The country’s creditor representatives, upon their imminent return to Athens in a bid to conclude the bailout’s second review, are expected to make new tough energy-sector demands seeking the provision of greater electricity amounts from main power utility PPC for the NOME auctions.
In the event that the availability of these increased electricity amounts to independent electricity suppliers fails to reduce the power utility’s still-dominant market share, the creditors, as a back-up demand, are expected to require PPC to sell 40 percent of its lignite-fired power stations and hydropower units. This is a new, additional demand.
Besides piling on the pressure to further liberalize Greece’s electricity market, the creditors, who will soon meet with the country’s energy minister Giorgos Stathakis, are also expected to apply relentless pressure for the swift privatization of DESFA, the natural gas grid operator, following the recent collapse of a long-running tender.
In comments offered to the Athens News Agency over the weekend, the energy minister contended that it is still too early to write off the NOME auction procedure as a failure. Introduced last October to break PPC’s market dominance by offering other traders access to PPC’s low-cost lignite and hydropower sources, the NOME auctions have yet to produce results. The utility’s electricity market has hardly moved and sits at just under 90 percent. It is expected to gradually fall to less than 50 percent by 2020.
Stathakis, in the Athens News Agency interview, noted that the NOME terms are clear-cut and do not require further clarification.
However, the creditors – responding to PPC’s stubborn market share stagnancy, fueled by a series of discount offers launched last summer – are expected to increase the pressure by calling for a compounding proportion of the utility’s electricity to the NOME auctions. In other words, in 2017, besides a 12 percent proportion demanded by law for the year, Greek officials will be pressured to also offer an 8 percent proportion that had been agreed to for 2016. By 2018, this compounding system would require PPC to make available 33 percent of its electricity to the NOME auctions –2016’s 8 percent, 2017’s 12 percent and 2018’s 13 percent.
Certain pundits believe that a compromise deal could eventuate from the talks. They believe the energy minister would accept the compounding electricity amounts for the NOME auctions in exchange for the withdrawal by creditors of the condition requiring PPC to sell 40 percent of its lignite and hydropower stations should the auctions fail to reduce the utility’s market share.
The part-privatization of PPC has not been included in the latest memorandum delivered by the creditor representatives to the energy ministry. Also, there is no mention of a PPC split-and-sale plan that would entail carving out a portion of its clientele and transferring it to a new subsidiary. PPC has presented this plan as a key alternative strategy that may satisfy the market share contraction demands made by the creditors.
As for DESFA, the energy minister contends that a new tender offering 66 percent of the gas grid operator will soon be launched. Stathakis told Athens News Agency that details have been finalized, enabling an imminent launch of the procedure. Between 16 and 18 months will be needed to carry out the entire process from the day the tender is announced. Last December’s collapse of the previous DESFA tender will leave a gap in this year’s budget concerning anticipated privatization revenues.