All energy sector matters suspended awaiting elections

With Greek Parliament set to be dissolved today ahead of early elections on January 25, numerous energy sector issues will be left pending over the short pre-election campaign. Some of these will possibly begin to roll once a new government is sworn in, regardless of the outcome at the polls. On the contrary, other matters may well be cancelled or shelved for lengthy periods.

One thing for certain is that all privatization procedures will temporarily stop moving, beginning with that of IPTO, the Independent Power Transmission Operator, which was at its closing stage, as binding offers were set to be submitted by candidates before the country’s political uncertainty set in. If Syriza, the left-wing main opposition party is elected to govern, either alone or as the main partner of a coalition, IPTO’s privatization prospects are expected to be deeply affected.

This is also the case for the part-privatization of PPC, the Public Power Corporation, entailing the sale of a 30 percent stake, followed by a further sale of a 17 percent equity share in the corporation, as well as the sales of DEPA (Public Gas Corporation), and the state’s 35 percent stake in ELPE (Hellenic Petroleum). The long-delayed sale of a 66 percent equity share of DESFA (Natural Gas Transmission System Operator) to Azeri company Socar, currently being examined by the European Commission over EU energy competition and security concerns, may stop short of offering the prospective buyer majority control.

Just days ago, two Syriza MPs, Thanassis Petrakos and Aphrodite Stambouli, declared that the country’s energy security concerns require a strong, state-controlled energy sector for utilities of strategic public importance.

The outgoing coalition’s plan to liberalize the country’s gas market, fully prepared after much work, can also be expected to be deeply affected by the political turmoil. It remains to be seen if this plan will be pursued by the next government. This is likely, possibly in a revised form, as the gas market’s liberalization is an EU obligation.

Also suspended, for the time being at least, are revisions enabling flat owners in apartment buildings to switch from heating fuel to independent gas heating systems. The transfer of a  responsibility for collecting electricity bill surcharges to fund renewable energy source (RES) producers from IPTO to LAGIE, the Electricity Market Operator, will also be put on hold. Both these revisions had been incorporated into the gas market reforms bill. However, RES producers were exempted from an Emission Reduction Tariff (ETMEAR) for self-produced electricity through an amendment ratified in Parliament just prior to Christmas, setting in motion a net metering plan for self-producers. A ministerial decision still needs to be signed if the net metering plan is to be launched. It will enable electricity consumers who generate their own power from an eligible on-site facility and deliver it to local distribution facilities to offset the electric energy provided by the utility during an applicable billing period.

The coalition’s work for the introduction of NOME-type auctions in the electricity market, which involved challenging negotiations with the country’s creditor representatives, or troika, can also be considered an ill-fated effort, at least for now. Legislative amendments still need to be made if the electricity auctions are to begin being staged in the Greek market.

On the contrary, revisions to the country’s capacity availability mechanism do not require amendments or ministerial approval. This domain is controlled by RAE, the Regulatory Authority for Energy, meaning that approval by its board is the only prerequisite. However, the plan, which would lead to changes for the market’s CATs (Capacity Availability Tickets), still needs to be forwarded for public consultation. Despite an agreement by the coalition with the troika on the capacity availability mechanism, the political situation will need to be cleared up before further progress can be made.

Smooth sailing for the TAP (Trans Adriatic Pipeline) project, to carry natural gas from Azerbaijan to Europe, via Greece, Albania, and the Adriatic Sea, is also currently in doubt. The Syriza party has repeatedly noted that the Greek State’s agreement with the project’s consortium provides too much authority to the consortium, and, as a result, will be renegotiated if the party is elected into power. Even though party officials admit that the feasibility of such a prospect is not legally definite, the intention alone does create some uncertainty for a project of strategic importance to national interests.