Greece’s energy-sector privatizations – meaning the networks – need to be swiftened, state-controlled monopolies must be restricted, and markets that essentially remain closed need to be liberalized to reduce natural gas and electricity costs, currently among the costliest in the world, the Organization for Economic Cooperation and Development (OECD) has proposed to the Greek government.
A new OECD economic survey on Greece, presented yesterday to Prime Minister Alexis Tsipras by the organization’s secretary-general Angel Gurria, highlights the various chronic issues that continue to mainly affect the country’s electricity market and, to a lesser degree, the natural gas market.
Cross subsidization, the practice of charging higher prices to one group of consumers in order to subsidize lower prices for others, is proving detrimental in the electricity market as many consumer categories of the main power utility PPC are still being weighed down by the approach. This is limiting competition and increasing prices, especially for the industrial sector, the report notes.
In a list of 27 countries, Greece ranked seventh in terms of natural gas costs for the industrial sector. Greece ranked fifteen places above the average price. As for industrial electricity, Greece ranked as the tenth costliest in a list of 29 countries, five places above the average level.
High energy costs are making Greek exports less competitive, the OECD report points out.
Boosting the independence of network operators is another crucial matter that needs to be looked at, the report notes.
Increased contribution of renewable energy (RES) electricity production to the grid would also boost Greek competitiveness, according to the report. The RES share of local power production increased from just five percent in 1990 to 23 percent in 2013, the report observed.