An ongoing effort by the main power utility PPC for improved terms of its supply agreement with Lignitorihia Ahladas, the licensed operator of the Ahlada lignite mine exclusively supplying the utility’s Meliti power station in northern Greece, has led to escalated tension between the two sides.

PPC has opted to stop payments to the operator for its lignite supply as a means of offsetting lower-than-expected output and pressuring Lignitorihia Ahladas for a lower supply price that would help the Meliti power station become sustainable.

Meliti is included in PPC’s bailout-required disinvestment package of lignite units, whose sale has just been relaunched following the initial effort’s failure to excite prospective buyers.

The government needs to intervene in an effort to resolve the dispute between state-controlled PPC and Lignitorihia Ahladas but must tread carefully as it knows well the power utility’s disinvestment could prompt political damage if its relaunch fails to produce a result.

The operator has dismissed eight of 600 employees amid its clash with PPC. Workers at the mine and Meliti power station fear the ongoing dispute could lead to more job losses.

Lignitorihia Ahladas contends it will not be able to continue operating the Ahlada mine should it succumb to PPC’s pressure for a supply price reduction to 18 euros per ton from the present level of 23 euros. The operator has counter-proposed reducing its supply price as of 2020, when its expropriation procedure concerning the Ahalda settlement, needed to facilitate output, is expected to have been completed.

PPC claims the supplier’s current price does not reflect actual conditions and potential at the mine, noting inefficient practices applied by the operator are increasing production costs.