Minimum prices to be set for bailout’s PPC lignite unit sales

The government-controlled main power utility PPC’s bailout-required sale package of lignite units, a construction permit for a new unit, as well as mines, will include the setting of  minimum sale prices for the facilities to be placed for sale, the government and country’s lenders have agreed.

Due diligence will be conducted by a major international consultant, followed by a market test, measuring the level of investor interest in the package, with these minimum price levels intact as compensatory benefits for PPC.

Last week, the power utility’s chief executive Manolis Panagiotakis stressed the importance of the price levels to be achieved by PPC’s disinvestment, planned to constitute 40 percent of the utility’s lignite capacity.

Also, the government is counting on the sale’s revenues for PPC’s recovery and medium-term sustainability.

Besides the minimum price levels for units, permission to be granted to PPC for lifespan extenions of its Amynteo and Kardia lignite-fired power stations represents an additional compensatory benefit for the power utility. The Greek government has also requested permission for an environmental upgrade of the Amynteo unit.

A third condition for the lignite sale agreed to between the government and the country’s lenders entails a reduction of electricity amounts offered through NOME auctions, introduced a year ago to further liberalize Greece’s electricity market. The extent of these NOME electricity amount reductions will depend on the progress to be made by the lignite unit sales.

Energy minister Giorgos Stathakis is scheduled to meet with the lender representatives tomorrow and Thursday to finalize energy sector measures for the bailout’s third review.

According to a document forwarded by the lenders to the government late last week, PPC’s bailout-required disinvestment will include PPC’s Meliti, Megalopoili III and IV lignite units, a construction permit for Meliti II, as well as mines in Megalopoli and Florina. The document sets a strict deadline requiring the sale process to commence next May.

Pending issues remain on other energy-related bailout requirements. Consensus has yet to be reached on the details concerning DEPA’s diminished role in Greece’s retail natural gas market. The lenders also want an energy exchange up and running by May.