PPC-Larco agreement offers 24% discount, conditions strict

Troubled nickel producer Larco’s new power supply agreement with the main power utility PPC, approved yesterday by the utility’s board, offers the producer a 24 percent discount and sets stric terms and conditions.

Larco will need to drastically reduce its production, cover – on time – the full cost of electricity consumed on a monthly basis, provide letters of guaranteem and also supply PPC 24,000 tons of lignite extracted from its mines in Kozani, northern Greece, to cover power utility fuel needs at its Kardia and Amynteo power plants.

Should Larco fail to fully cover its monthly electricity costs, PPC will have the right to disrupt electricity supply to the producer without any further action or notice, according to the agreement.

Also, Larco will need to reduce its annual energy consumption to a level of 900 GWh, or 75 GWh per month, a level the producer believes it can cover. If this upper limit is exceeded by up to 10 percent, then Larco will need to provide PPC a letter of guarantee worth 600,000 euros if the latter is to continue supplying electricity.

It remains to be seen how firmly the agreement will be enforced. PPC and Larco are both state-controlled enterprises. Larco’s debt to PPC exceeds 300 million euros. Pundits view the agreement as yet another life extension ahead of elections, due later this year.