Work needed for Athens-EC convergence on energy reforms

Greek and European Commission positions on energy reforms for further market liberalization remain at opposite ends, despite January being previously billed as a key month, and will require great effort if agreements are to be reached, government sources have informed ahead of a series of meetings in Athens. Both Athens and Brussels want further market liberalization but their approaches differ.

A first round of meetings is scheduled to begin next week with the arrival of Brussels technocrats for preliminary talks with government and market officials. Top-level lender representatives will then follow up a week later.

The Greek government’s basic position is centered around a swift decarbonization process at state-controlled power utility PPC, which would eliminate the need for third-party access to PPC’s monopolized lignite sources, offering lower-cost electricity.

A government proposal for the establishment of SPV partnerships with private-sector companies that would facilitate purchases of high-voltage lignite-generated PPC electricity by industrial enterprises has only been entertained by the power utility, limiting the measure’s prospects for a market share reduction at PPC, still dominant.

In preceding negotiations, the country’s lenders have indicated that decarbonization alone does not suffice. The views of the lenders on the government’s SPV proposal also differ.

The European Commission’s Directorate-General for Competition has called for wider participation in the SPV that would effectively also take on board independent electricity suppliers, not just energy-intensive industrial enterprises, for purchases of lower-cost lignite-generated electricity produced by PPC.

Opposing views are seen requiring more work for convergence, which could be achieved by the end of the first half. The implementation of the target model promises to serve as a catalyst.

Two more rounds of talks in Athens are scheduled for March and May.