1) The distribution license is a regulated monopoly with “public service” duties
In Türkiye, an intra-city natural gas distribution license is not simply a permission to operate pipes. It is a territory-based, exclusive service authorization that combines (i) network construction/operation and (ii) retail delivery of gas to customers within a defined distribution region. The Natural Gas Market Law (Law No. 4646) links the distribution license to a tender model and imposes ongoing obligations on license holders, including service continuity and consumer protection expectations. (LEXPERA)
The commercial implication is straightforward: a distribution company must behave like a regulated infrastructure operator. Even where a distribution company is privately owned, its customer-facing processes (connections, deposits, meter operations, billing, disconnections) and its infrastructure duties (expansion, maintenance, safety) are heavily shaped by legislation and EPDK/EMRA oversight.
2) The legal sources you must treat as your “compliance constitution”
A distribution company’s obligations come from four core layers:
- Natural Gas Market Law No. 4646 (primary legislation) – includes statutory obligations for distribution companies and a framework for licensing, service duties, and sanctions. (LEXPERA)
- Natural Gas Market Licensing Regulation – sets the licensing architecture, including distribution license rules and general duties of license holders.
- Natural Gas Market Distribution and Customer Services Regulation – the operational rulebook for distribution activities and customer services (connections, meters, billing, service standards, and internal corporate restrictions). (LEXPERA)
- Regulation on Measures Regarding Natural Gas Market Distribution Licenses (19.08.2023 / 32284) – “business continuity” and consumer protection measures, including what happens if EPDK must intervene, cancel a license, and sell/transfer the network to a new operator. (LEXPERA)
On top of these, amendments (notably those published in the Official Gazette dated 21.02.2026 / 33175) can materially change day-to-day customer service and billing rules, which means compliance is not “set and forget.” (Anadolu Ajansı)
3) Core license obligations under Law No. 4646: what the statute expects from distribution companies
Law No. 4646 contains a dedicated section titled “Obligations of distribution companies” and lists duties that are foundational for license compliance. The most practice-critical include:
3.1 Establish a dispatch/control center (Sevkiyat Kontrol Merkezi)
Distribution companies must establish a dispatch/control center for their distribution networks, with a limited exception where EMRA/EPDK determines that the city’s consumption capacity is insufficient to require it. (LEXPERA)
Why it matters: This duty drives SCADA, telemetry, emergency response, and operational reliability requirements. For investors, failure here is not “technical debt”—it is a potential enforcement trigger.
3.2 Connection obligation: “connect on request,” subject to feasibility and procedure
Distribution companies are obliged to connect consumers within their responsibility area upon request, but the law ties this to (i) network capacity enabling connection, (ii) the consumer completing the required procedures in the distribution legislation, and (iii) the connection being technically and economically feasible under EMRA/EPDK’s criteria. (LEXPERA)
Practical risk: disputes often arise when a company refuses a connection request or delays service line works. These disputes rarely stay “contractual”—they become regulatory complaints and can expose the company to sanctions and reputational harm.
3.3 Duty to serve in zoned/urbanized areas within the distribution region
The law emphasizes that distribution companies are obligated to conduct distribution activity within the “zoned/urbanized areas as a whole” inside the licensed distribution region. (LEXPERA)
Commercial consequence: distribution companies cannot selectively serve only the most profitable neighborhoods if the regulatory criteria require network rollout in the planned areas.
3.4 Limits and structural rules on distribution regions
The law includes rules about how many cities a distribution company can hold licenses for (as a general principle) and establishes mechanisms for extending, redefining, merging, or splitting distribution regions under EMRA/EPDK decisions, using technical and economic criteria such as network integrity and regional proximity. (LEXPERA)
Investor due diligence angle: if a business plan assumes expansion into additional regions, you must check whether that expansion is legally feasible under the region and license structure.
3.5 Investment coordination with Organized Industrial Zones (OSBs) and municipalities
Law No. 4646 allows distribution companies—subject to OSB request and consent—to make network and connection line investments for OSBs and perform distribution there, with procedures to be set by EMRA/EPDK (in coordination with relevant ministries). (LEXPERA)
The law also protects distribution companies from certain municipal charges in newly added expansion areas where municipalities request investment, and it places responsibilities on municipalities regarding surface restoration/coverings of excavation areas. (LEXPERA)
Practical point: municipal interface is an operational risk that frequently delays rollout. Strong legal documentation and stakeholder governance can prevent chronic investment bottlenecks.
4) Corporate governance obligations: what the Distribution & Customer Services Regulation forces into the company’s DNA
Unlike many sectors, the distribution company’s articles of association and corporate structure are regulated topics.
4.1 “Single-purpose company” rule
The regulation states that the distribution license holder cannot engage in activities other than intra-city natural gas distribution and related training services; the company’s articles of association must be aligned with this restriction. (LEXPERA)
Why it matters: group companies sometimes try to embed unrelated businesses under the same legal entity, which can create licensing noncompliance risk and complicate financing, M&A, and regulatory approvals.
4.2 Municipality share invitation
The regulation requires the distribution company (after license effectiveness) to invite the municipality (or municipal company) in the city to become a shareholder at a specified percentage, subject to the regulation’s conditions. (LEXPERA)
Deal implication: equity structure is not purely a commercial negotiation; it can be a regulated requirement.
4.3 “Continuity mechanisms” if license cancellation becomes necessary
The regulation’s structure anticipates extreme cases: it contemplates governance provisions that enable EMRA/EPDK to ensure continuity of service and operation of the network if license cancellation becomes necessary. (LEXPERA)
Practical meaning: distribution is treated as an essential service; the system is designed to keep gas flowing even during operator failure.
5) Customer service obligations: connection, activation, meters, billing, and complaint handling
Distribution companies usually experience the highest volume of legal disputes in customer service. This is also where recent amendments have tightened expectations.
5.1 Connection fees and refunds (updated approach after February 2026)
Recent regulatory changes reported as entering into force via the Official Gazette publication dated 21.02.2026 introduce clearer rules on connection fee collection and refunds, including “one-time collection” logic and refund timing where service line works have not started. (Anadolu Ajansı)
The same reform package highlights tighter deadlines for permit applications and service line completion, such as completing permit applications within a short period after fee collection and making the service line ready within a standard timeline, with a mechanism to extend by consumer approval and refund consequences if the service line cannot be made ready due to permitting issues. (Anadolu Ajansı)
Compliance tip: treat these deadlines as SLA-level obligations. If internal contractors and municipal coordination cannot support the timelines, you need a documented operational plan (and proof of “non-attributable delay” where the amendment framework recognizes it). (Anadolu Ajansı)
5.2 Security deposits: instalments and exemptions for certain vulnerable groups
Recent coverage of the 21.02.2026 amendment describes:
- allowing security deposit and certain subscription-related payments to be paid in instalments (e.g., 6 instalments without interest), and
- exemptions or reduced burden for certain vulnerable consumer categories (reported examples include certain elderly/assistance recipients). (Bloomberght)
Legal significance: deposit rules are not “policy preferences”—they are regulated consumer protection mechanics. Improper collection can trigger both consumer complaints and regulatory enforcement.
5.3 Meter operations and emergency response
Public reporting on the February 2026 reform highlights accelerated processes and simplification around meter/device replacement and intervention expectations for faults affecting supply. (CNBC-e)
Dispute pattern: a high percentage of consumer disputes relate to meter accuracy, reading intervals, and billing corrections. Your legal defensibility depends on data governance: reading logs, device calibration records, intervention timestamps, and customer notification evidence.
5.4 Billing and payment windows: transparency and procedural discipline
The February 2026 reform package is widely reported to strengthen consumer rights in billing timelines—such as minimum notice and minimum payment periods, and rules for instalment treatment where reading periods deviate due to distribution company causes. (Ekonomim)
Compliance recommendation: implement internal controls that ensure invoices are delivered within the required timeframes and that payment periods never fall below the regulatory minimums, with audit-friendly evidence trails.
6) Non-discrimination, access to the network, and eligible consumer dynamics
Distribution companies operate the local network. Even if the retail sale relationship is with a supplier, the distribution company’s infrastructure and service standards govern actual delivery.
The licensing regime recognizes distribution as transport and retail delivery through the regional pipeline network for customers, and it requires distribution companies to enable customers/subscribers and eligible consumers to access the network according to the Distribution & Customer Services Regulation and feasibility requirements.
Key client issue: where an eligible consumer wants to purchase gas from a different supplier, disputes can arise over technical requirements, connection terms, measurement points, and operational coordination. Distribution companies should maintain standardized, non-discriminatory procedures and document the basis of any refusal (technical/economic infeasibility decisions can escalate to EMRA/EPDK scrutiny).
7) Information duties, confidentiality, and accounting separation
Law No. 4646 imposes information-sharing duties among system actors to ensure safe and efficient system operation, and it also includes confidentiality restrictions: market participants cannot use confidential information obtained through their market activities for their own benefit or for related parties. (LEXPERA)
Additionally, the law requires accounting unbundling for entities that operate in more than one area within the natural gas market. (LEXPERA)
Practical compliance approach:
- create a compliance policy for data access (who can see what),
- implement conflict-of-interest controls,
- and ensure accounting separation is audit-ready (especially if the group has multiple regulated activities or related companies).
8) Enforcement risk: sanctions, license cancellation, and continuity measures
8.1 Administrative fines and licensing consequences
The Natural Gas Market Law contains a sanctions framework and is supported by annual communiqués on administrative fines for specific years (published in the Official Gazette). (LEXPERA)
For distribution companies, sanctions risk is not limited to fines. In severe or persistent noncompliance, license cancellation becomes a realistic scenario—especially where consumer service is disrupted or financial/operational failure occurs.
8.2 The 2023 “Measures Regulation”: what happens if EPDK must intervene
The Regulation on Measures Regarding Natural Gas Market Distribution Licenses (19.08.2023 / 32284) is built precisely for the moment where EPDK concludes that measures are necessary to prevent disruption of distribution services and protect consumers. It covers the chain from taking measures, to license cancellation, to conducting a network sale tender and transferring the network to a new license holder—designed to preserve continuity of service. (LEXPERA)
This regulation is highly relevant for:
- lenders and investors assessing downside scenarios,
- compliance teams designing early warning systems,
- boards evaluating “going concern” and operational resilience.
9) A practical compliance checklist for distribution companies (what sophisticated operators implement)
9.1 Governance and license hygiene
- Confirm articles of association reflect the “single-purpose” limitation. (LEXPERA)
- Keep a standing “license conditions register” mapping each obligation to a responsible department (legal, operations, customer services, finance, IT).
9.2 Connection and service line delivery controls
- Track statutory deadlines for permit applications and service line completion; adopt workflow tools to prove timeliness. (Anadolu Ajansı)
- Standardize refusal decisions (feasibility assessments) with documented engineering and economic analysis, anticipating EPDK review. (LEXPERA)
9.3 Billing, reading, and meter governance
- Implement a meter reading calendar with controls for minimum invoice delivery periods and minimum payment windows. (Ekonomim)
- Maintain device calibration and replacement records; ensure rapid intervention processes for supply-blocking faults. (Ekonomim)
9.4 Consumer complaint and dispute prevention
- Build a structured complaint workflow that produces evidence: ticket number, timestamps, actions taken, and customer notifications.
- Pre-draft standard settlement correction protocols (billing errors, meter disputes) and train front-office staff.
9.5 Data protection and confidentiality
- Restrict access to commercially sensitive consumption and supplier information; apply “need to know” controls. (LEXPERA)
- If the corporate group has multiple activities, ensure accounting unbundling is properly documented. (LEXPERA)
9.6 Emergency and continuity planning
- Maintain operational readiness consistent with dispatch/control center requirements and safety obligations. (LEXPERA)
- Develop a “regulatory intervention scenario” plan aligned with the 2023 Measures Regulation (what documents must be ready, how to maintain continuity). (LEXPERA)
10) Investor and M&A due diligence: red flags that change valuation
If you are buying or financing a distribution business, the following issues often decide pricing and closing conditions:
- Regulatory compliance history: any sanctions or ongoing investigations, patterns of consumer complaints, or recurrent billing/meter disputes. (LEXPERA)
- Network investment backlog: whether the company can meet rollout obligations in zoned/urbanized areas within the region. (LEXPERA)
- Connection service performance: whether the company meets the newest procedural standards and deadlines for service line completion and refunds. (Anadolu Ajansı)
- Corporate charter compliance: single-purpose restriction properly implemented. (LEXPERA)
- Resilience risk: how the company would behave under the 2023 Measures Regulation (continuity and potential license cancellation/network sale pathway). (LEXPERA)
Conclusion: distribution companies win by treating compliance as operational excellence
A natural gas distribution license in Türkiye brings enforceable, detailed duties: network control center requirements, connection obligations subject to feasibility, service roll-out expectations across planned areas, and strong consumer-service rules that are being actively updated (including the February 2026 amendments). (LEXPERA)
For distribution companies, the safest strategy is proactive: build auditable workflows, align corporate documents with licensing restrictions, and implement customer-service processes that are legally defensible. For investors and lenders, the key is diligence: trace compliance history and operational capability against the statutory and regulatory checklist before you price the asset.
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