Lenders up pressure, PPC may need to sell 40% of stations

The country’s lenders have increased the bailout agreement’s energy-sector demands needed to complete the delayed second review. If conditions and targets are not met, this heightened pressure, which has troubled, if not shocked, local authorities, could ultimately force the state-controlled main power utility PPC to sell 40 percent of its lignite-fired and hydropower units by the summer of 2018.

The intensifying pressure underscores the fact that the longer it takes the government to complete the bailout’s second review the more burdensome the demands piled onto it will become. The government now faces a far tougher task than it did last December, when energy minister Giorgos Stathakis met in Athens with the creditor representatives.

According to energypress sources, the latest list of conditions delivered by the lenders may well be too relentless – both in terms of deadlines and target figures – to facilitate the negotiation process.

The conditions for the NOME auctions – the process was introduced last October as a bailout-required measure aiming to break the main power utility PPC’s dominance by offering other traders access to the utility’s low-cost lignite and hydropower sources – have toughened. Though the target figures remain unchanged, the NOME schedule has tightened.

The latest memorandum of understanding conditions issued by the lenders require the creditor representatives, themselves, in collaboration with government officials, to assess the NOME-related progress – PPC’s market share contraction – this coming June. Previously, this task had been set aside for RAE, Greece’s Regulatory Authority for Energy.

This assessment’s results will determine the nature of restructuring measures to be taken if PPC’ s market share reduction targets are missed. This is where the sale of 40 percent of the utility’s lignite-fired and hydropower units, by June, 2018, would come into play. If so, a consultant for the sale process will need to be hired by this August, two months after the NOME assessment.

Lenders want PPC to cover additional NOME ground over the next few months to make up for its failure to meet a market share contraction target that had been set for the end of 2016.

The lenders also insist on a compounding system for the amount of electricity offered by PPC to rivals through the NOME auctions. In 2017, PPC will need to offer 12 percent of the previous year’s total demand, as agreed, plus an 8 percent amount that was offered in 2016. In 2018, the utility must offer 2016’s 8 percent, 2017’s 12 percent, plus that year’s 13 percent. No revisions have been made to the auction starting price.