Government seeking European investors for PPC market test

Greek government officials have launched a mission seeking prospective investors, primarily European, ahead of a market test expected to be held in November in order to measure the level of interest of investors in a forthcoming bailout-required main power utility PPC sale list comprised of lignite-fired power stations.

If the interest to be expressed is insufficient, hydropower stations will need to be added to the sale package. According to the current agreement, the sale package is expected to include 40 percent of PPC’s lignite capacity.

Numerous talks have already been held with potential buyers, including Czech electricity company CEZ and Italy’s Edison.

At this stage, a growing number of signs suggest that the level of investor interest will not suffice. Delivering a speech at a recent energy conference, Dinos Benroubi, the chief official at independent electricity supplier Protergia, described the prospect of investing in lignite-fired power stations as fruitless.

“In the mid to long term, natural gas will cost less than lignite, and we need to keep this in mind when we are called upon to invest,” explained Benroubi.

He added that, according to reliable forecasts, the trading price of CO2 emission rights will reach 30 euros per ton in 2030. “This means that the cost of production for any new lignite-fired power station will reach 100 euros per MWh,” Benroubi pointed out. The current level ranges between 50 and 60 euros per MWh.

These reservations for lignite-fired electricity generation were also recently reiterated by Anastasios Kallitsantsis, president of Ellaktor, a Greek construction giant. He forecast that the annual cost of of CO2 emission rights for lignite-fired power stations will reach between 600 and 700 million euros in 2030.

It is widely believed that a market test for a PPC sale package that consists entirely of lignite-fired power stations is bound to fail. As EU climate change policies have burdened solid fuels with CO2 emission rights, prospective investors have no reason to invest in PPC’s lignite-fired power stations, even if these are state-of-the-art units. Energy minister Giorgos Stathakis is well aware of this.

Essentially, the government appears to be buying political time as failure of the upcoming market test will require a second attempt – with revisions. This would lead to delays and increase the likelihood of the matter being inherited by the country’s next administration. The Syriza-led coalition’s four-year term ends in September, 2019.