Ministry’s options tighten after court rejects PPC abuse appeal

Greek energy minister Giorgos Stathakis is currently seeking to weigh his main power utility PPC-related options following the European Court’s rejection last week of an appeal made by the utility against an older European Commission decision that had condemned it for abuse of its dominant position in the lignite market.

The minister is today expecting a report from the government’s legal team, whose conclusions will serve as a guideline for his next steps.

At this stage, Stathakis does not appear to have much room to maneuver as the European Court verdict is being  incorporated into the energy-sector bailout negotiations between the Greek government and the country’s lenders.

Meanwhile, PPC is currently maintaining an open line of communication with the European Commission for a direct update on Brussels’s views and presentation of its own positions.

PPC contends that its recent move to team up with China’s CMEC for the construction of a second lignite-fired power station in the Florina area, northern Greece (Melitis II), to be included in a new Greek-Chinese corporate venture along with the existing power station Melitis I, as well as a coal mine supplying it, satisfies the lignite-related concessions required by Brussels. CMEC is planned to hold a majority stake in the new venture while it is estimated that PPC’s stake will range between 40 and 44 percent, according to the power utility’s CEO, Manolis Panagiotakis.

However, even if the Greek-Chinese partnership in Florina does go ahead as planned, it is not expected to fully satisfy the European Court’s decision as the verdict does not merely require PPC to reduced its share of lignite output, but also to ensure an increased share for the independent electricity firms operating in the Greek market.

According to energy ministry officials, the role played by the bailout-required NOME auctions in the Greek electricity market’s ongoing liberalization has now been downgraded. The issue is no longer about PPC offering third parties access to energy produced by the utility’s low-cost lignite and hydropower sources, as is being carried out through the just-introduced NOME auctions, but giving competitors direct access to these sources – production facilities and mines – prior to energy production, as a way of breaking the utility’s electricity retail market dominance.

At this stage, it appears that the country’s creditors will apply pressure on two fronts – one requiring PPC to provide greater amounts of electricity to rivals through the NOME auctions as a means of breaking the utility’s dominance in the retail electricity market; the other for the transfer of electricity production facilities and sources controlled by the utility to third parties.