Government officials and creditor representatives, currently engaged in bailout review negotiations, have so failed to reach agreements on a number of energy-sector prior actions needed by the end of this month for the disbursement of a subtranche of 2.8 billion euros, while Greece’s long-running attempt to privatize DESFA, the natural gas grid operator, appears set to hit a dead end. This sale also faces an end-of-September deadline.
Azerbaijani officials at the potential DESFA buyer Socar, disgruntled by the recent implementation of a revenue-restricting measure on the Greek gas operator, insist on meeting with Prime Minister Alexis Tsipras, not energy minister Panos Skourletis, the measure’s architect, or the Minister of State Alekos Flambouraris, as intended by the Greek government.
Though a superbill to be submitted to parliament today is expected to include the target model, a plan for the electricity market’s future look based on the European Commission’s objective for an integrated EU energy market, a number of energy-sector prior actions will be missing.
According to energypress sources, the biggest gap separating local officials and the creditor representatives concerns the plan to eliminate the renewable energy (RES) special account’s deficit. The lenders remain dissatisfied, despite the ratification of a recent energy ministry bill that increases payments by electricity suppliers into the RES special account. The lenders insist that the RES special account’s deficit can only be wiped out through an ETMEAR surcharge increase on consumer electricity bills. Government officials argue such a move will negatively impact consumers and enterprises.
In the natural gas sector, the lenders are pushing for an across-the-board increase of gas amounts auctioned off by DEPA, Public Gas Corporation, to the industrial sector as a means of breaking the market’s monopoly. In response, Greek officials have tabled counterproposals for the natural gas market’s liberalization, including the establishment of spot markets, long-term purchase agreements, reduced industrial sector direct participation at the auctions and increased supplier participation.
The negotiators are waiting for RAE, the Regulatory Authority for Energy, to determine natural gas network usage fees for distributon and transmission. An effort is being made for these levels to be set as soon as possible. The issue concerns the EPA regional gas supply companies controlled by DEPA and will also impact DESFA’s revenue potential.
Despite the challenges, the government officials and lenders are expected to reach agreements on the aforementioned issues. However, the prospect of a solution for the stalled DESFA sale looks bleak. A letter of guarantee submitted by Socar expires at the end of this month.
Socar, which had emerged as the winning bidder of an international tender for DESFA in 2013 with a 400 million-euro offer for a 66 percent stake, believes the operator’s market value is now worth between 40 and 50 percent less as a result of the recently imposed revenue-restricting measure. Socar officials are demanding a meeting with the Greek Prime Minister, nothing less, to state their case. Greek officials argue that any change to the original price is impossible as this would annul the tender. Inclusion into DESFA’s asset base of the Revythoussa LNG terminal close to Athens is an option being considered by Greek officials.
Local authorities fear that the DESFA privatization’s failure could have a spillover effect on the country’s privatizations agenda. At present, the energy ministry is battling to convince the country’s creditors for a removal of three energy-sector privatizations – main power utility PPC (17%), DEPA (65%) and ELPE-Hellenic Petroleum (35%) – from Greece’s privatizations list managed by TAIPED, the State Privatization Fund.