IPTO deal headed for rough ride towards completion

The government’s agreement with the country’s creditor representatives on the future of IPTO, the power grid operator, entailing a full break-away of the operator from its parent company PPC, the main power utility, appears headed for turbulent progress before being finalized as details concerning the compensation package to be offered to PPC for its loss of the subsidiary’s fixed assets remain unclear. This lack of clarity is expected to prompt reaction from Genop, PPC’s main workers union, as well as the utility’s foreign institutional investors.

The process agreed to involves transferring all of IPTO’s equity to the Greek state’s new privatization fund, which, in the procedure to follow, will transfer a 51 percent stake of IPTO to the Greek state, although it has not been specified when. The other 49 percent will be sold. A 29 percent share will be offered through the bourse, while the other 20 percent will be offered to a strategic investor who is a grid operator. Initially, it had been announced the operator will need to be a certified European transmission system operator (TSO), but the agreement’s finalized version widens the prospect to an international operator.

PPC’s share plunged by 7.5 percent on Friday after legislative procedures concerning the prior actions for the next sub-tranche of bailout money were pressed ahead. Market authorities were surprised by the absence of any reference to the IPTO agreement in the legislation’s text, prompting lack of clarity concerns. The ministry yesterday leaked information contending that an amendment on the specific agreement is not required, which is why it was not included in the bill. The agreement concerns a schedule of steps needed, which will be clarified over the next few days, according to the ministry.

Genop, PPC’s main workers union, is expected to decide on its reaction after meetings with IPTO’s management today and Panos Skourletis, the energy minister, on Thursday.

Questions have been raised as to whether foreign investors will be interested in acquiring the 20 percent share of IPTO to be offered through a tender, expected to be staged next June.

This procedure is likely to take until mid-2017 to be completed. Only then and following the collection of funds to be provided by IPTO’s 29 percent listing on the bourse will PPC and its shareholders be able to be compensated for its loss of networks.

Also, PPC’s compensation package will be calculated based on a prospective evaluation of IPTO by an independent agency to be appointed in January. Existing debt owed by PPC to IPTO will also need to be offset. Although a figure is not mentioned in the agreement, the energy ministry has put the figure at 540 million euros.

As for the new IPTO company’s management, the agreement entails reserving a majority for the Greek state and appointing a managing director to ensure a role for the strategic investor.