Fast-track DESFA procedure unlikely to satisfy Socar

RAE, the Regulatory Authority for Energy, has just launched fast-track public consultation procedures for a new gas network tariff regulation, obviously in an effort to meet a bailout prior actions deadline leading to the disbursement of a subtranche of 2.8 billion euros.

The public consultation procedure, which ends Friday, leaves little leeway for a compromise solution that may satisfy Azerbaijani energy company Socar, the winning bidder of a tender offering a 66 percent stake of DESFA, the natural gas grid operator.

Socar, which needs to surrender 17 percent of DESFA and assume a minority role, following European Commision intervention, is disgruntled by a government measure that limits the network usage hikes possible at DESFA and, therefore, restricts the operator’s revenue potential.

Italy’s Snam appears to have reached an agreement with Socar for the 17 percent of DESFA it must surrender.

Over the past few days, various authorities, including government officials, have tabled proposals in search of a solution that may save the unfinished DESFA sale.

Energy minister Panos Skourletis met yesterday with a Snam representative, while the Minister of State Alekos Flambouraris is expected to soon meet with Azerbaijani officials.

The new regulation will take network usage fees back to levels that applied in 2012, leading to price reductions for various consumer categories.

Under the new regulations, DESFA’s weighted average cost of capital (WACC) stands to be reduced to 10.62 percent from 10.99 percent.