The successful staging of a bailout-required sale of three main power utility PPC lignite-fired units as well as mines, whose draft bill was ratified in parliament yesterday, stands as the next major challenge for both the government and the power utility.
The units to be offered for sale in the form of two packages, representing assets in the north and south, need to be split from the corporation by the end of May so that the tender’s staging may immediately follow. The entire sale procedure needs to be completed within 2018.
PPC’s chief executive Manolis Panagiotakis is confident the power utility will emerge from the sale as a smaller but more robust corporation.
“PPC stands to gain from a successful sale of lignite units,” Panagiotakis declared in parliament. “We will turn a page, meet our commitments and change the firm’s energy mix,” he added.
Failure to complete the sale, representing 40 percent of PPC’s lignite capacity, will inevitably bring the utility’s hydropower units into the picture.
PPC and the energy minister Giorgos Stathakis are desperate to avoid such a development, vaguely described as a resort to “structural measures” in the bailout if PPC fails to meet its obligations concerning its shares of the retail electricity market and production.
The participation of major energy firms and the price offers they will be willing to make are crucial factors for the sale’s success.
A desired price for the assets included in the sale package has not been included in the bill just ratified. A minimum price level is anticipated from an independent valuator.
Lignite asset values around Europe have been impacted by the EU’s decarbonization policy as well as projections of elevated CO2 emission right costs in the future.
At this stage, it appears that the mimimum price level to be set by the independent valuator is unlikely to be reached by investor offers.
Both the energy minister and PPC boss are confident investors from Greece and abroad will express interest in the sale package.
Panagiotakis, the PPC chief, believes the investment interest from abroad will be led by Chinese firms, including CMEC, SPIC and Shenhua.