Lenders propose September market test for PPC unit sales

A Greek government delegation will participate at today’s Eurogroup meeting of finance ministers without any progress to show on the country’s bailout-required energy-sector measures.

Greece’s energy minister Giorgos Stathakis failed to make progress on energy sector issues during a teleconference with the lenders last Friday.

The government team hopes to receive some support at today’s Eurogroup meeting which could lead to convergence with the lenders on bailout measures, both in the energy sector and other domains, needed to conclude the second review and avert problems at a politcal level for the coalition.

However, a demand by the lenders for the sale of 40 percent of main power utility PPC’s lignite-fired and hydropower units greatly limits the prospects for any swift deal.

An MOU proposal presented to the Greek government by the lenders sets a tight schedule through which the PPC units would be sold as one, two or three packages within the first half of 2018, assuming certain other intermediate targets are met along the way.

The MOU includes a proposal to stage a market test in September for the PPC unit sales plan, the submission of non-binding offers by investors by November of this year, binding offers by February, 2018, signed sale agreements the following month, and a full review of the procedure within the first half of 2018.

The lenders have also made clear that any future buyers of PPC units must not share any direct or indirect links with the Greek State.

The lenders reject a PPC proposal entailing the sale of new utility subsidiaries with existing clients on board as a means towards achieving market-share contraction targets.

Instead, the lenders insist on a drastic increase of electricity amounts offered by PPC through the recently introduced NOME auctions as a key tool that could reduce the utility’s market share.

The NOME auctions were introduced last October to break PPC’s market dominance by offering other traders access to the utility’s low-cost lignite and hydropower sources.