McKinsey’s new PPC business plan to feature major changes

Consulting firm McKinsey, set to prepare a new five-year business plan for power utility PPC, will base its proposals on three key factors: CO2 emission right costs;  lignite-fired units that should remain active or withdrawn; and the resulting impact of these decisions on the grid’s sufficiency.

The study, whose preparation will soon get underway, is expected to end up featuring major changes compared to a previous set of proposals as PPC’s current financial condition has deteriorated compared to early in 2018, when the previous business plan was delivered.

It had called for an improvement of the corporation’s operating profit by 500 million euros over a five-year period. The current demands are far more challenging.

The previous business plan, which was based on eight fronts, placed emphasis on renewable energy investments, new business activities, international expansion and overall investments totaling 3.9 billion euros, approximately half of which would have been channeled into networks and the RES sector. A 23 percent share of the investments was planned for the construction of a new lignite-fired power station, Ptolemaida V. Major changes are now expected along all these fronts.

A tougher stance on unpaid receivables; a plan entailing the partial sale of DEDDIE/HEDNO, the distribution network operator; and pricing policy adjustments are expected to feature in the new plan.

McKinsey’s examination to determine which lignite-fired power stations must keep operating or be withdrawn is expected to generate a voluntary retirement list of 2,000 employees.

If so, severance pay costs for PPC will amount to 30 million euros, as employees are currently entitled to 15,000-euro payments for early retirement.