Turkish Republic has amended the existing provisions regarding monetary incentives that are provided to shipowners building new vessels to replace those that are old and to be scrapped. The new provisions, published in the Executive Order dated 7 April 2022, brings forward incentives that concern vessels which will use, inter alia, LNG and/or hybrid systems as their source of power. Accordingly, the amount of the incentive can be as high as 2.5 times the vessel’s scrap value. Please note that the incentives foreseen for fossil-fuel powered vessels are still in place, albeit the top limit is much lower in comparison – 1.5 times the vessel’s scrap value. You can read our previous client alert here regarding the said incentives and the requirements, which will be also applicable for these new incentives for vessels using an alternative, environmentally friendly source of power. With this amendment, the purpose of the regulation referred to in our previous client alert could be better fulfilled as it directly aims to boost interest in “green” vessels.
The new amendment comes as no surprise considering the new international movement in the shipping industry: sustainability. As we have seen many countries implementing tax exemptions, state aid schemes and other measures to promote production of environmentally friendly vessels, Turkey’s approach to this matter is another positive step in achieving United Nations’ sustainable transport goals. Further, given that we are seeing more and more Emission Control Areas designated globally, it can be said that the Turkish fleet will be more compliant as a unit with the specified measures.
Please do not hesitate to contact us for any questions you may have.