Ministry confident energy sector issues to be resolved with troika

The leadership at Greece’s energy ministry, preparing for next Monday’s arrival of troika heads to Athens, is confident all pending energy sector issues will be resolved.

Revisions to the NOME auctions are expected to be shaped by the progress made in the bailout-required disinvestment of main power utility PPC units. Proposals made by lenders, at a technical level, for an upgraded role of hydropower units in the new NOME auction plan, are not seen as an acceptable solution by the energy ministry.

As for a new model to replace the RES-supporting supplier surcharge from the beginning of 2019, energy ministry officials believe that a new formula may be established, as was the case with a reduction to the supplier surcharge for 2018. The energy ministry rejects any possibility of an ETMEAR surcharge increase, or an introduction of any alternative RES-supporting surcharge that would impact consumers

Energy minister Giorgos Stathakis and his team intend, this week, to complete the Greek side’s finalized proposal for DEPA’s (Public Gas Corporation) role in the natural gas market and privatization.

Negotiations between DEPA and its local supply and distribution partners Shell and Eni have been completed but the gas utility’s ensuing privatization details still need to be finalized. DEPA is expected to withdraw from the EPA supply company covering Greece’s north and remain a part of the distribution company, EDA Thess. DEPA holds 51 percent stakes in these ventures and Italy’s Eni the other 49 percent.

DEPA is also expected to acquire Shell’s 49 percent in EPA Attiki and EDA Attiki, two ventures serving the wider Athens area. DEPA also holds respective 51 percent stakes in these.

Greece’s obligation to sell a 65 percent stake of DEPA will remain the basis of the plan, but alternatives of equivalent worth are being sought. At least two alternatives have so far being proposed. The energy ministry and DEPA appear to favor establishing a holding company to be comprised of three subsidiaries and be eligible for a listing on the bourse.

According to this plan, one of the three subsidiaries will control the DEPA networks and a strategic investor could cquire a minority stake. The second subsidiary would take on commercial affairs but a majority stake could be sold to investors. The third subsidiary would remain a part of the holding company and control major projects.

It remains unclear whether this model can rake in the privatization funds budgeted for the DEPA sale. Valuation studies are expected to be completed within the next few days.

The Greek State, according to the 2018 national budget, is expected to receive 850 million euros from three pending energy-sector privatizations – ELPE (Hellenic Petroleum), DEPA and PPC. The ELPE sale is expected to provide 500 million euros, DEPA’s 65 percent is seen providing 250 million euros and PPC’s 17 percent a further 100 million euros.

The Greek State stands to receive 250 million euros from the sale of a 31 percent in DESFA, the natural gas grid operator, up from an initial budgeted amount of 188 million euros, given the result of a recent international tender. ELPE offered a further 35 percent of this privatization, totaling 66 percent.