elektrik Dagitim A.S. from the Turkish Privatization Administration (Ozellestirme Idaresi Baskanligi or OIB). Firat Elektrik Dagitim A.S. was granted a 30 year electricity distribution concession in 2006 in the provinces of Elazig, Bingöl, Malatya, and Tunceli. The company had 659.5 thousand customers, including 544.4 thousand residential customers by December 2008. Aksa Electrik won the tender for the block sale of 100% of Firat Elektrik Dagitim A.S. concession organized by OIB, offering the highest price for the concession (US$230.25 million) and beating off the competition with four other bidders. The Higher Privatization Council gave the final approval to the transaction in December 2010. The project reached contractual closure on December 31, 2010 with the signature of sale and transfer agreements by the winning bidder and the Turkish government. The private bidder that won the project has the right to operate the distribution company for the remaining of its concession period until 2036. The concession was part of a government program to introduce private operation of, and investment in, the 20 regional electricity distribution companies owned by the state-owned Turkiye Elektrik Dagitim A.S. (TEDAS). The program followed a Transfer of Operating Rights and Share Sale model ('TSS model'). In this model, the private investor became the sole owner of the distribution companies' equity and the unique licensee for distributing electricity in each region for a period of 30 years. However, TEDAS retained ownership of the distribution network assets and of certain other items essential for operating the distribution assets. The private investor was obliged to undertake the necessary network investments, recoverable through the tariffs. These investments were embedded in the tariffs during the first tariff implementation period (2006-2010). After 2010, the private investor was to submit an investment plan annually to the Electrity Market Regulatory Authority (EPDK) for its approval.