Energy ministry seeks DESFA revisions, deal considered safe

New network usage fees for DESFA, Greece’s power grid operator, have yet to be determined despite the approaching completion of due diligence procedures being conducted by bidders seeking to gain a 17 percent share that must be surrendered – at least – by Azeri company Socar, from 66 percent initially agreed to through an international tender, following European Commission intervention.

Italy’s Snam and Belgian-Spanish team Fluxys-Enagas are conducting due diligence procedures ahead of their offers, which would allow the long-running DESFA privatization effort to be finalized.

The new network usage fees stand as a key factor in the level of their offers to be submitted. The delay in setting these new fees is linked to a recent effort being made by the energy ministry to revise pricing policy conditions and terms, according to sources.

The same sources noted Socar officials are not prepared to accept any pricing policy changes. Socar had offered 400 million euros in 2012 for DESFA’s 66 percent based on existing conditions. This effectively means that any pricing policy revision would prompt Socar to reduce its offer, or the privatization, a bailout agreement obligation, would be cancelled.

The energy ministry is not casting any doubts over the privatization’s prospects but wants to re-examine terms, according to sources. The ministry wants to review the terms because a 40 percent tariff increase would result if the terms remain as they are and new network usage fees are introduced. The energy minister Panos Skourletis wants to avoid such a price hike.

Maros Sefcovic, the European Commission’s Vice President, who is in charge of Energy Union, said he considers the DESFA privatization virtually completed, adding that “there is no need for concern at this stage,” during recent comments made at the World Economic Forum in Davos, where he met with Azeri president Ilham Aliyev.

The DESFA tender was completed in 2013 but delays were caused by the European Commission’s intervention, over energy security and competition concerns.

No investment interest had been expressed in the first half of 2015 for DESFA’s 17 percent, but the third Greek bailout deal, signed last August, drew Snam and Fluxys-Enagas into the procedure.