Energy ministry rules out PPC tariff hikes, as proposed by McKinsey

Main power utility PPC electricity tariffs will not be increased, as the utility has been advised by consulting firm McKinsey, energy ministry sources have told energypress.

McKinsey, commissioned by PPC for guidance in shaping a new strategic plan, has pointed out a need for the power utility to either disrupt its 15 percent discount offered to punctual customers or increase tariffs for certain consumer categories as a means to boost revenues.

Ministry officials have told energypress that the government will not, under any circumstances, accept this advice for the state-controlled power utility.

According to McKinsey, the utility’s adoption of either of the two proposals is essential as no other revenue-boosting solutions are available.

The consulting firm also noted that PPC’s net debt to operating profit ration needs to be restricted to 4:6 if the power utility is to regain sustainability. PPC will need to generate an additional profit amount totaling 400 to 550 million euros by 2022, or an extra 100 million euros per year, if this ratio adjustment is to be achieved, McKinsey has estimated. However, a profit increase of such magnitude without tariff increases is not possible.

In its report, the foreign consulting firm appears to have fully rejected PPC’s sustainability plan as envisioned by the Greek government.

Instead, the report highlights an alarming reality in which the power utility’s net debt is eight to nine times over its operating profit level. Ratios at equivalent European corporations such as RWE, ENGIE, EON and EDF, are considerably lower.

The McKinsey report anticipates revenues of no more than 100 million euros for PPC through its imminent bailout-required sale of lignite units as a result of the EU’s decarbonization policy.

The consulting firm, in its report, also proposes a voluntary retirement plan for 2,000 PPC employees.