DG Comp doubts PPC’s lignite-only market test prospects

Greek officials, taking part in a Directorate-General for Competition meeting today, will seek to convince Brussels authorities that the government’s proposed sale package of main power utility PPC lignite units stands a chance of passing next month’s market test.

The exchange of views leading to today’s meeting has strongly suggested that the DG Comp is discontent with the Greek plan. Brussels officials appear to believe that Greece’s electricity market cannot achieve full liberalization unless hydropower units are also added to PPC’s sale package.

The Greek government, which will be represented by a mixed team of energy ministry and PPC officials, headed by the ministry’s secretary general Mihalis Veriopoulos, at today’s Brussels meeting, is expected to face major pressure in its defence of its proposal.

Issues the Greek team will need to explain include a government decision to include two old Amynteo units in its PPC sale package – when it has already been determined that these require extensive revamps that would cost prospective buyers over 50 million euros – instead of the utility’s Agios Dimitrios and Megalopoli units.

The Greek government has, so far, contended that it cannot see why prospective buyers should not invest to upgrade units when state-controlled PPC needs to do likewise. Athens has raised the Agios Dimitrios facility as an example. PPC has already spent 70 million euros of a total of 100 million euros needed for its environmental upgrade.

As for a Brussels concern over the inclusion of Meliti I and a license for prospective Meliti II, rather than an entire existing facility, in the sale package, the Greek government supports that investors would be buying PPC’s most modern unit, a permit to construct an additional adjacent unit, plus a lignite deposit at Vevi to feed this facility. The Greek government has also adopted this same argument to defend its inclusion in the sale package of the ageing Amynteo units, which are sided by the Amynteo and Lakkia mines.

Though these arguments are not groundless, DG Comp officials are skeptical of the current sale package’s ability to attract satisfactory investor interest. Investors have yet to express noteworthy interest. Even so, Greek officials will stick to their guns and present the interest purportedly expressed by investors from east Europe and China.

Greek officials will seek to avoid a bargaining procedure entailing demands for additions and exclusions of units. This is a dreaded thought for Athens as it could bring PPC’s hydropower units into the picture.

“Most importantly, we need to convince [Brussels officials] that investor interest will be expressed [for the market test],” a Greek official participating in today’s talks told energypress. “We’ll then find solutions for the rest along the way.”