Finance Minister’s pledges block Lafazanis’s energy plans

The recently elected leftist Syriza party’s radical agenda of policies for the energy sector will need to tighten up and squeeze into the confines of Finance Minister Yiannis Varoufakis’s reform proposals offered to creditors in exchange for a four-month extension to the country’s bailout. Review procedures of the minister’s reform proposals will begin in April.

Varoufakis’s commitments to creditors establishes new conditions for Production Reconstruction, Environment and Energy Minister Panayiotis Lafazanis. Even so, during a lengthy Syriza Parliamentary group meeting yesterday, Lafazanis reiterated his radical views, spelling out that no privatizations will take place in the energy sector. According to sources, he cast a blank vote for the reform proposals at the end of the party meeting.

The government’s commitment to creditors severely confines the new energy minister’s plans for the sector, and brings him back down to the less radical European energy sector’s reality, which was bound to occur sooner or later. Ministry officials who are well informed on the limitations and forbidden practices imposed by EU directives have already identified several issues that run contrary to the energy minister’s declared agenda of policies, which generally envision greater state control on all fronts.

Varoufakis’s commitment to not roll back already introduced privatizations means that the unfinished sale of a 66 percent stake of IPTO, the Independent Power Transmission Operator, is not over. Also, the finance minister’s commitment to review privatizations not yet implemented means that privatization initiatives for DEPA, the Public Gas Corporation, and ELPE, Hellenic Petroleum, will eventually need to be launched, possibly with different conditions and objectives.

According to Varoufakis’s commitment, TAIPED, the State Privatization Fund, will, contrary to the new administration’s previous statements, not be abolished. Instead, it will continue to operate with the aim of merging, at an unspecified time, with other state agencies also managing state assets and property.

As for RAE, the Regulatory Authority for Energy, the finance minister’s commitment to allign the electricity and natural gas markets with EU practices and law turns any thoughts of reducing its powers into anti-EU policy. Lafazanis has said he intends to limit RAE’s authority, within EU limits.

Following the latest developments, the country’s lignite source and water markets will not be able to remain closed to competition for too much longer, considering the finance minister’s pledge to “allign” with EU practices, according to which  accessibility for third parties to lignite source and water markets is mandatory.

As for the natural gas market, EU law requires competition at a retail level. The European Commission has already demanded an end to the regional monopolies maintained by the country’s three EPA (gas supply) companies covering the wider Athens area, Thessaloniki, and Thessaly.