The imposition of capital controls in Greece, pushing the country closer to bankruptcy and out of the eurozone, also threatens to stifle numerous energy-sector enterprises. Consequently, it is feared that energy companies will not be able to pay foreign trading partners for products and services. Also, questions hang over the fate of the few investments, minor and major, either in progress or at the planning stage.
“The daily operation of the market is interwoven with the Greek banking system. Over the past few hours, foreign suppliers have been contacting us panick-stricken, asking how we will be able to pay them as of today because of the capital controls. There is huge concern,” noted Mathios Rigas, CEO at Energean Oil & Gas. “In the case of Prinos [oil deposit in northern Greece], our production may be sold to BP and payments deposited into a Greek account. The big question at Energean concerns the new drilling investment plan, scheduled to soon begin. If we can’t pay suppliers for the equipment needed we will be forced to disrupt,” he continued.
Other important investment plans are also at risk as a result of the capital controls imposed. These include a plan by main power utility PPC to develop a new power station in Ptolemaida, northern Greece, current investents at wind-energy parks, as well as the tender offering export and exploitation licenses for twenty sea blocks in the Ionian Sea and south of Crete, expiring on July 14. A new extension to the deadline now appears possible.
The shock to the market caused by the credit controls imposed is widespread, affecting both private-sector and public-setor companies, such as PPC, IPTO (power grid operator), DEPA (Public Gas Corporation), DESFA (natural gas grid operator), and ELPE (Hellenic Petroleum), all wondering how they will be able to cover their respective obligations and maintain credibility.
The situation is even worse for smaller enterprises. Take the hundreds of photovotaic parks for example. Sector companies being supplied by foreign firms are already reporting that the limited credit terms offered amid the crisis will now stop completely. Until now, these local enterprises were forced to cover between 30 and 60 percent of orders with down payments. It now appears that foreign supppliers will demand entire amounts at the time of purchase. Of course, bigger energy companies will be in a better position as they had transferred amounts into foreign bank acounts well ahead of the capital controls, and are therefore in a position of still being able to manage transaction payments.
As a Greek exit from the eurozone draws closer, the major debt levels burdening many local enterprises threaten their survival. It is not just the smaller firms holding loans with Greek banks that need to worry. On a bigger scale, PPC, for example, has issued bonds worth billions of euros to foreign creditors for loans. In the event of a currency switch, the amounts owed by the power utility will grow enormously as a result of the inevitable depreciation of the local currency amid a devastated national economy. This will severely stifle operational ability.