Who’s Who Legal interviews Müge Önal, manager of legal affairs at Zorlu Energy Group. Önal discusses her role within the group and the challenges of doing business in Turkey.
Name: Müge Önal
Position: Manager of Legal Affairs
Company: Zorlu Energy Group
Number of employees: Approx. 900
Zorlu Energy is part of Zorlu Group, one of the largest conglomerates in Turkey. The group is active in the sectors of home textiles, durable goods, energy, real estate and mining. Founded in 1993, Zorlu Energy’s initial purpose was to supply electricity to Zorlu Group’s textile plants. With increasing demand for electricity within the group and from the outside, the group expanded to become one of the strongest participants in the Turkish energy sector today.
The energy market in Turkey is one of the most attractive fields of investment in the country’s economy. Turkey is a major energy importer and the rising demand for energy among the increasingly young and urban population requires the country to increase its energy output significantly in the near future. Consequently, the sector offers a lot of growth potential and, with liberalisation processes under way through privatisations, licensing tenders and strategic partnerships, there are many ways for domestic and foreign investors to participate in the economy.
Aside from electricity generation and trade, the group plays an active role in rendering operation and maintenance services for power plants, turnkey Engineering, Procurement, Construction (EPC) services and natural gas distribution and trade in certain regions of Turkey. The group attaches a great deal of importance to renewables, including hydroelectric, wind and geothermal energy, as well as thermal power plants.
In recent years, Zorlu Energy has turned its attention to growing energy markets beyond its borders in Europe, Asia and the Middle East, and currently has power plant investments in Russia, Israel and Pakistan.
Müge Önal joined Zorlu Group in 2006. Prior to this she was a foreign attorney with one of the largest law firms in the United States.
Who’s Who Legal: Tell us about your role.
My responsibilities vary depending on the group’s agenda but broadly include general corporate matters and compliance with the regulations of the Turkish Energy Market Regulatory Authority, the Turkish Capital Markets Board (Securities and Exchange Commission) and the Turkish Competition Authority. My team and I provide legal advice on project finance deals, partnership negotiations, state tenders/privatisations, electricity and gas sales. We also coordinate and supervise all legal matters relating to the group’s foreign investments, and we manage dispute resolution in Turkey and in foreign jurisdictions.
Who’s Who Legal: Describe a typical day.
My typical 10-to-12-hour working day starts with a number of e-mails, phone calls and short meetings. The energy sector is a newly developing and dynamic sector in Turkey, as well as in foreign jurisdictions that we are investing in, so almost all legal advice or support requests are urgent. It is almost impossible for me to plan a day ahead. During the day I review and/or supervise the legal advice or support provided, discuss the matters with my team, attend relevant meetings in Turkey or abroad, if necessary, and close the day by dealing with administrative matters.
Who’s Who Legal: How big is the legal department?
The legal department for the Energy Group is a division of the corporate legal department of Zorlu Group and consists of six lawyers and two legal assistants.
Who’s Who Legal: Tell us about any recent special projects keeping your team busy.
We recently invested in a wind farm in Pakistan; the financial closing of the 56.4MW wind power plant took place not too long ago. The project is financed by Asian Development Bank, International Finance Corporation, Eco Trade and Development Bank and Habib Bank Limited. In recognition of this project – the first wind power generation project in Pakistan – and the company’s $158-million investment, our group company
Zorlu Enerji Pakistan Ltd won the “Middle East Renewables Deal of the Year 2011” award given by Euromoney’s Project Finance magazine. This project highlights the excellent teamwork among the legal department, the finance department and external counsel.
Who’s Who Legal: Do you tend to use the same law firms?
We decide on a case-by-case basis and are open to working with new law firms. That said, we have been working with and getting good results from some law firms for several years, so we take this into consideration during the decision-making process.
Who’s Who Legal: A lot of international law firms have been opening offices in Turkey in recent years. Is the legal market very competitive? Is there a lot of choice for clients? How can firms distinguish themselves?
Most international law firms see Turkey as an opportunity to expand their activities. We will have to wait and see how successful these endeavours are because it is likely that a majority of them will close their offices after some years. At the moment, the legal market is overly competitive. Aside from international law firms, there are pioneering Turkish law firms that are also experienced in international deals, as well as many boutique law firms, established by lawyers who left those local or international law firms. There are many alternatives for clients, but for certain specialised and very large projects, clients still have a much narrower choice. I think specialising in certain areas of law is the key to distinguishing oneself in the sector.
Who’s Who Legal: What are the main challenges for a company operating in Turkey?
The main challenges for investing in the energy sector in Turkey are the increased interest rates and the limited availability of financing over the past couple of years. As most professionals in the sector will agree, Turkey needs to aim for a liberalised energy market that is compliant with international standards to encourage investment and improve financing facilities in the near future.
The determination displayed by the political authorities to date raises hopes that this target will be achieved. The energy-exchange subject, which we hope will be clarified in 2012, is expected to form a transparent and liberalised energy market as well as ensure supply security.
From a legal perspective, the main challenges are the obstacles caused by bureaucracy. Recently, serious amendments made to fundamental codes of law, such as the Turkish Commercial Code, are further challenging companies as they have to review all their legal, financial, internal audit, human resources, information technologies and corporate communication processes and take necessary action to ensure compliance within predetermined deadlines.
Who’s Who Legal: Turkey has had a very active privatisation programme since the 1990s. Has the company played any part in this programme?
Our group company, Zorlu Enerji Elektrik Üretim AS, submitted the winning bid of $510 million in the auction held by the Privatisation Administration on 5 March 2008 for the “transfer of operating rights”, for a period of 30 years, of the hydroelectric power plants Tercan, Kuzgun, Mercan, Ikizdere, Çıldır, Beyköy and Ataköy, and the Denizli Geothermal Power Plant, and the sale of the Engil Thermal Power Plant, which are all owned by state-owned company Ankara Dogal Elektrik Üretim ve Ticaret AS. The High Board of Privatisation approved the transfer and sale on 7 May 2008. The amount was paid in full and in cash, in line with the agreement signed on 1 September 2008.
Although private-sector participation in Turkey’s energy generation and trading is a positive development in terms of meeting the upcoming new capacity requirements, further participation is required.