The government appears to be resorting to delay tactics on energy-sector reforms agreed to in the latest bailout package as it meanders for alternative solutions that may produce equivalent results to those of plans specified by lenders. The administration’s objective is to maximize the state’s control in the sector, especially main power utility PPC, as the Syriza party has pledged.
Many government officials may have not yet fully realized that if the administration’s alternative options fail to produce the market results demanded by creditors, then an abrupt outcome of tough and undesired measures will inevitably follow. These could include the part-privatization of PPC.
So far, the government has sought hybrid, middle-of-the-road solutions such as reducing PPC’s market share, as is demanded by the bailout, without selling any company units or downsizing the power utility. Another seemingly impossible combination being pursued by the country’s administration entails achieving competitive conditions for grid networks, far away from any PPC intervention, without, however, privatizing the power utility’s subsidiary firm IPTO, the power grid operator.
Environment and Energy Minister Panos Skourletis is seemingly reiterating, almost every day, what he views as the need to maintain a strong and state-controlled PPC.
The government’s imminent NOME-type auctions plan, intended to break PPC’s market dominance, as well as its IPTO proposal – both of which appear unrealistic and will soon be submitted to the European Commission – are probably being used as components of the administration’s delay tactics. The meandering is serving one main objective, which is to test the limits of lenders, especially the European Commission.
The government’s foot-dragging is also part of an attempt to incorporate energy-sector matters into the wider framework of political negotiations between the administration and lenders. The intention here is to further complicate energy reforms.
However, it remains to be seen what may follow if the lenders react ruthlessly and the country’s prospective bailout tranches end up depending on pending energy reforms. Energy ministry officials do not have an answer to this possibility.
PPC appears increasingly unwilling to lower its starting price for the NOME-type auctions, which will provide wholesalers access to the utility’s low-cost lignite-fired electricity production. The aim is to immediately reduce PPC’s retail electricity market share by 25 percent and down to 50 percent by 2020. Electricity wholesalers will not be drawn to the NOME auction process if starting prices are set at 59 euros per MW, as PPC is insisting.
In other words, it is now widely believed, in advance, that the NOME effort is slowly being driven towards its ultimate debacle. However, in its effort to appear punctual towards its bailout commitments, the government is nevertheless preparing to submit its NOME plan to Brussels and waste more time.
If the NOME effort fails to reduce PPC’s market share and lenders demand an alternative route, as is stipulated in the bailout agreement, the government does not appear to have prepared a Plan B, despite leaked information of an alleged solution entailing the sale of PPC power stations and establishment of partnerships with private-sector companies for existing facilities.
The European Commission has so far avoided offering any comments on the ordeal. Greece has been granted an unofficial deadline extension for energy reforms ahead of the first review in November. Despite having remained silent to date, officials in Brussels are closely following developments, including the energy sector’s coverage by local media.