Main power utility PPC, battling against a poor cash flow situation, expects the board at subsidiary firm IPTO, the power grid operator, to approve a payment of 93 million euros to the utility, at a meeting this Thursday, as a return of capital for the operator’s split and sale, now in progress.
Though this amount will represent some relief for the utility, PPC officials are anxiously anticipating two other crucial developments, to be determined in Brussels. One concerns certification needed by IPTO from the European Commission’s Directorate General for Energy endorsing the subsidiary’s split. PPC is also hoping the Directorate General for Competition will endorse a plan entailing the sale of a 25 percent stake of IPTO to the Greek State and a 24 percent stake to China’s SGCC (State Grid Corporation of China).
RAE, Greece’s Regulatory Authority for Energy, submitted a file on the issue to the European Commission late last month. The endorsements are expected to come through no later than two months following this date, meaning towards the end of May.
The sooner Brussels gives the green light for the IPTO sale to carry on the better for PPC. The utility is relying on funds to be received from the sale of the operator in order to meet a number of considerable payments with fixed deadlines within the year.
According to sources, European Commission officials are likely to use up most or all of the two months permitted by law before delivering decisions.
PPC is anticipating a 320 million-euro payment from SGCC for the latter’s agreement to acquire a 24 percent stake of IPTO. As a second step, the utility is also looking forward to a still-undetermined amount from the Greek State for its acquisition of a 25 percent stake of IPTO. This amount will be determined through an evaluation process.
An evaluation of IPTO conducted last year by Deloitte Business Solutions on behalf of PPC put the operator’s total value at 964.2 million euros.
Based on this evaluation, the 25 percent stake to be purchased by the Greek State would cost just over 240 million euros. If so, PPC stands to receive a total of over 560 million euros for the sale of a 49 percent share of IPTO.
Greek government and PPC officials dread the thought of any delays to the endorsement procedure in Brussels, which would stretch the IPTO sale effort beyond May. Such a prospect cannot be completely written off as SGCC is a non-EU enterprise.