An imminent market test for Greece’s bailout-required package sale of main power utility PPC lignite units, a one-month procedure that could be launched by the European Commission’s Directorate-General for Competition today, or, if not, definitely within the current week, promises to not only measure the level of investor interest but also reveal queries, demands and conditions by potential buyers.
Though it remains to be seen whether various conditions expected to be called for by the investors will be accepted, the market test will certainly influence the sale’s prospects, price levels, and shape terms once the actual sale procedure is staged through a tender, or tenders, next June. A number of sale packages, rather than just one, could be held.
Possible conditions to be set by potential buyers could include workforce reduction demands at certain units prior to their respective sales, or advance carbon emission right cost agreements as protection against future price fluctuations.
Besides the interest of Chinese investors in the market test, already considered a certainty, a number of east European firms, such as the Czech Republic’s CEZ, as well as Japan’s Hitachi and certain Greek enterprises, could also explore the sale’s prospects. The emergence of any potential buyers from Europe’s west would come as a major surprise as a result of the region’s declared intent to pursue a path towards decarbonization.
Energy minister Giorgos Stathakis struck a deal with the country’s lenders just days ago on details concerning state-controlled PPC’s lignite unit sale, as part of the bailout’s third review.
It includes a term providing job security for PPC’s 1,100 employees at the Megalopoli lignite-fired power station, believed to be overstaffed. Excess staff at this unit, in the Peloponnese, will be transferred to other PPC units. But it remains unclear whether their services will truly be needed at these new posts.
Lower price limits will also be set by a consultant to be hired by PPC, while another term excludes hydropower unit additions from the sale, to focus on selling units representing 40 percent of the utility’s lignite capacity. The market test will run for one month, until mid or late January, it has been decided.
A draft bill covering the agreement will need to be prepared and submitted to parliament for ratification, probably around February or March. This could prove politically contentious but the government believes the reaction will be manageable.
Then, in April or May, PPC will recruit a consultant to be tasked with removing the units to be sold from the corporation’s portfolio and transfering these into a separate company in preparation for the tender, or tenders, scheduled to be announced in June.
Should the overall effort fail to produce results, a new tender offering revised and improved terms, strictly for lignite units only, could be staged, energy ministry officials insist.
A Greek request for a lifespan extension to PPC’s Amynteo unit in Greece’s north, from 17,500 hours to 32,000 hours, remains pending. This ageing lignite-fired facility was excluded from the sale by the European Commission.