Bailout measures, including energy issues, ratified Sunday

The draft bill submitted to Parliament yesterday for debate ahead of ratification this coming Sunday includes a number of measures of energy-related interest, such as a complex plan for power grid operator IPTO’s split from its parent company, PPC, the main power utility, the introduction of NOME-type auctions, as well as special consumption tax (EFK) revisions for electricity production.

The superbill needs to be legislated by the Greek government prior to the next Eurogroup meeting on May 24 as part of the effort to complete the first review of Greece’s third bailout package.

Natural gas-fueled power stations will be exempted from a special consumption tax on natural gas in an effort to boost domestic industrial sector competitiveness, as well as to adjust to EU directives. The special consumption tax will be imposed climactically on all other natural gas sub-categories, except for household use.

The NOME-type auctions, to provide third parties with access to PPC’s low-cost lignite and hydropower sources as part of the bailout-related obligation to help break the utility’s dominance, will be launched in 2016 by offering an electricity amount equivalent to eight percent of the total amount used in the retail market in the previous year. This percentage figure – applied to each previous year’s power consumption – will increase to 12 percent in 2017, and 13 percent in 2018 and 2019.

The auction regulations will allow for some flexibility of terms. If PPC’s resulting market share loss exceeds the target figure by more than two percent during a six-month period, then RAE, the Regulatory Authority for Energy, will reduce the percentage figures for electricity amounts offered and vice versa.

The first NOME auction will be held at the end of September this year, while actual electricity orders secured will be made available to independent traders during the year’s final quarter.

IPTO’s split from PPC, a long and complex process, will result in a transfer of no less than 51 percent of the operator to the Greek State and the rest to private investors. A strategic investor will be entitled to acquire a maximum of 24 percent through an international tender to be announced one month after an upcoming PPC shareholders meeting. The winning bidder, who must be a certified power grid operator in the EU, will need to be chosen within five months. The agreement for the transfer of the stake to the strategic investor will need to be signed within eight months of the tender’s announcement.

The superbill also includes the temporary CAT plan which will compensate electricity producing units at a rate of 45,000 euros per KW, the maximum payable amount for each unit being 15 million euros. The temporary CAT mechanism will cost a total of 225 million euros.

The draft bill just submitted to Parliament also nullifies older laws, ratified by country’s pre-Syriza administration, concerning a part-privatization plan for PPC, locally dubbed “Little PPC”, and the sale of a 66 percent share of IPTO.