NOME plan, IPTO under latest bailout review’s spotlight

Authorities are hoping the review of Greece’s energy-related reforms will be completed during the latest round of negotiations starting tomorrow between Greek government officials and technical officials representing the country’s lenders.

A meeting between energy minister Panos Skourletis and the creditor representative leadership has yet to be set.

The NOME-type auction plan and split of IPTO, the power grid operator, from its parent company PPC will once again be under the spotlight.

Significant progress has already been achieved in negotiations for the NOME-type auction plan, intended to provide third parties with access to main power utility PPC’s low-cost lignite and hydropower sources as part of the bailout-related obligation to help break the utility’s virtual monopoly. Greek officials and the lenders have agreed that the auction starting price will need to be set at least slightly lower than the System Marginal Price (SMP).

The energy ministry appears to have fully understood that the starting price levels sought by PPC – around 45 to 46 euros per MWh – would repel all independent suppliers from the NOME auctions. With the current SMP level at about 42 euros per MWh, an auction with a starting price of 46 euros pr MWh would represent nothing less than a joke for interested parties.

Although PPC is not very enthusiastic about the prospect, it will have no other choice than to accept auction starting prices below the SMP.

As for the IPTO breakaway plan from PPC, work conducted on the prospect by the consulting firms Lazard, Sol, and Norton Rose will be presented during the latest talks. The objective will be to iron out issues that may be prompted by Greece’s proposal.

As has been previously reported by energypress, the plan entails transferring a 51 percent stake of IPTO to the Greek State, while the study conducted by the consulting firms proposes that the deal’s strategic investor acquire a stake of between 20 and 30 percent. The possibility of offering smaller stakes to institutional investors is also being considered, while IPTO’s remaining equity share would be placed on the bourse.

As for the new IPTO firm’s management, a twin role involving both the public and private sectors is likely to be adopted, similar to an exisiting model at ELPE (Hellenic Petroleum), an enterprise in which the Greek state controls 35.5 percent of ELPE, while Paneuropean Oil, a member of the Latsis corporate group, holds 40.98 percent. In other words, the operator’s prospective strategic investor will not only hold a minority stake but also stands to play a co-managerial role.