Although the latest bailout plan for Greece does allow for the main power utility PPC’s subsidiary IPTO, the power grid operator, to remain under state control, it would be a challenging and costly matter. Even so, the new leadership at the Production Reconstruction, Environment and Energy Minister appears determined to avoid privatizing the operator.
“Maintaining the state-owned standing of PPC and all its companies remains a strategic matter for us,” the newly apppointed energy minister Panos Skourletis noted after assuming his new post yesterday, following a six-month tenure at the helm of the Labor Ministry.
The tight terms of the bailout agreement, along with the admission of privatization advocates that IPTO’s sale would not prompt fundamental change in the wholesale and retail electricity markets, will certainly serve to help keep IPTO under state control. In other words, the prospective privatization of IPTO is not a crucial aspect of EU regulations concerning the liberalization of electricity markets.
The agreement with lenders does not obligate Greece to sell IPTO. On the contrary, it actually allows for the state to acquire the operator from PPC, its parent company, and assure its independence through such a solution. This is a tough task, however, as IPTO’s value is estimated at no less than 600 million euros, an amount currently not possessed by the Greek state.
Essentially, European Commission officials believe that IPTO’s continued association with its parent company PPC would obstuct other electricity companies from accessing the country’s network, therefore depriving free market competition. EU law requires free competition in the sector.
Even so, IPTO’s acquisition by the Greek state would comply with EU law. Most such companies in the EU are controlled by state companies, such as social security funds.
IPTO faces the challenge of needing to carry out necessary network-related projects, both for expansion purposes, including interconnection of Greek islands, as well as maintenance.
Should the government decide to sell a 66 percent equity share of IPTO, as the plan had stood prior to last January’s elections, it remains uncertain whether this is feasible amid the bailout agreement’s tight scheduling demanded by lenders, and the Greek economy’s current condition. Procedures would take until October to complete, while earlier interest expressed by prospective buyers is now highly doubtful amid the badly struck economy.
Four companies, Italy’s Terna, Belgium’s Elia, Canadian fund PSP, and China’s State Grid China Corporation, had all expressed an interest in acquiring a 66 percent share of IPTO.