The part-privatization of PPC, the main power utility, and sale of its subsidiary firm IPTO, the power grid operator, have been brought back to the negotiating table in full force by the country’s creditor representatives as prerequisites for a new bailout agreement.
Until now, the gas market’s liberalization and the establishment of NOME-type auctions, as a means towards heightened competition and lower-priced electricity, appeared to be the only two energy-sector issues being demanded by creditors in the ongoing negotiations.
However, it has been made clear to Greek officials that major reforms in the energy sector, including an end to PPC’s monopoly, through the sale of part of the utility, dubbed “Little PPC”, stand as an integral part of the bailout agreement’s negotiating process.
The recently elected leftist Syriza-led coalition government, via Production Reconstruction, Environment and Energy Minister Panagiotis Lafazanis, has adamantly branded such matters as unnegotiable. The latest developments indicate these issues had never been withdrawn from negotiations, but were merely given far less publicity than other factors, such as revisions to VAT rates, social security funds, labor law, and privatizations beyond the energy sector.
According to sources, creditor representatives have placed Greece at the bottom of the EU list of 29 member states in terms of level of competitiveness in the energy sector. Creditor officials have noted that key investments in Greece, such as submarine interconnection projects to link the islands with the mainland’s grid, are being inexcusably delayed, at the expense of consumers. The creditor officials are also bemused by the price levels of natural gas in Greece, among the EU’s highest, despite a revision made last year between DEPA, the Public Gas Corporation, and Russian supplier Gazprom in their agreement.
Greece, along with Bulgaria, have been set aside as bad energy-sector examples because of persisting monopolies, especially at a time when the European Commission is striving to unify the European energy market.
Last year, the European Court issued a verdict against PPC, condemning its monopoly of Greece’s lignite sources, 98 percent of which are controlled by the state. Subsequently, Greece’s previous administration launched an effort to part-privatize a 30 percent share of PPC, (“Little PPC”). If this initiative is not continued, the current government will need to find an alternative that may end PPC’s monopoly.