Greek officials have been given an additional month to settle pending key energy issues concerning corporate restructuring at IPTO, the power grid operator, and the introduction of NOME auctions, both part of a wider plan to further liberalize the country’s electricity market.
Little progress was made on either matter at two meetings held this week, one on Wednesday involving Greece’s energy minister Panos Skourletis and the creditor representatives, the other yesterday, which brought together Dimosthenis Papastathopoulos, a director at the ministry, with technical teams.
As for the NOME auctions, to offer wholesalers access to main power utility PPC’s low-cost lignite-fired production, it was agreed, following this week’s presentation of a plan by the Greek officials, for both sides to work together on its finalization in order to swiften procedures. The objective will be for Greek officials to have reached an agreement in one month’s time with the European Commission and the other creditor representatives.
Greek officials believe authorities from the European Commission’s Directorate-General for Energy and Directorate-General for Competition must take part in the process as lignite access and the liberalization of the electricity market are matters that not only concern the country’s bailout agreement but EU-related commitments as well.
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 not be linked to a binding time schedule.
On IPTO’s restructuring, talks are focused on details concerning how the operator will be divided. As has been widely reported, a privatization option has been removed from the negotiating table.
Greece’s proposal, currently being negotiated without any certain outcome, entails transfering all the fixed assets of IPTO, a wholly-owned subsidiary of PPC, to a new IPTO company, which will be state-run. Based on the plan, the state will hold a stake of at least 51 percent in the new IPTO company, while the other 49 percent could end up belonging to PPC.
The lenders have demanded that the new company’s 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.
PPC would need to be compensated for its loss of the IPTO assets. However, as payment by the state is currently not possible, the main utility could be offered equity shares of companies in which the state maintains stakes.
Besides the private management requirement raised by the creditors, their overall view of the Greek plan, and reaction, remain to be seen.