PPC secures financial relief, cash injections worth €300m

Power utility PPC is reinforcing its financial position for protection against challenges already brought about by the coronavirus crisis and ones not yet fully apparent.

The corporation’s board has approved moves worth 300 million euros, including restructuring of high-cost loans, in an effort to boost its liquidity.

Financial tools and alternative borrowing sources have once again become available to the corporation following its return to profit territory and growth prospects.

Investors and banks are expressing renewed faith in PPC, as was made clear yesterday by three decisions taken by the utility’s board promising to inject about 300 million euros into the company.

CEO Giorgos Stassis and his board approved a JP Morgan offer worth between 200 and 250 million euros for unpaid receivables by customers in the low and mid-voltage categories. This package of unpaid receivables totals 260 million euros and concerns amounts overdue for no more than 60 days. The financial services company is offering an interest rate of 3.5 percent over a three-year period. Bonds will be issued by PPC through an SPV.

Also, the country’s four main banks, National, Alpha, Eurobank and Piraeus, have accepted a request by PPC for a delay in the payments of two 25 million-euro installments, respectively due June 30 and December 31, for a one billion-euro, five-year bond issued in 2018. The systemic banks, showing faith in PPC, agreed to receive these payments when the bond matures in 2023.

In addition, PPC has further diversified its borrowing sources. The board approved an Optima Bank proposal for a 15 million-euro debenture loan with floating six-month interest.

 

Independent supplier revenues plunge, tariff cuts not possible

Independent electricity suppliers, pressured by lower revenue figures and increased bad-debt risk as consumers, mainly businesses, struggle to pay their bills, have not been able to offer tariff reductions in response to the dramatic drop in the cost of electricity production brought about by lower natural gas prices.

The System Marginal Price, reflecting, to a certain degree, the cost of electricity, averaged 28 euros per MWh in April, down from 62.4 euros a year earlier.

This sharp drop has been attributed to the increased grid participation of natural gas-fired power stations, using low-cost LNG, as well as renewable energy units.

On the downside for independent suppliers, electricity demand fell by 14 percent in April, further aggravating their cash flow predicament.

Electricity bill payments have dropped considerably amid the lockdown, falling by as much as 50 percent in April, suppliers have informed.

Power utility PPC, which has traditionally battled bad-debt problems, is the least affected, its electricity bill collections falling by approximately 25 percent. This has been attributed to the company’s client base, comprised mostly of households and high-voltage consumers.

On the contrary, independent suppliers, suffering far sharper revenue drops, serve many small and mid-size businesses, badly affected by the lockdown.

Households have consumed greater amounts of electricity during the lockdown and generally serviced their bills.

It is feared some 100,000 enterprises may go out of business in the next few weeks. This would be a major setback for independent electricity suppliers.

 

PPC, ND opposition party dread utility’s first-half results

Power utility PPC’s trajectory towards a poor first-half performance, expected as a result of disappointing first-quarter figures and looming very bad results for the second quarter, are a concern for both the company itself and the main opposition New Democracy party, if it is voted into power at the July 7 elections, as the recent European election results have indicated.

There are no signs of a late second-quarter rebound for PPC within the next fortnight or so, when the first-half period is completed.

Not surprisingly, the ND party has remained quiet on PPC, marginalizing the power utility on its pre-election agenda.

Cash flow problems are dreaded at PPC, a corporation with 16,747 staff members on the payroll, a senior company official recently acknowledged in comments to reporters.

PPC’s first-half results, to be published in autumn, as is customary, will provide a clear picture on the course of the company, which has relied heavily on cash injections from the State for support but has not received any new amount of late.

Most recently, PPC was expecting a cash injection of 250 million euros for public service compensation (YKO) concerning 2011. The prospect, which would have offered PPC some relief, was blocked by finance minister Euclid Tsakalotos.