TAIPED, the State Privatization Fund, is preparing to hire consultants and proceed with 19 privatizations which the government has endorsed but since taken a step back from in light of its effort to finalize an agreement with the country’s creditors for completion of bailout prior actions by the end of September
In recent times, the energy ministry has contended that the privatizations are based on agreements reached by preceding administrations, while suggesting it would prefer alternative paths. The privatizations include 17 percent of PPC, the main power utility, 65 percent of DEPA, the Public Gas Corporation, and 35 percent of ELPE, Hellenic Petroleum.
Energy minister Panos Skourletis has been at odds with TAIPED chief Stergios Pitsiorlas over the privatizations. Skourletis has sought to revise the energy-related privatizations through a new super-privatization fund in the making, which would demote TAIPED as a subsidiary and generally seek to utilize assets rather than sell.
Despite the conflict, the energy ministry is believed to be temporarily holding back from pushing for its alternative plan concerning PPC, DEPA and ELPE. The ministry considers the current period inappropriate for any controversy as the government’s effort to finalize the prior actions agreement with creditors by the end of September, now on the right track, would be endangered.
An exact starting date for the international tenders to seek consulting firms for the PPC, DEPA and ELPE partial privatizations has yet to be announced. However, a date following September is expected to be set. The country’s creditors, represented by two officials at the TAIPED board, have been pushing for the matter to proceed.
Energy ministry officials believe that even if consultants were recruited now, the tenders for the three energy companies would stand no chance of being launched within 2017, possibly even 2018. In the meantime, the ministry anticipates it will build its case for its prefered alternative plans, hoping these could be at least partially adopted.
One of these plans could entail the eventual scrapping of the sale of PPC’s 17 percent as the utility’s current troubled state – including a severe cash flow problem attributed to an alarming level of unpaid receivables as well as a bailout requirement for a drastic market share reduction from 90 percent, at present, to 49 percent by 2019 – is not an enticing prospect for investors. Given PPC’s woes, the current controversy over whether the utility’s 17 percent stake should be privatized or not is more a political battle than one of substance.
On the other hand, the energy ministry’s hesitation to firmly state its case right now for privatization revisions may well be the result of an outright rejection, at any point along the timeline, by the country’s creditors