Faced by bailout-related demands aiming to significantly reduce its market dominance over the next fifteen years, the main power utility PPC will need to drastically improve its collection effort concerning consumer arrears and also greatly limit its number of uncooperative consumers if the utility is to avoid bankruptcy in the near future, sector officials warn.
If the sector’s cash flow does not improve and no growth potential sets it, then the current subdued situation will lead to a PPC default, with mathematical precision, within the next two years, certain officials insist.
As has been noted by market sources, all countries whose economies have faced default threats over the past 40 or so years have not only been threatened by the collapse of their banking systems but their energy sectors as well. In some cases, economic collapse also prompted energy sector debacles.
Whenever delivering public speeches, PPC chief executive Manolis Panagiotakis has inevitably made reference to certain issues, these being the utility’s need to adopt measures that will restrict the level of unpaid overdue bills; the threat posed by the imminent NOME auctions, to offer independent wholesalers access to PPC’s low-cost, lignite-fired electricity production; as well as the arrival of full competition in Greece’s retail electricity market, which he believes threatens to deprive the utility of a large chunk of reliable consumers.
Overdue unpaid bills owed by consumers to PPC have reached approximately 2.2 billion euros, according to the utility’s administration, and 2.5 billion euros, according to unionists. PPC officials estimate that a large part of the consumer arrears, possibly more than half the total amount, is not the result of payback inability by consumers but a lack of willingness to be punctual. PPC has launched an intensified collection effort, obviously aware of the threat posed to the utility’s sustainability by the current figures. At present, the power utility’s arrears amount to almost half its sales.
Apart from needing to deal with a poor cash flow, PPC, as part of the bailout plan’s push for competition in Greece’s electricity market, must surrender 25 percent of its market share in the immediate future and 50 percent by 2020. However, lenders have indicated they will be leniant on the short-term objective. Market officials have noted the schedule is extremely demanding and could ultimately prove disastrous for PPC as the retail market, despite the collection problems, is a key source of revenue for the power utility.
Also, the cash flow problem at PPC is spilling over into the wider energy market, which has regressed into a chain where virtually everybody – including operators, producers, and renewable energy source (RES) producers – owes to everybody.