Creditors applying pressure for energy-sector revisions

Greek officials representing the government in negotiations with the country’s creditor representatives, the Brussels Group, have conveyed to Greece’s leadership the pressure being applied for specific responses and commitments concerning pending bailout agreement issues, including in the energy sector.

A new round of negotiations is set to begin today following the previous round’s conclusion on Sunday night.

Outstanding issues addressed by creditor representatives include liberalization of the natural gas market and the retail electricity market, offering third parties access to lignite production, as well as other electricity market revisions leading to the target model.

The Production Reconstruction, Environment and Energy Ministry is not directly engaged in the negotiations, opting instead to provide information through representatives, despite the fact that energy-related matters seem likely to play a key part of any new bailout agreement, whenever, or if, reached.

The creditor representatives have presented the exact same list of pending energy-related issues as those pointed out to Greece’s previous administration prior to the January 25 snap elections that brought the leftist Syriza-led coalition to power.

According to sources, negotiating sides are converging on the natural gas market’s liberalization and electricity market revisions, including the introduction of NOME-type auctions which are considered a crucial step for opening up the retail market to competition. However, the sources said Greek officials have not tabled a convincing proposal for lignite access to third parties, as the Greek government wants to avoid discussing any kind of privatization concerning PPC, the main power utility. Greece may be required to provide an alternative plan if a new bailout agreement is to be reached.

The same sources noted the government is refusing to discuss privatizations for IPTO, the power grid operator, DEPA, the Public Gas Corporation, and ELPE (Hellenic Petroleum). However, progress is being made on a plan to sell a 49 percent equity share of DESFA, the natural gas grid ooperator, instead of a 66 percent stake, as had been originally intended. Prime Minister Alexis Tsipras has already backed this plan.

Production Reconstruction, Environment and Energy Minister Panagiotis Lafazanis recently told reporters that a monopoly does not exist in Greece’s electricity market. The minister noted the local market is open to private-sector investors willing to develop lignite facilities, and, refering to the NOME-type plan, remarked that “we cannot accept the idea of PPC selling its own lignite production so that its competitors can sell [electricity] cheaply.”

His remarks were offered as a response to views expressed by the EU’s competition commissioner Margrethe Vestager, who noted the Greek energy market is plagued by a lack of competition.