Most of the country’s energy sector issues and developments stand awaiting the result of the upcoming early national elections on January 25, which makes any predictions for the industry extremely precarious.
Victory and majority rule for left-wing Syriza, the main opposition party currently ahead in polls, will lead to radical changes and upheavals. Should its main rival, the conservative New Democracy party, defy the polls and score an election victory, rapid progress can be expected along a number of fronts, especially privatizations. Either way, both parties may fail to achieve an outright majority, meaning they would need to serve as senior partners of coalition governments, which would dilute their political potency.
Pending privatization procedures and the liberalization of the country’s electricity and gas markets can be expected to be completed in the case of victory for New Democracy, which led the outgoing coalition. The crucial question concerns Syriza’s intentions, even though the party has more or less stated how it intends to handle energy sector issues if elected to govern.
Amid a stable political environment, the privatization of IPTO, the Independent Power Transmission Operator, would have been completed within the first few months of 2015. Syriza has voiced strong opposition to the sale of a 66 percent equity share of the operator, a subsidiary firm of PPC, the Public Power Corporation. Despite being at its closing stages, the tender cannot be expected to be finalized under a Syriza government. The same applies for a planned 17 percent sale of PPC following the IPTO privatization.
As for the privatization of DESFA, the Natural Gas Transmission System Operator, with Azeri company Socar as the buyer, it had reached its final stage but was stalled and delayed by the European Commission for an examination over EU energy security concerns. A Syriza government would complicate proceedings here, too.
The planned liberalization of the gas and electricity markets would be subject to a series of amendments if Syriza prevails to govern either independently or as the senior partner of a coalition. The gas market’s liberalization was at an advanced stage prior to the government’s fall. The liberalization of the electricity market through a series of revisions, such as NOME-type auctions, was also in the making before snap elections were called.
According to Syriza’s planned policies for the energy sector, the role of state-controlled companies will be bolstered, which also raises questions about the future standing of ELPE (Hellenic Petroleum). The public sector may not have majority control of ELPE, but it does hold a considerable stake.
As for the development of natural gas pipeline infrastructure, no major changes are expected here, regardless of the election’s outcome, because the shape of most projects has been pre-determined. However, Syriza has left open the possibility of attempting to reach a new agreement for the TAP (Trans Adriatic Pipeline) project, citing the State’s level of interest, and its corporate inclusion as a consortium partner. It remains unclear whether this is legally feasible.
Syriza has not voiced objections to the interconnection of the Cyclades with the mainland grid or the development of an underground natural gas storage facility in Kavala, northern Greece.
The recent plunge in international oil prices, alone, has lowered the expectations for the country’s oil exploration and exploitation tenders. Market trends aside, Syriza has forwarded a revised model that makes the State a consortium partner at both the exploration and exploitation stages. Tenders currently in progress are based on lease-agreement models, which stipulate specific taxation, royalty payments and other obligations for companies involved. Syriza is promoting a model based on production sharing agreements, which would offer the Greek State rights in research, development, and production.