Creditors increasing pressure for ‘Little PPC’ solution

The country’s creditors appear to be pushing for a clear-cut and binding commitment from Greece on alternative electricity market structural measures should the recently introduced NOME auctions – providing third parties with access to the main power utility PPC’s low-cost lignite and hydropower sources as a measure to help break the utility’s market dominance – fail to produce results.

Energy ministry officials have acknowledged that the part-privatization of PPC, locally dubbed “Little PPC”, or a variation of this proposal, will most likely be brought back to the negotiating table and adopted as a bailout review condition if the auctions, launched last October, do not reduce the utility’s still-dominant market share. Two sesssions have been staged so far but PPC’s market share appears to be remainiing resilient.

Though legislation of such an alternative measure is not expected to be immediately demanded, the ministry officials believe Greece will need to produce a highly detailed plan which the country will need to commit itself to. The overall developments of the bailout’s ongoing second review will also influence the pressure to be applied by the creditors for electricity market action.

The creditors are persisting with a revised plan for a compounding NOME approach through which electricity amounts offered by PPC as of next September must also be added to the following year’s amount on a continual basis until 2019. This demand is expected to force PPC to provide 46 percent of its annual electricity production to the NOME auctions by 2019.

Greek officials disagree with this compounding approach and want the initial plan to remain valid. It calls for PPC to provide 8 percent of total annual electricity production in 2016, 12 percent in 2017 and 13 percent in 2018 and 2019. Greek officials believe such amounts suffice to drive down the utility’s electricity market share to less than 50 percent by 2020.