The main power utility PPC is preparing to take legal action against the operator of the Ahlada lignite mine feeding the utility’s nearby Meliti power station in northern Greece in an effort to overcome issues with the existing supply contract that have kept prospective buyers away from Meliti.

The facility, included in PPC’s bailout-required sale of of lignite assets, just relaunched following the initial sale effort’s failure, is seen as a major drawback for the overall sale effort.

The existing agreement with Lignitorihia Ahladas, the Ahlada mine’s operator, is regarded as unappealing by investors as it does not secure price and quantity stability.

One of the sale’s participants, a consortium comprised of the Copelouzos group and CHN Energy, did not submit an offer to the initial sale effort, citing Ahlada mine supply contract concerns.

Late last year, the energy ministry extended the Ahlada lignite mine operator’s contract until 2023 with an option for a further five-year extension.

However, state-controlled PPC’s chief executive Manolis Panagiotakis has condemned the mine operator for under-producing and not fully utilizing the Ahlada mine’s potential.

In 2007, PPC signed an agreement with the operator for 2,000 tons of lignite per year at a price of 13.4 euros per ton. Focusing on a high-yield mine area, the operator was able to honor these terms until the end of 2009. However, since 2010, the operator has mined at lower-yield areas to avoid expropriation costs.