Disagreement between the government and the country’s lenders over a demand raised by the latter for private management of a new company proposed by Greek officials to take on the fixed assets of IPTO, Greece’s power grid operator, will stand as the key issue at a meeting today between a technical team representing the institutions and energy ministry officials. Energy Minister Panos Skourletis will not take part in the meeting.
The private management dispute for the new IPTO company was made clear through an exchange of emails between the negotiating sides following a meeting by Skourletis with the creditor representatives a fornight ago.
As disclosed by energypress, the lenders have accepted a Greek proposal for the establishment of a new company to take on IPTO’s fixed assets, but are now demanding that its management be assumed by a private-sector company, which would enter the deal as a strategic investor, regardless of the stake it will hold in the new company. Based on the plan, the Greek state will hold a stake of at least 51 percent in the new company.
Officials at the energy ministry are concerned as acceptance of the private-management demand by lenders would essentially lead to a loss of the state’s control over the country’s networks. At this stage, the government appears determined to remain adamant on its position if the lenders insist, which could establish an impasse in the talks. For the time being, Greek officials appear to have secured avoidance of IPTO’s privatization.
IPTO is a wholly-owned subsidiary firm of the main power utility PPC, whose overwhelming market dominance in Greece’s electricity market, from production to retail, will need to be drastically restricted as part of the bailout deal.
PPC will need to be compensated by the Greek state if IPTO’s fixed assets are tranfered to the new IPTO-linked company. Compensation in the form of a cash payment is not an option, as the financially weakened Greek state would not be in a position to cover the required amount. Instead, PPC would probably be offered equity shares of other state-run companies, as well as a percentage of the new company’s future earnings.
IPTO aside, some progress has been made on other pending energy-sector revisions demanded in the bailout agreement.
The temporary CAT mechanism, initially planned for 2015, now appears set to be implemented for 2016, as a lead-up to a fixed system. Independent electricity producers will need to make ends meet without CAT payments for 2015 output as a result of the European Commission’s rejection of a plan offering retroactive payments.
The country’s “disruption management” plan, to enable energy cost savings for major-scale industry in exchange for shifting energy usage to off-peak hours whenever required by IPTO is ready and is expected to be presented tomorrow by Skourletis, the energy minister, to EVIKEN, the Association of Industrial Energy Consumers, and renewable energy source (RES) representatives. The RES sector will be burdened by the plan’s cost.
As for the NOME auctions, to offer electricity wholesalers access to PPC’s low-cost lignite-fired production as part of the plan to reduce the utility’s market dominance, it appears that the lenders have accepted a Greek request for focus on a longer-term 2020 target requiring PPC to reduce its retail market share to 50 percent. A shorter-term target, calling for a 25 percent reduction, will most probably be disregarded.