The main power utility PPC has requested a three-month extension for its bailout-required sale of lignite units as the utility’s failure, to date, to secure any sale terms that would make the assets for sale more attractive to investors threatens to sink the entire effort.
Given this threat, PPC, just days ago, forwarded a letter to the energy ministry and the European Commission’s Directorate-General for Competition requesting a deadline extension for binding offers until mid-February. No signs have yet to emerge as to whether Brussels will offer PPC additional time.
The European Commission has rejected a profit-and-loss sharing arrangement proposed by PPC entailing an even split of lignite unit profits and losses with buyers for a two-year period. Brussels believes this term contravenes Greece’s commitment for state-controlled PPC to disinvest, through the sale, 40 percent of its overall lignite capacity.
Brussels has also delayed endorsing the country’s permanent CAT remuneration plan, which includes remuneration for PPC’s lignite-fired power stations. Their exclusion from Greece’s new CAT mechanism would devastate the government’s disinvestment plan for PPC’s lignite units.
These negative developments, combined with higher international CO2 emission prices and PPC unit operating losses identified by prospective buyers through PPC’s data room, have all raised investor concerns with respect to the lignite units sale.
PPC has warned European Commission insistence on the sale’s completion within December would severely limit, if not vanish, investor interest, while any offers made would be too low for the power utility’s board to accept.