New IPTO plan, offering state 100%, tabled against the clock

Greece’s energy minister Panos Skourletis and the country’s creditor representatives are reportedly discussing a new proposal for the future of IPTO, the power grid operator, which, essentially, revives an older plan that would give the Greek state full ownership of the operator, as part of an overall effort being made to avoid privatization.

The proposal, tabled by the Greek side, would give the state full ownership of IPTO, possibly through a new company controlled by the energy ministry and not the finance ministry, which is the main shareholder of the main power utility PPC, IPTO’s parent company. This new company could then offer as much as a 49 percent stake to a strategic investor or through the bourse.

The main problem with this proposal concerns how PPC could be compensated for surrendering IPTO to the Greek state, currently financially restricted. Greek officials seem to have a number of ideas in mind, including payment to PPC of earnings over a long-term period, and utilization of capital to emerge from the future sale of a 49 percent share in the new company.

Management remains an issue. Lenders demand that the new IPTO firm be managed by a private-sector strategic investor, regardless of the stake held in the new company. Greek officials have flatly rejected such a prospect.

Lenders have also expressed concern as to whether the new IPTO company will be able to make investments if run by the Greek state. Greek officials have responded by noting the operator is currently in a position to make investments and reminded of a recent funding agreement reached with the European Investment Bank.

Sources insist that the negotiations are continuing without any mention of the need to privatize IPTO.

A further round of talks on IPTO’s future is scheduled for later today. The negotiating sides must reach an agreement by midday this Friday.

Two preceding proposals were also tabled by Greek officials prior to this latest plan. The first entailed transferring IPTO to a state-run company and compensating parent company PPC through shares held by the state in other utilities for 51 percent of the transfer. PPC would have maintained a 49 percent stake comprised of preferred stock.

The other proposal, announced just days ago, entailed carrying out a stock split of PPC for the creation of a new IPTO company reflecting PPC’s equity make-up. It would adopt PPC’s fixed assets. The Greek state would hold a 51 percent equity share in the new IPTO corporate entity, while private-sector shareholders would control the other 49 percent.