Lenders demand NOME auctions in 2016, tight plan

Greece’s agreement with international lenders, required to conclude the first review of the country’s third bailout package, contains no surprises concerning the plan to split IPTO, the power grid operator, from its parent company PPC, the main power utility, judging by a text leaked yesterday.

However, the tight schedule being demanded for the NOME-type auctions – to provide third parties with access to main power utility PPC’s low-cost lignite and hydropower sources as part of the bailout-related obligation to help break the utility’s dominance – is a newsworthy disclosure.

The agreement, according to the leaked text, demands that the first NOME auction be held this coming September. Within 2016, the process will be expected to offer participants, or independent suppliers, the equivalent of eight percent of the total amount of electricity used in the interconnected power grid during 2015.

The total amount consumed in 2015, according to data provided by IPTO, reached 51,430 GWh, which means that 4,114 GWh will need to be offered through the NOME auctions within 2016. As such, PPC must commit roughly 1,400 MW of its lignite and hydropower capacity as soon as the procedure is launched.

The agreement specifies that the NOME plan’s objective will be to decrease PPC’s wholesale and retail electricity market shares by 20 percent within 2017 and to 50 percent by 2020.

As for the IPTO split plan, it is expected to be completed by the end of this year. A draft bill on the plan will need to be ratified this month, while, in July, PPC’s shareholders must endorse the sale of at least 20 percent of the subsidiary firm to a strategic investor. The prefered investor will be selected in October, according to the IPTO plan.

Should the lenders determine that this schedule’s deadlines concerning the sale of a stake to a strategic investor are not honored, then the Greek State, will need to announce, in October, a date for the submission of binding offers for the sale of all of IPTO’s equity by this December.