Elevated production costs at the Meliti power station, included in the main power utility PPC’s bailout-required sale of lignite units, have been attributed to a fragmentation of related mines and the power utility’s need to resort to solutions such as combined xylite and lignite imports from the Former Yugoslav Republic of Macedonia (Fyrom) in order to secure needed fuel for the unit. These high production costs can be reduced, sources stressed.
Sources well informed on the matter noted that the sale plan for the Meliti power station includes the mines at Klidi, Meliti and Vevi, both PPC’s stake and the remainder owned by the Greek State, which will enable for a significant fuel cost reduction, allow for mine synergies, and, ultimately, make the power station more competitive.
Current fuel costs of between 45 and 60 euros per MWh could be reduced considerably, even more than halved, if existing problems at the Klidi mine are resolved to enable its return to action and, in addition, the Vevi mines owned by PPC and the Greek State are merged.
Furthermore, payroll cost reductions could reduce the power station’s overall production cost by 2 to 3 euros per MWh. At present, the payroll cost at the Meliti power station reaches 9.5 euros per MWh.
Other costs at the Meliti facility include maintenance and materials (7 euros per MWh) and depreciation (17 euros per MWh).
It is estimated that the Meliti power plant’s production cost could drop to less than 40 euros per MWh following investments and the merger of mines, which would make the unit competitive in the wholesale market.
The Meliti power plant’s current annual costs total approximately 95 million euros but could be reduced to a level of between 60 and 65 million euros per year and make the unit profitable following its privatization, officials believe.