Energy-sector authorities contacted by energypress have all expressed deep concern over today’s crucial bailout talk developments as the possibility of a break in ties between Greece and its lenders has not yet been ruled out, while certain members of the leftist Syriza led coalition, including from its junior partner Independent Greeks, appear to want a rift.
The concern is not only linked to the concerns of the business sector – certain entrepreneurs, as a result of the nature of their particular fields, believe a Greek exit from the eurozone would benefit their operations – but, more crucially, the social, political, and economic upheaval that would be prompted by a breakdown in today’s negotiations.
Last week’s enormous outflow of deposits from Greek banks was countered with capital injections from the European Central Bank (ECB). If the negotiating sides fail to reach a deal, the ECB will stop providing liquidity, which would prompt a collapse of the local banking sector and leave banks unable to cover deposits. Implementation of capital control measures would be necessary, placing in danger social composure, the state’s smooth functioning, services, the economy, production, even national security. In addition, in the event of an unfavorable deal for the government, it would be forced to head for elections.
Certain energy sector officials told energypress that a temporary deal between Greece and its lenders would avert the danger of immediate collapse, but, essentially, the country and economy would fall further behind on commitments for the remainder of this year, increasing the difficulty of any prospective restructuring.
Both the Greek government and all creditor representatives need to act based on mature political insight for a wide-reaching and sustainable agreement. Only such a deal could restore faith in the economy and unlock investment as a preliminary step towards the economy’s revival.
The series of energy-sector demands set by the country’s creditor representatives include part-privatization of PPC, the main power utlity; privatization of IPTO, the power grid operator; gas market reforms; PPC tariff revisions based on production costs, which would lead to increases and decreases, depending on category; adoption of NOME-type auctions for lower-cost electricity; CAT revisions; energy tax revisions; and preparation of a legal framework supporting the renewable energy source (RES) sector.