PPC unit candidates demanding major changes to SPA terms

Possible buyers of lignite units offered by the main power utility PPC in a bailout-required disinvestment have warned that incentives offered so far do not suffice to prevent losses incurred by two power stations, Meliti and Megalopoli, included in the sale, and, as a result, are demanding major changes to the sales and purchase agreement (SPA) terms.

The sale procedure’s binding bids deadline has been given a further extension until January 23, but, despite the additional preparation time, investors are warning structural problems at the units will make it difficult for them to participate in the sale.

Certain pundits suggest the negative talk could be part of a bargaining game played by investors aiming for the best possible terms and deals.

The need for a workforce reduction at the two power stations, down to a total of 600 from the current 1,248, is one of the main demands of investors, who believe half the current workforce would be enough to keep these units running.

PPC has offered employees a voluntary exit plan offering 15,000 euros in severance pay plus a 5,000-euro bonus. However, buyers want the ongoing procedure completed before they submit any binding bids.

Prospective buyers have determined the Meliti and Megalopoli are incurring losses of between 60 and 70 million euros per year. A subsequent profit-and-loss sharing scheme offered by PPC as remedy was included in the SPA terms but ended up not being accepted by Brussels, the energy ministry has informed.