PPC takes on expropriation plan for Meliti unit’s sustainability

The main power utility PPC’s board is expected to approve, at a session today, a self-financed expropriation plan designed to ensure lignite quantity and quality standards are met for the sustainability of the utility’s Melti power station, included in a bailout-required disinvestment package.

PPC had reached an improved lignite price agreement with the operator of the Ahlada mine supplying the utility’s Melti power station, at 16.5 euros per ton between 2020 and 2025. However, lignite quality and quantity standards demanded by the sale’s participants were pending.

PPC’s decision to finance the expropriation of the village Giourouki promises the extraction of better and greater amounts of lignite from the Ahlada mine, an initiative expected to make the Meliti power station sustainable.

The Ahlada mine operator, citing high expropriation costs, stopped expanding its mining activities for better-quality lignite and instead dug deeper around Giourouki. The resulting lower-quality lignite affected yield rates at the Meliti power station.

A pre-contractual agreement signed by PPC and Giourouki village residents promises an immediate expropriation payment of 60 percent, while the remaining 40 percent, according to the agreement, will be provided as soon as the precise compensation amount is finalized.

Participants of PPC’s sale of lignite units, relaunched after an initial sale failed to produce a result, face a May 28 deadline for binding bids. PPC’s expropriation plan for the village Giourouki has raised hopes at PPC of a successful follow-up sale.

Meanwhile, the Meliti power station’s eligibility for CAT remuneration remains unclear. PPC has no control over this issue. It is being handled by the energy ministry. The European Commission will have the final say.

 

PPC uploads improved Meliti lignite supply deal to VDR

The main power utility PPC has uploaded to its virtual data room an improved lignite supply agreement reached with the operator of the Ahlada mine feeding the Meliti power station, thereby resolving one of the biggest ambiguities that has shadowed the utility’s bailout-required sale package of lignite units for prospective buyers. The Meliti unit is included in this disinvestment package.

The agreement guarantees the Meliti power station a minimum annual amount of 2 million tons of lignite at a cost of 16.5 euros per ton over a five-year period beginning in 2020. These terms are based on the condition that the village Giourouki, in the Meliti area, will undergo expropriation procedures by the end of this year.

In the lead-up, a price of 21 euros per ton has been set for 2019.

The Meliti agreement’s annual lignite output of 2 million tons could be increased by 25 percent if certain requirements are met.

The Meliti unit’s high operating cost was a key factor behind PPC’s failure to attract investors to its initial sale effort offering the same package of lignite units.

 

PPC unit contenders promised 30% price return without CATs

Investors have been promised a 30 percent return of the price paid for the acquisition of the main power utility PPC’s Meliti and Megalopoli power stations, included in a bailout-required package of lignite units, if these units are not remunerated through a European Commission CAT mechanism within nine months of the acquisition’s completion, according to the sale’s revised SPA terms, endorsed by the utility’s board yesterday, energypress sources have informed.

It remains unclear if the SPA includes an improved lignite supply agreement reached between PPC and the operator of the Ahlada lignite mine supplying the Meliti power station.

Some sources contend this agreement has been incorporated into the revised SPA while others claim it concerns an arrangement for the supply of additional lignite quantities to Meliti from other producers.

PPC has relaunched its sale of lignite units after an initial effort failed to produce a result.

CAT remuneration eligibility for the Meliti and Megalopoli units, as has been called for by some of the sale’s participants, is absent from the revised SPA terms.

 

 

PPC sale contenders embrace coal cost cut, await SPA terms

Prospective buyers considering the main power utility PPC’s bailout-required sale package of lignite units, relaunched after an initial effort failed to produce a result, have responded favorably to news of a lignite supply cost reduction for Meliti, one of the stations up for sale, but they remain on hold awaiting the sale’s finalized SPA terms before reaching conclusions.

PPC has secured a lignite supply cost reduction of 28 percent for its Meliti power station following an agreement with the operator of the Ahlada mine feeding the power station. The lignite supply price has come down to 16.5 euros per ton from 23 euros per ton.

“The finalization of any pending issue is positive news [for the sale], but we will take positions once we see the SPA,” one source noted.

A total of six bidding teams are participating in the sale. Beijing Guohua Power Company Limited, joined by Damco Energy; China Western Power Industrial; the Czech Republic’s Sev.En Energy – Indoverse Coal Investments Limited; GEK Terna; Elvalhalcor; and Mytilineos make up the field of contenders.

 

Amynteo silence adds to investor jitters over PPC sale

A decision by the main power utility PPC chief Manolis Panagiotakis to drop from a recent board meeting’s agenda the subject of a closure of the now-expired Amynteo lignite-fired power station is believed to have added to the ambiguity surrounding the utility’s relaunched sale package of lignite units.

Panagiotakis’ unexecuted announcement has been interpreted as an attempt to send out a positive message to investors as Anynteo’s eventual withdrawal from the grid would make other power stations units included in PPC’s sale package more competitive.

PPC is not planning an immediate withdrawal of Amynteo. The power plant’s closure is expected in late 2020 or early 2021, when a 32,000-hour extension offered by the government through a ministerial decision last November – as a further extension to Brussels’ 17,500 hours – should expire.

Investors eyeing PPC’s sale package, whose initial sale effort failed to produce a result, are still waiting for clarity on a number of issues.

Details remain pending on a profit and loss sharing mechanism expected to apply for the Meliti and Megalopoli units offered in the package. Investors are waiting to see these details in an updated SPA.

Also unclear are the developments of PPC’s effort for an improved lignite supply agreement with Lignitorihia Ahladas, the operator of the Ahlada mine feeding the Meliti power station. Improved price and quantity terms are being sought. Energy minister Giorgos Stathakis is mediating these talks.

Gov’t, employees on edge amid PPC, Ahlada mine operator dispute

An ongoing effort by the main power utility PPC for improved terms of its supply agreement with Lignitorihia Ahladas, the licensed operator of the Ahlada lignite mine exclusively supplying the utility’s Meliti power station in northern Greece, has led to escalated tension between the two sides.

PPC has opted to stop payments to the operator for its lignite supply as a means of offsetting lower-than-expected output and pressuring Lignitorihia Ahladas for a lower supply price that would help the Meliti power station become sustainable.

Meliti is included in PPC’s bailout-required disinvestment package of lignite units, whose sale has just been relaunched following the initial effort’s failure to excite prospective buyers.

The government needs to intervene in an effort to resolve the dispute between state-controlled PPC and Lignitorihia Ahladas but must tread carefully as it knows well the power utility’s disinvestment could prompt political damage if its relaunch fails to produce a result.

The operator has dismissed eight of 600 employees amid its clash with PPC. Workers at the mine and Meliti power station fear the ongoing dispute could lead to more job losses.

Lignitorihia Ahladas contends it will not be able to continue operating the Ahlada mine should it succumb to PPC’s pressure for a supply price reduction to 18 euros per ton from the present level of 23 euros. The operator has counter-proposed reducing its supply price as of 2020, when its expropriation procedure concerning the Ahalda settlement, needed to facilitate output, is expected to have been completed.

PPC claims the supplier’s current price does not reflect actual conditions and potential at the mine, noting inefficient practices applied by the operator are increasing production costs.

 

PPC set for legal action to resolve mine supply concerns

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.

PPC ups pressure on Ahlada mine operator for better lignite supply terms

The main power utility PPC is increasing its pressure on the operator of northern Greece’s Ahlada lignite mine, feeding the utility’s nearby Meliti power facility, for improved supply terms.

The existing contract, which does not secure price and quantity stability, was seen as a drawback by participants of PPC’s failed sale of lignite units, relaunched today. The Meliti unit is included in the bailout-required sale’s package.

PPC will pursue measures, including loss of earnings charges, against the Rozas family, operating the Ahlada mine, if the existing agreement’s supply terms are not improved, Manolis Panagiotakis, the power utility’s boss, has warned.

Late in 2018, the Greek State extended state-controlled PPC’s agreement with the Ahlada mine’s operator until 2023 with an option for a further five-year extension.

However, Panagiotakis has condemned the operator for under-producing and not fully utilizing the Ahlada mine’s potential, which, he supports, is prompting price instability.

The mine’s operator has supplied PPC’s Meliti facility at price levels ranging between 19 and 23 euros per ton, but these can be reduced to 18 euros per ton, leading to annual savings of 12.5 million euros, the PPC chief noted.

Panagiotakis claims flawed mining practices are being applied at Ahlada as the operator is avoiding expropriation costs concerning three settlements in the region. As a result, potential for better-quality lignite is not being realized, the PPC boss said. Expropriation costs are estimated at between 25 and 30 million euros.

“The operator can choose between the roads of understanding and conflict. Opting for the latter will lead to defeat,” Panagiotakis warned, adding successful negotiations would offer the operator an opportunity to sell considerably greater lignite amounts to Meliti’s prospective new owner.

 

 

PPC acts against Ahlada mine operator for better supply terms

The main power utility PPC has taken extrajudicial action against a family-run enterprise licensed by the utility to operate the Ahlada mine supplying the nearby Meliti lignite-fired power station in northern Greece in an effort to secure improved terms for prospective buyers of the power station. It is included in the utility’s bailout-required disinvestment of lignite assets.

The existing agreement between PPC and the Rozas family enterprise,  licensed to operate the mine, does not secure price and quantity stability. Prices vary depending on the yield offered by extracted lignite. Also, PPC believes development at the mine is too reserved. It is anticipated that greater output would lower the price of lignite per ton.

Prospective buyers who took part in PPC’s recently failed first attempt at completing its lignite package sale identified the Ahlada mine’s current supply agreement for Meliti as a disincentive. A team comprising China’s CHN Energy and the Copelouzos group was particularly troubled. The supply agreement will be passed on to Meliti’s prospective owner.

Two other requests forwarded by prospective buyers – staff cuts and the adoption of a profit-and-loss sharing mechanism for the units sold – are in the process of being added to the follow-up sale effort’s new terms.

PPC is currently supplied Ahlada lignite at a price of 23 euros per ton for its Meliti mine but wants the price level reduced by five euros per ton, which would generate annual savings of approximately 12.5 million euros.