Energy issues remain as latest bailout review talks end

The latest visit to Greece by the country’s creditor representatives, seeking to conclude the bailout’s second review, has ended after ten days of negotiations without any finalized agreements on the energy, labor, social security and taxation fronts.

The energy-sector talks are primarily focused on a main power utility PPC proposal entailing the transfer of existing clients to new subsidiaries that could be sold as a means of reducing the utility’s dominant market share, as well as on a request by the lenders for the utility to increase its low-cost carbon and hydropower generated electricity amounts offered to independent suppliers through the recently introduced NOME auctions to a level of 17 percent of total annual demand.

A demand by the lenders that would require state-controlled PPC to sell a considerable proportion of its production units may have been removed from the negotiating table at this stage.

It appears that PPC will be given until the end of 2017 to display satisfactory progress in its bailout-related market share contraction targets. Failure to do so will most likely prompt the lenders to demand the sale of production units.

PPC also needs to deal with on an ongoing market-abuse probe by the European Directorate for Competition.

Pending issues that require more work and negotiating will be discussed through teleconference sessions with the lenders next week, a leading government official informed following yesterday’s last round of talks in Athens.

This government source contended that “significant progress” for a balanced package of additional fiscal measures was made.

According to sources, the lenders are demanding additional measures worth two percent of the country’s GDP, which works out to 3.6 billion euros. The lenders want half of this amount to be shouldered by a reduction of the tax-free threshold in 2019 and the other half by pension cuts in 2020.

The lenders appear to have rejected a government request for a reduction of the ENFIA property tax and, instead, are expressing a preference for a reduction of company and personal income tax, especially for individuals with higher income levels.