Gov’t to seek French support for PPC sale of lignite units

The Greek government can be expected to seek France’s support for October’s market test concerning main power utility PPC’s unit sale package, to offer investors 40 percent of the utility’s lignite production capacity, when French President Emmanuel Macron heads a delegation for an official visit to Greece, scheduled for September 7 and 8.

French support would add clout to the market test if EDF or its subsidiary Edison express an interest in state-controlled PPC’s lignite units. The interest so far appears to be limited to firms from China and east Europe.

Greek Prime Minister Alexis Tsipras is expected to raise the issue to Macron during the French leader’s visit.

To date, efforts by Greece’s energy minister Giorgos Stathakis to lure Edison to the prospective PPC sale have failed to produce results. Echoing the thoughts of most pundits and market players, Edison officials have noted that hydropower units would need to be added to PPC’s lignite-only sale package.

Less than a fornight ago, Evangelos Mytilineos, the chief executive of the Mytilineos group, a key player in Greece’s energy market, noted that it will be particularly difficult for PPC to sell a lignite-only package that does not include hydropower units.

At this stage, the Greek government appears adamant on limiting the offer to lignite units, despite being fully aware of the fact that an EU policy for increased emission right costs is subduing investment interest in solid fuels.

At present, PPC lignite-fuled power stations generate electricity at a cost of around 50 to 60 euros per MWh. This cost is expected to skyrocket to about 100 euros per MWh by 2030. Such a prospect will surely keep investors back.

Even if French support for the PPC lignite package sale is limited to October’s market test, when investors will be invited to express non-binding interest, and is not followed up by actual offers in the ensuing international tender, the Greek government will have gained valuable support in its effort, over the past few months, to create a positive picture for the lignite-only sale. Athens could, as a result, contend that the inclusion of hydropower units into the PPC sale is not necessary and, ultimately, gain time against European Commission demands for electricity market reforms targeting PPC’s dominance.

This aim for a delay is the core issue at play. More time would help PPC maneuver and reshape for its future in a drastically changed electricity market. PPC is expected to reduce its retail electricity market share to less than 50 percent by the end of 2019, from a litle over 85 percent at present. The utility’s contraction has fallen behind schedule.