The extent of changes being made, or about to be made, in Greece’s electricity market and their anticipated impact is generating a considerable level of interest among foreign institutional investors and funds, if the activity at the 17th New York Capital Link Forum, focused on the topic “Investing for Growth” is to go by. The main power utility PPC’s chief executive Manolis Panagiotakis, who attended the event, was extensively questioned by investors, sources have informed.
PPC’s loss of its grid-related fixed assets, to be transfered to a new, break-away version of subsidiary firm IPTO, the power grid generator, the move’s impact on profit potential, the current level of overdue unpaid electricity bills at PPC and the figure’s trend, and CAT mechanism revisions being made, were some of the subjects international investor representatives insisted on while questioning Panagiotakis.
The Greek state will control 51 percent of the new IPTO firm, an international transmission system operator (TSO) stands to acquire 20 percent, and investors will be offered 29 percent through the Athens bourse.
PPC officials believe that, despite the tough questioning, investors see investment opportunities in the Greek electricity market, including at PPC, regardless of the fact that the power utility is headed towards being transformed into a smaller and very different enterprise than the one it is today.
Panagiotakis held meetings with representatives of eight foreign funds, including Cyrous Capital Partners, Horizon, and Fidelity, once a key institutional investor in PPC. Sources noted that some of these eight funds expressed an interest to acquire stakes in PPC.
It remains to be seen whether this preliminary interest will be followed through with actual investments. Although certain investors may be focusing on the Greek market, they first need to fully understand what exactly is going on in the local energy market.
Market officials abroad monitoring the developments at PPC, which is faced by a series of revisions aiming to break its virtual monopoly of the Greek electricity market, know well that the corporation’s next chapter is already been written.
Foreign investors have kept a closed eye on details included in the bailout agreement reached between the Greek government and lenders. PPC stands to lose its ownership of the grid, until now controlled through its subsidiary IPTO, which will break away. Also, the utility is expected to lose 60 percent of its corporate profit. It remains unclear when PPC will be compensated for its loss of the grid, and by how much. The company is already incurring losses as a result of the alarming level of unpaid overdue bills owed by consumers. Currently controlling 94 percent of the country’s electricity retail market, PPC is committed to reducing its share by 50 percent until 2020.
PPC will contract into a far smaller company than the virtual monopoly it is today, but it will still be able to play a pivotal role, even as a smaller enterprise in the future. It is these prospects that are currently being examined by institutional investors.