copelouzos

PPC lignite units sale failure highly likely, day after examined

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The main power utility PPC’s ongoing effort to sell its Megalopoli and Meliti power stations as part of a bailout-required disinvestment of lignite units appears increasingly likely to fail as possible buyers are maintaining an unfavorable view of the prospects of the units on offer.

An extended deadline for binding bids is nearing and expires on February 6.

PPC has planned a series of meetings for today with the sale’s three possible buyers – CHN Energy-Copelouzos group, Seven Energy-Gek Terna and Mytilineos – to update on the progress of its voluntary exit plan offered to employees at the Megalopoli and Meliti units and transfer of 400 employees to other units.

PPC believes these changes will transform the loss-incurring units into profitable ventures but the buyers remain tentative. Their analysis of data made available paints a darker picture.

The sale’s participants have called for the implementation of a profit-and-loss sharing system for Megalopoli and Meliti. The European Commission has rejected a plan forwarded by PPC but the investors contend it was very different to a preliminary plan embraced by Brussels. The buyers also want a more drastic reduction of employees at the two plants to 480 from the previous combined total of 1,248. They are also demanding clarity on the CAT remuneration eligibility of the two plants and a clearer picture on the lignite price for supply from the Ahlada mine to the Meliti unit.

The energy ministry is believed to already be examining options based on EU regulations should the sale effort fail. If so, the ministry believes the forthcoming European Parliamentary elections, to be held May 23-26, will hold up and thrust forward the sale to a future date.

PPC sale deadline extension ‘pointless without better terms’

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Investors considering the main power utility PPC’s bailout-required sale of lignite units expect new sale-term improvements beyond certain incentives already offered now that a last-minute decision was taken by authorities earlier this week to extend a January 23 binding bids deadline to February 6.

“There is no point in the deadline extension if further incentives are not offered,” a source at one of the sale’s contender firms told energypress, echoing the thoughts of all possible buyers. The PPC units on offer are not capable of generating profit figures under the sale’s existing terms, the source added.

Contenders have remained adamant on earlier views. The Czech Republic’s Seven Energy, which has teamed up with Gek Terna for this sale, insists on a 50 percent staff cut at two power stations, Megalopoli and Meliti, included in the sale package. Both plants remain loss-incurring, the candidates remind.

A team made up of China’s CHN Energy and the Copelouzos group is demanding a lignite supply cost reduction, especially for the Meliti plant.

The energy ministry is under less pressure to complete state-controlled PPC’s sale effort now that Greece’s bailout program has concluded and the country’s borrowing ability is no longer directly linked with the bailout terms.

At worst, energy ministry officials believe, the PPC sale effort will sink and the European Commission will again challenge the power utility’s dominant position in Greece’s lignite market, seen as a slow bureaucratic procedure.

PPC lignite unit contenders up pressure, new deadline possible

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Three contenders considering the main power utility PPC’s sale of its Megalopoli and Meliti lignite-fired power stations included in a bailout-required disinvestment of lignite units are intensifying their pressure on PPC for more favorable terms as the deadline for binding bids approaches.

In response, PPC has been eager to present any new favorable developments that have emerged from the implementation of incentives in an effort to support the sale’s conditions and price-tag potential.

This was demonstrated yesterday by chief executive Manolis Panagiotakis in comments to journalists.  He made reference to the results of a voluntary exit plan offered to employees at the Megalopoli and Meliti units, both loss-incurring. A total of 360 employees working at the two lignite-fired power stations have accepted the offer. Prospective buyers have indicated they want the workforce at Megalopoli and Meliti, totaling 1,248 prior to the voluntary exit plan, to be cut down to 600. PPC has just announced a voluntary transfer plan for Meliti and Megalopoli unit employees to other company posts.

Panagiotakis also noted PPC is negotiating with the owners of the Ahlada lignite mine, feeding the Meliti power station, for a lower supply price and longer supply agreement.

Reacting to the PPC chief’s comments, China’s CHN and the Copelouzos group’s Damco, one of the sale’s three potential bidding teams, described the results of the staff reduction effort at the two power stations as a good basis for cost reduction.

A consortium comprising the Czech Republic’s Seven Energy and Gek Terna has refused to comment. The Seven Energy firm has yet to present itself as a certain participant in the sale. In recent times, it has made note of narrow profit margins despite the voluntary exit plan, CAT remuneration uncertainties surrounding for the two units, and increased CO2 emission right costs.

Panagiotakis, the PPC chief, yesterday told journalists the Mytilineos group remains a contender for the Megalopoli and Meliti power stations. The Mytilineos group has not responded but, according to sources, remains troubled by what it sees as an unfavorable investment conditions surrounding the lignite sector, including the sharp rise in CO2 emission right costs.

Just days remain before the sale’s January 23 deadline for binding bids expires. An extension could be required as a result of PPC’s last-minute Ahlada mine negotiations and a Brussels delay concerning the European Commission’s position on Greece’s CAT remuneration mechanism proposal, a crucial factor for the lignite units sale.

 

 

PPC pressuring ministry on Amynteo power station’s future

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The main power utility PPC is maneuvering to increase the pressure on the government for action that would ensure the inclusion of the power utility’s lignite-fired Amynteo power station in the country’s energy mix over the coming years, secure its environmental upgrade and attract investors for its sustained utilization.

PPC appears to remain unconvinced of the government’s intentions to keep the Amynteo power station alive despite assurances from energy minister Giorgos Stathakis that the facility’s two units, totaling 600 MW, have been factored into the country’s electricity production calculations until 2030.

PPC is demanding a study as verification of the government’s Amynteo plan.

A 17,500-hour operating time limit imposed on the Amynteo power station by the European Commission for environmental reasons expired just over a month ago but Greek authorities have decided to sustain its operations while working on a revamp plan that would enable the unit to keep operating. Brussels is believed to be gearing up a sanctions procedure but it would typically move along at a slow pace.

The Mytilineos group, Gek Terna, Copelouzos and Intrakat have all expressed interest for involvement in an Amynteo upgrade.

The national energy and climate plan, currently undergoing public consultation, projects an installed capacity reduction of fossil fuel-fired power stations from 4.3 GW to 3.4 GW in 2020. A slight rise to 3.5 GW is foreseen for 2025 before this capacity is slashed to 2.7 GW in 2030.

Elpedison set to begin importing gas via Bulgarian link in 2019

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Energy firm Elpedison has finalized all details, including grid capacity reservations, to begin importing natural gas into Greece as of 2019 via the Greek-Bulgarian interconnection, according to sources.

The company’s move, promising to add Elpedison to a growing number of major domestic energy players engaging in cross-border natural gas trade, aims to improve the firm’s supply mix and bolster its portfolio.

Elpedison is expected to begin importing at levels of 500 MWh with a view to increasing amounts.

Besides the gas utility DEPA, three private-sector players, Promitheas – a member of the Copelouzos group – Mytilineos and Heron, are already importing natural gas through the Greek-Bulgarian border.

The Greek-Bulgarian border was opened for natural gas trade in 2017 following agreements signed by the respective gas grid operators of the two countries.

Elpedison’s turn to natural gas follows its already heightened level of cross-border electricity trading activity, reaching as far as central Europe and Hungary.

Elpedison, on a positive course, is expected to end 2018 with favorable EBITDA results.

 

Brussels set to launch action against Amynteo overtime use

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The European Commission is set to launch a sanctions process against Greece in response to the country’s continued use of main power utility PPC’s lignite-fired Amynteo power station, whose 17,500-hour operating time limit, imposed for environmental reasons, expired approximately three weeks ago, on November 19.

The news of the imminent Brussels action was disclosed by a highly-ranked Directorate-General for Environment official in Athens last Friday, who added the specific department, responsible for EU policy on the environment, has not received any Greek extension request.

European Commission sanction procedures for such issues are typically lengthy and could take anywhere between a year or two to complete from the time Brussels forwards its initial complaint, the two sides exchange ensuing letters, Athens raises an anticipated objection, and Brussels issues a ruling, an official who is well-informed on the process told energypress.

Athens will aim to utilize this period and push ahead with a plan to complete an Amynteo power station upgrade that would enable the revamped unit to keep operating. The development of Ptolemaida V, a modern facility, may also be completed by then.

The Amynteo upgrade is not expected to begin until a bailout-required sale of three power stations at Megalopoli and Meliti has been completed.

The Mytilineos group, Gek Terna, Copelouzos, joined by China’s Shenhua, as well as Intrakat, have all expressed interest for involvement in the Amynteo upgrade.

 

 

Brussels asks RAE to inspect Chinese entry into Greek RES sector, IPTO

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RAE, the Regulatory Authority for Energy, acting on a European Commission request, has begun an examination process to determine if a strategic agreement between the Copelouzos group and China’s state-run CHN Energy for the latter’s acquisition of wind energy parks creates any EU regulation issues regarding fellow state-run SGCC’s (State Grid Corporation of China) recent 24 percent stake buy into Greek power grid operator, authority sources have informed energypress.

RAE has been asked to examine whether CHN Energy’s agreement to buy Copelouzos wind energy farms with a total capacity of 1,500 MW violates an EU directive concerning the separation of a single entity’s activities in energy production, supply and transmission, according to the same sources.

In essence, RAE is being asked to inspect IPTO’s current certification as a result of SGCC’s purchase of a stake in the Greek operator before determining whether a follow-up certification process will be needed.

Much ground needs to be covered before the strategic agreement reached between the Copelouzos group and CHN Energy turns into an actual deal, the RAE sources told energypress.

The European Commission’s intervention is also linked to CHN Energy’s interest in the main power utility PPC’s ongoing sale of the Meliti and Megalopoli lignite-fired power stations, part of a bailout-required sale of PPC lignite units, the sources admitted.

Alexandroupoli FSRU tender draws major international interest

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More than ten companies are believed to have expressed official interest in a tender launched by Gastrade, a member of the Copelouzos group, for provision of a vessel to be used as part of the FSRU facility in Alexandroupoli, northeastern Greece, as well as for the LNG terminal’s development.

The tender’s deadline expired last Friday. Major international players have submitted offers, including foreign companies in collaboration with Greek contractors.

A market test measuring the level of interest for capacity reservations at the planned LNG terminal in Alexandroupoli, promising to serve as a gateway for gas supply to the wider Balkan region, is being concurrently held with the tender. The results of the current market test, whose deadline expires in mid-December, will be pivotal for the project’s final investment decision. A follow-up market test, for binding commercial interest, will also be staged.

The Alexandroupoli FSRU, planned to be constructed as a fixed facility 17.6 kilometers southwest of the city’s port, will have an LNG storage capacity of 170,000 cubic meters and the ability to supply gas at a rate of 900,000 nm3 per hour or 8.3 billion nm3 per year.

Construction of the Alexandroupoli FSRU is scheduled to commence in 2019 while its completion date has been set for July, 2020. The unit’s launch is expected in late September, 2020.

 

Brussels grants investors one-month extension for PPC bids

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Investors have been given a one-month extension for second-round binding bids concerning the main power utility PPC’s sale of lignite units following the European Commission’s approval of a request made by China’s CHN Energy, which has joined forces with the Copelouzos group for this sale.

Subsequently, prospective buyers now face a November 17 deadline for their binding bids. The deadline extension had been widely anticipated over the past ten days or so following hints made by energy ministry officials at the recent Thessaloniki International Trade Fair.

The additional time provides energy ministry and PPC officials with an opportunity to negotiate with Brussels for the possible inclusion in the sale of a CAT remuneration system for lignite-fired electricity generation.

CHN Energy and the Copelouzos group had requested up to two months of additional time but the deadline extension was limited to one month by a  Monitoring Trustee overlooking the overall sale procedure on behalf of the European Commission.

Both the energy ministry and PPC officials fear offers by investors could remain low, higher CO2 emission right costs being a key factor. CAT remuneration would offer some incentive for bigger bids.

Initial hopes of a total sale price of around one billion euros for PPC lignite units and mines representing 40 percent of the utility’s overall lignite capacity have now deescalated to levels of several hundred million euros. Some investors have suggested offers could be considerably lower.

GEK-Terna, which has united with the Czech Republic’s Seven Energy for the PPC sale; another Czech firm, EPH; ElvalHalcor, a member of the Viohalko group; as well as Mytilineos, are the sale’s other second-round qualifiers.

Brussels considering small deadline extension for PPC sale

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The European Commission appears to be considering a second-round binding bids deadline extension for the main power utility PPC’s bailout-required sale of lignite units following a request made by China’s CHN Energy, one of the sale’s contenders.

According to Greek energy ministry officials, Brussels could extend the deadline by a few weeks, less than an additional one to two months sought by CHN. The current deadline expires on October 17.

CHN, which has joined forces with the Copelouzos group for the PPC sale, has so far submitted 224 queries regarding PPC’s sale of lignite units.

Both the energy ministry and PPC are concerned increased CO2 emission rights costs, currently up to levels of around 22 euros per ton, could negatively impact the price levels prospective investors would be willing to pay for the power utility’s lignite units.

Also, the European Commission does not appear likely to make PPC’s lignite units eligible for CAT remumeration rewarding grid input. However, an unspecified partial reward system is believed to be in the making.

 

Surprise US player may enter Alexandroupoli FSRU team

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An additional member, possibly a major US player, could join a consortium for the development and operation of an FSRU project in Alexandroupoli, northeastern Greece, with a 20 percent stake, in addition to DEPA, the public gas corporation, and Bulgaria’s BEH, both preparing to also enter the project’s corporate team.

Technical details are now being worked on by the Bulgarian government for the entries of DEPA and BEH to the Alexandroupoli FSRU’s consortium. It was initiated by Gastrade, a member of the Copelouzos group, before Gaslog, an international LNG carrier, also joined.

The government in Sofia is expected to offer its approval within the current month. Once this stage is completed, the consortium will be comprised of Gastrade (40%), Gaslog (20%), DEPA (20%) and BEH (20%). The additional entry being touted would acquire half of Gastrade’s stake, giving all members equal stakes.

Cheniere, the dominant player of the US natural gas market, and another unnamed American enterprise, regarded as a surprise candidate, are both being touted as possible additions to the Alexandroupoli FSRU consortium.

The addition of a non-American enterprise has also been mentioned as Gastrade is believed to be engaged in talks with major traders showing an increasing interest in the specific region.

“A final decision will be reached based on the added value, both strategically and financially, to be brought to the project by the new shareholder,” a source involved in the developments informed energypress.

Meanwhile, a two-stage market test is expected to be launched by mid-September. Gastrade anticipates an accurate measure of the overall commercial interest in the project by the end of 2018, before it makes investment decisions. If all goes as planned, the FSRU project will be ready to operate at the end of 2020.

Important project news is expected to emerge this Friday at a Hellenic-American Chamber of Commerce conference in Thessaloniki, held ahead of the Thessaloniki International Trade Fair, opening Saturday.

The Alexandroupoli FSRU is seen as an important project that may ensure supply of new natural gas quantities to the Greek and regional southeast European markets, while also contributing to the diversification of supply sources and routes. The PCI-status project plan is being widely supported at Greek, EU and cross-Atlantic levels.

 

PPC lignite sale regaining pace, 4 of 5 candidates interested

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Four of five investment teams that submitted first-round expressions of interest for the main power utility PPC’s sale of bailout-required sale of lignite mines and power stations appear to have sustained their interested now that the disinvestment procedure is regaining speed following the summer slowdown in August.

Investors have actively sought sale-related information in the virtual data room established for the disinvestment ahead of a series of separate interviews, planned to begin next week, with PPC officials for further clarification of the assets up for sale, including technical and financial details. Interested parties are expected to submit binding second-round offers in October.

Czech firm EPH (Energeticky a Prumyslovy Holding) appears to have retreated and will most likely not take part in the upcoming series of meetings. Until now, EPH representatives have yet to request any meeting with PPC officials.

On the contrary, Seven Energy, another Czech firm that emerged in the first round, has stationed a representative in Athens, seems very interested, and has joined forces with local powerhouse GEK Terna.

Investors still need to gain further information as the two companies founded to offer two separate sale packages, respectively representing PPC lignite units in Greece’s north and south, did not exist prior to this sale’s launch. As a result, prospective buyers need to be particularly careful and seek further details on corporate, legal and sale matters.

PPC’s chief executve Manolis Panagiotakis is not expected to participate in the power utility’s series of forthcoming meetings with investors.

Despite certain reservations as a result of lignite’s indefinite future in Greece’s energy mix, all other four investment teams appear interested in PPC’s two sale packages, representing 40 percent of the power utility’s overall lignite capacity.

Besides the GEK Terna-Seven Energy partnership, the Copelouzos group has been joined by China Energy (Beijing Guohua Power), while the Mytilineos group and ElvalHalcor also emerged in the first round.

DEPA planning pricing changes, new formula for all consumers

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DEPA, the public gas corporation, is preparing to revise tariff formulas applied by the company to determine purchase prices offered to all consumer categories, including large-scale consumers, energypress sources have informed.

Until now, electricity producers have been offered special natural gas supply terms compared to household consumption, especially for heating purposes.

The gas company is believed to have completed studies that have produced results indicating leeway exists for adjustments concerning flexibility and supply security offered to customers.

It has become clear at DEPA that tariffs need to be adjusted to the energy sector’s new, liberalized and competitive environment, as shaped by institutional and regulatory changes adopted.

DEPA will seek to adopt fairer pricing formulas for all consumers, regardless of category.

The gas company has already begun negotiations with all its suppliers and is aiming to make changes over two stages. The first stage concerns the period up to 2020 or 2021 when contracts entailing gas supply by Turkey’s Botas and Algeria’s Sonatrach expire. The second stage will factor in the activation of a supply agreement for Azerbaijani natural gas via the TAP gas pipeline and Greece’s geopolitical emergence as an energy hub and role of the country’s energy exchange.

Of course, DEPA’s negotiations will also include Russian giant Gazprom, whose current supply contract for the Greek gas utility ends in 2026, and, possibly, a diversification effort by DEPA that could incorporate American LNG and spot market deals into its portfolio.

Overall, these developments changes could require DEPA to alter its gas prices offered to electricity producers, which could spark reactions from the main power utility PPC as well as independent electricity producers.

If DEPA manages to offer fair and competitive natural gas packages, then it could lay the groundwork for a leading role amid the new liberalized market.

Competition in the wholesale natural gas market is intensifying. Besides DEPA, other importers are also supplying gas to the Greek market, the main players being the Copelouzos group and the Mytilineos group.

 

 

 

 

 

Prospective PPC unit buyers maneuvering for partnerships

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First-round participants in the main power utility PPC’s bailout-required sale of lignite mines and power stations representing 40 percent of capacity are heightening their efforts to form partnerships for the sale procedure ahead of an upcoming July 31 deadline and could be close to announcing arrangements, energypress sources have informed.

In one of two main fronts taking shape, one of two Czech firms that have emerged for the sale and said to be displaying a strong interest in Greece’s lignite market is close to reaching a deal with a major Greek corporate group, sources said.

On the other main front, a high-voltage industrial enterprise also taking part in the sale is said to be exploring the possibility of merging with the aforementioned scheme or partnering with the Copelouzos-China Energy scheme.

The high-voltage industrial enterprise is entitled CO2 emission right cost offsetting support, a definite advantage, even though most recent calculations indicate CAT remuneration support is also needed to make competitive the PPC lignite facilities being sold.

Though no further details on the players have emerged at this point, the sale appears to be developing into a showdown between the Copelouzos-China Energy scheme and a second team to be comprised of a foreign firm with a Greek partner, sources noted.

The aforementioned high-voltage industrial enterprise could side with either team, the sources added.

Also, both candidate teams are believed to be interested in the sale’s two separate packages, respectively comprised of PPC assets in the country’s north and south.

DEPA sale schedule now rests with Competition Committee

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An on-schedule launch of the DEPA gas utility’s privatization procedure will depend on the time it will take the Competition Committee to approve a recent local takeover agreement between DEPA and Shell concerning the Greek gas utility’s acquisition of the Dutch firm’s 49 percent share of the EPA Attiki gas supply and EDA Attiki gas distribution ventures covering the wider Athens area.

DEPA went into the negotiations with Shell already holding 51 percent stakes in these joint ventures. The deal was reached for a price of 150 million euros.

If the Competition Committee approves the DEPA-Shell agreement by September, then the DEPA privatization could begin on schedule, in September or October, with the gas utility’s split into two firms, DEPA Infrastructure and DEPA Trade, as agreed to by the government and the country’s lenders for the privatization.

According to the plan, a 50.1 percent stake of the trading firm is expected to be offered to investors while 14.9 percent, including veto rights, will be maintained by the Greek State. As a second stage of the privatization, the Greek State’s offering to investors of DEPA Infrastructure will be limited to a minority stake of no less than 14 percent. The Greek State is expected to retain a 51 percent stake in DEPA Infrastructure.

The gas utility’s privatization procedure will most likely be delayed until 2019 if the Competition Committee requires an extended period to examine the DEPA-Shell agreement.

Pundits closely following the developments have not ruled out delays in the DEPA privatization procedure.

Greek petroleum group Motor Oil Hellas lodged an official complaint to the Competition Committee over the DEPA-Shell agreement while it was still in the making, noting it would enable DEPA to dominate natural gas supply in the wider Athens area. Motor Oil plans to soon enter Greece’s natural gas retail market through its subsidiary Coral (Shell).

DEPA, whose repositioning in Greece’s natural gas retail market was included as a bailout term, has also reached a deal with Italy’s Eni. DEPA agreed to withdraw from the Zenith gas supply company covering the country’s north by selling its 51 percent stake in this venture to the Italian firm, previously a minority partner with a 49 percent share.

At least three key players, Mytilineos, the Copelouzos group and ELPE, which already holds a 35 percent stake in DEPA, have expressed an unofficial interest for DEPA Trade.

These players, as well as others who have yet to disclose their interest, all see DEPA Trade as an enterprise that is ready for robust business given DEPA’s experience, existing customer base and foreign deals. More crucially, the investors also see a company that is soon expected to wholly own the EPA and EDA supply and distribution firms which, until recently, monopolized the retail gas market in the wider Athens area.

 

Copelouzos group emerges as latest DEPA Trade candidate

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The Copelouzos group has stepped forward to made clear its interest in a 51 percent stake of DEPA Trade, gas utility DEPA’s forthcoming subsidiary to be offered as part of a bailout-required privatization along with a minority stake in DEPA Infrastructure, the DEPA sale’s other subsidiary in the making.

The Copelouzos group is the latest major player to have emerged as a prospective buyer of DEPA Trade. Mytilineos and ELPE (Hellenic Petroleum), holding a 35 percent stake in DEPA, have both already declared they will bid for DEPA Trade.

Mytilineos and ELPE expressed their interest in DEPA Trade immediately following the recent unveiling of the DEPA privatization model. More interested investors are expected to emerge, including Motor Oil Hellas (MOH).

Just recently, Motor Oil Hellas made known an intention to enter the retail natural gas market through the fuel station network controlled by its subsidiary Coral.

Motor Oil Hellas has lodged an appeal to the competition committee against a local takeover agreement between DEPA and Shell, selling its 49 percent stake in their EPA Attiki natural gas supply joint venture, covering the wider Athens area, to DEPA. The gas utility already holds a 51 percent share of this joint venture and, as a result, will fully control own EPA Attiki.

DEPA already holds the biggest gas supply contracts in the country’s wholesale market and a complete takeover of EPA Attiki would offer the gas utility an unfair advantage over competitors, Motor Oil Hellas argues.

Without a doubt, the prospective field of DEPA Trade bidders sees major potential in the country’s natural gas market. The gas utility’s vast experience, existing client base and major wholesale gas agreements are all seen as big positives generating interest for DEPA Trade. Control of EPA Attiki, a key retail market player, promised by a 51 percent stake in DEPA Trade, is another prospect exciting investors.

All first-round PPC units sale participants to make next stage

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All first-round participants of the main power utility PPC’s bailout-required sale of  lignite mines and power stations representing 40 percent of the utility’s overall lignite capacity meet the procedure’s criteria to qualify for the next stage, PPC officials have unofficially made known.

A total of six bidding schemes submitted non-binding expressions of interest for the sale’s first round, expected to end today with the announcement of qualifiers.

As of Monday, the sale’s second-round qualifiers will gain access to the procedure’s data room for two months – once they have signed confidentiality agreements – to evaluate technical and financial information concerning the power stations and mines up for sale.

A consortium comprising Beijing Guohua, a subsidiary of China’s Shenhua, and Damco Energy, a wholly owned subsidiary of the Copelouzos group; GEK-Terna; ElvalHalcor, a member of the Viohalko group; Czech firm EPH (ENERGETICKÝ Α PRŮMYSLOVÝ HOLDING); Indoverse Coal Investments Limited, also Czech; as well as Mytilineos, all submitted first-round expressions of interest.

The wide turnout could lead to aggressive bidding in the next round, when investors will be expected to produce binding offers. However, not all pundits are convinced turnout alone will be enough to generate elevated bids for a lofty sale price.

PPC’s administration has stressed solid incentives are needed for the prospective investors, including CAT payment assurances for the units included in the disinvestment’s packages, one covering the country’s north and the other the south.

Second-round terms are expected to be announced to the qualifying schemes next week. PPC and the utility’s advisers have pushed the sale’s authorities for the most favorable terms possible in an effort to increase the sale’s appeal for investors.

PPC wants terms that will enable, even encourage, participants to join forces. Mobility is being reported among the first-round bidders, including the Czech bidders, believed to be maneuvering for possible partnerships.

The second-round terms are also expected to clarify whether participants will be permitted to submit a joint offer for the sale’s northern and southern packages. Sources said such a provision will be included in the second-round terms, based on a formula applied for the privatization of regional airports around Greece.

The PPC disinvestment’s Greek-Chinese bidding team of Beijing Guohua and Damco Energy, which yesterday signed a partnership agreement for this sale yesterday, made clear it is interested in both the northern and southern packages.

CAT eligibility vital for prospects of PPC units sale, chief notes

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The level of investor interest, asset value and achievable sale price of a bailout-required sale of main power utility PPC lignite mines and power stations will depend on whether the units being offered will be eligible for CAT remuneration, the power utility’s CEO, Manolis Panagiotakis, has told journalists.

Strong political support by the government, perhaps from its top level, will be needed as European Commission directives issued so far exclude lignite units from CAT mechanism payments, the PPC boss noted.

Conventional power stations, such as lignite-fired units, must satisfy a CO2 emission limit of 550 grams per KWh to qualify for CAT mechanism payments.

A European Commission proposal calling for even stricter limits is gaining growing support throughout Europe.

Given the developments, the PPC lignite units placed for sale will most likely remain ineligible for CAT support. If so, this will severely limit their appeal for investors in general. They would need to be taken on by industrial enterprises active in sectors eligible for mechanisms offsetting a considerable percentage of CO2 emission right costs.

Meanwhile, taking the sale process a step further, PPC shareholders yesterday approved a split from the corporation of the two lignite unit packages being offered in the sale of lignite mines and power stations, representing 40 percent of the utility’s overall lignite capacity.

Yesterday’s approval now enables PPC to open a data room through which six candidate investors will be informed on the details of assets included in the disinvestment.

“Our work begins now – to correctly inform interested parties, make appropriate presentations and highlight the details that make the units attractive investment prospects – in order to to achieve a satisfactory sale price,” PPC’s chief executive, Manolis Panagiotakis, informed journalists. “Now is also the time for the government and the European Commission to show, with action, their support for lignite-related production,” he added.

Three major local players, GEK-Terna, Mytilineos and ElvalHalcor, a member of the Viohalko group, as well as a fourth, the Copelouzos group, joined by Beijing Guohua, a wholly owned subsidiary of China’s Shenhua, submitted first-round expressions of interest for the PPC lignite units. Two Czech firms, EPH (ENERGETICKÝ Α PRŮMYSLOVÝ HOLDING) and Indoverse Coal Investments Limited, also emerged as surprise participants.

 

 

 

PPC sale draws expected local players, Shenhua, Czech firms

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Three major local players, GEK-Terna, Mytilineos and ElvalHalcor, a member of the Viohalko group, as well as a fourth, the Copelouzos group, joined by Beijing Guohua, a wholly owned subsidiary of China’s Shenhua, have – as was anticipated – all submitted first-round expressions of interest for the main power utility PPC’s sale of bailout-required sale of lignite mines and power stations. Two Czech firms, EPH (ENERGETICKÝ Α PRŮMYSLOVÝ HOLDING) and Indoverse Coal Investments Limited, also emerged as surprise participants. The deadline for expressions of interest expired yesterday afternoon.

PPC needs to disinvest power stations and mines units representing 40 percent of the utility’s overall lignite capacity.

The list of first-round bidders could be revised if partnerships are established or entrants fail to meet criteria enabling qualification for binding bids in the second round. The PPC board will decide on the qualifiers.

Finalized investment schemes will need to be officially declared by the end of July. A September deadline is expected to be set for binding bids.

It is not yet known if any of the sale’s early participants intend to submit binding second-round bids. They are expected to decide after examining PPC’s financial, technical and legal information to be made available to first-round participants through a data room. Investors are not expected to decide any sooner than next month.

The sale price to be demanded by PPC will be a crucial factor for investors. Though definitely interested in acquiring lignite-fired power stations and mines as a means of  controlling their cost of electricity sold, participating suppliers are troubled by the rising production cost of solid fuel-based power generation, a development prompted by EU climate change policies.

PPC advisers upbeat on wider turnout for lignite units sale

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The main power utility PPC’s advisers steering the utility’s bailout-required sale of lignite mines and power stations representing 40 percent of the utility’s overall lignite capacity, are confident that, besides local players, a considerable number of foreign investors will also emerge to submit first-round expressions of interest. The deadline for participants expires today.

Over the past few days, it has been rumored that the sale could attract investors from India. This remains to be seen, later today. For the time being, a number of local players, namely GEK-Terna, Mytilineos and Viohalco, as well as the Copelouzos group, expected to join forces with China’s Shenhua for this sale, are believed to be the only certainties.

It is not yet known if any of these probable participants will submit binding second-round bids. They are expected to decide after examining PPC’s financial, technical and legal information to be made available to first-round participants through a data room. These details will help participants determine whether the purchase of lignite units represents a sustainable investment or not. Investors are not expected to decide any sooner than next month.

The sale price to be demanded by PPC will be a crucial factor for investors. Though definitely interested in acquiring lignite-fired power stations and mines as a means of  controlling their cost of electricity sold, participating independent suppliers are troubled by the rising production cost of solid fuel-based power generation, a development prompted by EU climate change policies.

According to European Commission studies and forecasts, emission right costs in the EU, already elevated, are expected to climb further, from 14.43 euros per ton, yesterday’s price, to over 30 euros per ton in 2030.

Given these conditions, investor interest in PPC’s disinvestment of lignite units is expected to be limited to industrial enterprises eligible for offsetting mechanisms compensating such expenses.

 

 

PPC lignite unit bidders to move alone for sale’s initial stage

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Most of the local corporate groups planning to submit first-round expressions of interest for the main power utility PPC’s bailout-required sale of lignite mines and power stations representing 40 percent of the utility’s overall lignite capacity are expected to move independently before forming consortiums for the second round, if the acquisition of units offered is deemed sustainable.

All investors, expect for the Copelouzos group, which has made clear it intends to join forces with China’s Shenhua from the start, are expected to bid alone in the first round.

The deadline for first-round expressions of interest expires this Thursday. At this stage, GEK-Terna, Mytilineos and Viohalco, along with the Copelouzos-Shenhua partenership, are expected to emerge as the first round’s local bidders.

No further partnerships involving Greek firms are expected at this preliminary stage of the sale process despite ongoing talks between various parties. Talks for the establishment of consortiums are seen maturing in July, once the short list of second-round qualifiers takes shape.

The sustainability prospects of units offered by the sale’s terms will be crucial in determining the bidding interest of second-round qualifiers.

According to sources, current talks between interested parties not only concern initial equity line-ups but long-term partnerships for power supply.

Given the increased CO2 emission right costs, investor interest in PPC’s disinvestment of lignite units is expected to be limited to industrial enterprises eligible for offsetting mechanisms compensating these expenses.

Two major Greek industrial groups, Viohalko and Mytilineos, are eligible for offsetting mechanisms.

 

PPC set to appoint boards of two firms selling lignite units

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The main power utility PPC intends to appoint, within the next few days, the boards of two new companies to carry the utility’s lignite mines and power stations included in a bailout-required sale representing 40 percent of the corporation’s overall lignite capacity, CEO Manolis Panagiotakis has announced.

Procedures for the disinvestment are believed to be progressing on schedule. Investors have until June 21 to express first-round, non-binding interest for the units included in the sale.

A broad turnout is expected in the first round, but many local investors insist they will emerge for the sale’s preliminary stage on an exploratory basis.

The two new PPC firms will operate concurrently with the sale procedure, according to the power utility’s boss.

The increased cost of CO2 emission rights, consistently over 15 euros per MWh in recent times, is a concern for the sale as it adds to the risk faced by prospective investors.

“We could make a bid if we see that the units can operate even with a marginal profit margin,” the representative of one potential investor, still reserved about the prospects of the units up for sale, told energypress.

The Mytilineos group and GEK-Terna have both declared they will submit non-binding offers on June 21, but it remains unknown whether they will be willing to make follow-up offers. Elpedison has insisted it will not turn up for the first round. The Stasinopoulos group is expected to participate, either independently or as part of a consortium. The first-round participation of a consortium comprised of the Copelouzos group and China’s Shenhua is also seen as a certainty.

According to the sale plan, binding offers will be submitted in September following the provision of data-room access to participants, offering details on the units to be sold.

 

 

 

 

 

Country’s big energy players gearing up for DEPA sale

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The past couple of days could be regarded as an unofficial launch of DEPA’s (public gas corporation) privatization, given the strong interest expressed by major players for the gas utility’s commercial division.

Two of the country’s biggest energy market players, the Mytilineos corporate group and ELPE (Hellenic Petroleum), which holds a 35 percent stake of DEPA, made clear their interest in the gas utility’s commercial section yesterday, just hours after energy minister Giorgos Stathakis updated energypress on the DEPA privatization model to be adopted.

The government and country’s lenders have agreed on a DEPA sale model entailing a split of the gas utility into two subsidiaries representing its commercial and distribution network divisions. This split is expected in September.

Motor Oil Hellas is also expected to emerge as a candidate, highlighting how coveted the DEPA privatization is for energy players.

Motor Oil Hellas recently announced a plan to enter the retail natural gas market through its Coral network of gas stations.

The petroleum firm has filed a complaint to the competition committee over DEPA’s close-to-finalized effort to acquire Shell’s 49 percent of their EPA Attiki joint venture covering supply in the wider Athens area. DEPA already holds a 51 percent stake and would fully own EPA Attiki if the deal with Shell is finalized.

The Motor Oil Hellas complaint could turn into legal action as DEPA, already controlling the country’s biggest wholesale gas agreements, would also gain major control in the capital’s retail market and affect competition.

This issue is certainly not one of minor importance and could end up delaying the overall plan for the retail gas market’s restructuring as well as DEPA’s privatization.

Greece’s wholesale gas market is also changing. Until recently, DEPA controlled this market as the dominant importer of natural gas. DEPA held a 96 percent of the wholesale gas market in 2016.

Things began to change in 2017 when Prometheus Gas, a joint venture formed by the Copelouzos group and Gazpromexport, imported a total of one billion cubic meters, capturing a 20 percent share of the market. M&M Gas, a joint venture involving Motor Oil Hellas and Mytilineos, also imported gas amounts in 2017, through the Greek-Bulgarian interconnection.

Mytilineos is already very active in the wholesale natural gas market as an LNG importer. It plans to import a first Qatar Gas shipment next month. Mytilineos has also established a direct trading partnership with Gazprom and is believed to be negotiating a deal with another major player.

 

PPC announces lignite units tender a day ahead of schedule

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The main power utility PPC has just announced an international tender offering a bailout-required sale package of lignite units one day ahead of tomorrow’s scheduled date.

Prospective investors will have until June 21 to submit official expressions of interest and June 11 to forward any queries concerning the overall sale procedure.

Power stations and mines representing 40 percent of PPC’s overall lignite capacity have been included in the sale package.

The preferred bidder is scheduled to be officially announced on October 17. Binding offers will need to be submitted by September 1. Then, PPC’s board is scheduled to meet on September 20 to endorse the sale and purchase agreement as well as a financial appraisal procedure.

On July 3, the PPC board plans to endorse prospective investors who express interest as well as the procedure leading to the submission of binding offers.

It remains to be seen who the participants will be and how much they will be willing to offer for PPC’s lignite units.

At present, three investment teams are expected to submit official expressions of interest. The Copelouzos group, joined by Chinese energy company Shenhua, is one of the three, Terna Energy is another, while the metals industry Viohalco, one of the country’s biggest energy consumers, is the other player seen as a certainty.

The aforementioned players could also establish partnerships between them of with other investors still out of the picture.

Whether these prospective investors will progress beyond the preliminary stage to submit binding bids is another story. This will largely depend on the variable costs of units, currently not known; lignite’s level of participation in the country’s energy mix; as well as other still-unspecified matters, such as the CAT eligibility of lignite units.

 

 

Alexandroupoli FSRU business decision seen by end of year

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A road map prepared by shareholders of a consortium for the development and operation of an FSRU project in Alexandroupoli, northeastern Greece, lists three basic steps still needed for the venture’s development and operation.

Greece’s DEPA, the public gas corporation, and Bulgaria’s BEH still need to complete negotiations and sign agreements concerning their involvement; an official market test measuring capacity coverage by interested third parties must be staged; and a finalized business plan that would enable the project’s development to commence towards the end of the year, are listed as three pending steps in the road map.

Current developments suggest the official market test will be held imminently, most likely by the summer.

The Alexandroupoli FSRU is seen as a project that may ensure supply of new natural gas quantities for the Greek and regional southeast European markets; contribute to the diversification of supply sources and routes; increase competition, to the benefit of consumers; and boost the reliability and flexibility of both the national and regional gas systems.

These factors have helped reinstate the Alexandroupoli FSRU as an EU Project of Common Interest (PCI).

The project’s interests are linked to those of the Greek-Bulgarian IGB Interconnector.

The Alexandroupoli FSRU plan was initiated by Gastrade, a member of the Copelouzos group, before Gaslog, an international LNG carrier, also officially joined the consortium. Due dilligence is currently in progress for DEPA’s entry with a 20 percent stake. DEPA signed a related agreement with Gastrade in October.

Negotiations with Bulgaria’s BEH are also in progress. The firm’s official entry into the project is expected soon.

 

 

 

Lower-cost industrial electricity a ‘key factor’ in Amynteo plan

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Officials at the energy ministry see an environmental upgrade of the main power utility PPC’s ageing Amyneo lignite-fired power plant as an opportunity that would offer energy-intensive industry lower-cost electricity in the long run.

The Mytilineos group and GEK-TERNA have both proposed to upgrade the Amynteo facility in exchange for favorable electricity tariffs over an extended period, while the Copelouzos group and China’s Shenhua have joined forces to propose upgrading the lignite-fired facility in exchange for a stake of the facility.

Energy ministry officials are already making clear that the main criterion to be applied in the appraisal of these proposals will be the extent to which they assure lower-cost electricity for industries as a means of boosting their level of competitveness and complying with EU and Greek competition terms. At present, industrial enterprises are offered special tariffs by PPC on an individual basis.

Similar deals entailing upgrades for lower-cost energy have been reached in France.

PPC is currently preparing to move ahead with a bailout-required sale package of lignite units. Amynteo was excluded from the sale list by European authorities but the upgrade proposals offer potential to extend the old facility’s lifespan, currently running out of time.

The future course of the Amynteo lignite-fired power plant will depend on government decisions concerning the country’s energy strategy, PPC officials told energypress earlier this week. Lignite’s share of the country’s energy mix would need to remain considerable for the Amynteo upgrade to make sense, officials explained. It is believed that a lignite presence in the energy mix of close to the 19 TWh reached last year would justify an Amynteo upgrade. Lower levels of around 16 TWh would make Amynteo redundant, the sources added.

Just days ago, the Mytilineos corporate group’s chief executive Evangelos Mytilineos made a 110 million-euro offer to upgrade PPC’s ageing Amynteo plant and extend its lifespan to 2030 in exchange for a favorable long-term electricity supply agreement concerning the group’s Aluminium of Greece industrial enterprise. The proposal called for electricity absorption of between 300 and 400 MW per year, from the unit’s total capacity of 600 MW. Mytilineos left open the possibility of other industrial enterprises also taking part in the agreement. The Viohalco industrial group is believed to be interested in such a project, but the prospect remains unconfirmed.

GEK-TERNA had forwarded its environmental upgrade proposal to the energy ministry in October in exchange for favorable electricity tariffs.

 

PPC waiting for gov’t decision on Amynteo unit for direction

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The future course of the main power utility PPC’s Amynteo lignite-fired power plant will depend on government decisions concerning the country’s energy strategy, utility officials told energypress when questioned about the utility’s intentions following three upgrade investment proposals made for Amynteo by GEK-TERNA, Mytilineos and Copelouzos-Shenhua.

PPC’s chief executive Manolis Panagiotakis is definitely interested in attracting an investor to take on the environmental upgrade of the ageing Amynteo facility, which would spare the utility of needing to provide capital of its own for the project, as long as lignite’s share of the country’s energy mix remains considerable, the sources noted. It is believed that a lignite presence close to the 19 TWh reached last year would justify an Amynteo upgrade.

If the annual share of lignite in the energy mix is limited to no more than 16 TWh then certain lignite-fired power stations will be redundant. Amynteo would certainly be sidelined in such a case. Newer plants and units included in a bailout required sale package of PPC lignite units, from which the Amynteo facility was dropped, would carry on operating.

PPC is waiting for energy ministry decisions on Amynteo around March, when they are expected to be revealed and forwarded to the European Commission, before deciding, the officials noted.

 

Major battle seen for liberalized gas market in 2018

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The natural gas retail market’s liberalization, a new reality in Greece that has arrived along with the New Year as a follow-up to the wholesale gas market’s opening, promises to lead to major changes.

Combined electricity-and-gas packages are already being offered by retailers in a local energy market whose natural gas sales have grown from 2.9 billion cubic metres in 2015 to 5 billion cubic meters in 2017.

The natural gas market is expected to gain further impetus as a result of the electricity market’s liberalization. Numerous gas market retailers, besides EPA Attiki, covering wider Athens, and Zenith, covering Thessaloniki and Thessaly, are examining the prospect of offering combined electricity-and-gas packages.

The main power utility PPC has hired a consultant to help prepare its entry into the natural gas market, while major independent electricity suppliers have already launched campaigns for gas supply. Also, DEPA, the public gas corporation, is considering entering the electricity market, either alone or along with a partner.

As of 2018, independent gas suppliers will seek to further bolster their presence in a market traditionally dominated by DEPA.

The degree of DEPA’s future retail presence in the EPA supply companies serving wider Athens, Thessaloniki and Thessaly, to be determined by ongoing negotiations between the shareholders involved in these ventures, remains to be seen.

The government appears to favor DEPA’s withdrawal from EPA Thessaly-Thessaloniki and continued presence in EPA Attiki. DEPA currently holds 51 percent stakes in these ventures. Shell holds a 49 percent stake in EPA Attiki and ENI a 49 percent stake in EPA Thessaly-Thessaloniki. Shell appears to want to withdraw.

EPA Attiki and Zenith, covering Thessaloniki and Thessaly, have both expressed an interest to broaden their geographic reach.

According to data released for 2015, the retail natural gas market in wider Athens, Thessaly and Thessaloniki exceeded 293 million euros. EPA Thessaly-Thessaloniki posted a pretax profit of 45 million euros and EPA Attiki a pretax profit of 30.1 million euros, according to this data.

As for Greece’s wholesale natural gas market, DEPA, until recently, has stood as the undisputed dominant player owing to its overwhelming control of imports. In 2016, DEPA’s natural gas imports reached 42.7 million MWh, from 44.5 million MWh in total, a 96 percent share.

However, this picture began changing in 2017, beginning with Prometheus Gas, a joint venture of the Copelouzos Group and Gazprom Export, whose imports for the year reached one billion cubic meters, or 20 percent of the 5 billion cubic meter total. These amounts were imported from the gas pipeline at Sidirokastro, via Bulgaria.

According to sources, Prometheus Gas has already signed contracts for a greater amount in 2018. Clients include PPC, which has placed orders for its natural gas-fueled power plants.

M&M, a joint venture involving Motor Oil Hellas and the Mytilineos Group, has also made imports.

In recent comments to Reuters, Evangelos Mytilineos, chief executive of the Mytilineos Group, noted that the corporate group ranks as the country’s biggest natural gas consumer with a level of 1.5 billion cubic meters, adding that M&M Gas could soon start trading annual amounts of natural gas measuring around one billion cubic meters.

Despite the emergence of new players in Greece’s wholesale gas market, DEPA managed to increase its volume-based sales increase of 9 percent for 2017’s nine-month period, while its operating profit (EBITDA) rose by 32 percent to 223 million euros.

 

PPC, expanding sources, places first Prometheus Gas order

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The main power utility PPC has taken a major step towards expanding its natural gas supply sources by placing its first order with Prometheus Gas, a Gazprom-Copelouzos group joint venture, for a total amount of 839,500 MWhth in 2018. Until now, PPC has relied on DEPA, the Public Gas Corporation, for its gas needs.

PPC’s move follows a number of Prometheus Gas orders made this year by independent electricity producers and industrial enterprises.

The power utility’s order, based on a board decision made just days ago, will partially cover PPC’s gas needs in 2018 for electricity generation at its gas-fueled facilities.

Prometheus Gas is expected to end the current year with sales of close to one billion cubic meters, an amount representing 20 percent of the Greek market’s total gas demand, based on current figures.

According to sources, Prometheus Gas has already signed deals for natural gas supply totaling over one billion cubic meters in 2018. Most of these orders have been placed by electricity producers, industrial consumers, as well as suppliers, now operating in a reformed retail gas market.

The shape of Greece’s natural gas market in the year to come has yet to be finalized. The Mytilineos Group, the country’s biggest natural gas consumer with annual needs totaling 1.5 billion cubic meters, has yet to unveil its plans.

In recent comments to Reuters, Evangelos Mytilineos, chief executive of the Mytilineos Group, suggested the corporate group could soon begin trading amounts of around one billion cubic meters a year through M&M Gas, a wholesale trading joint venture involving the Mytilineos Group and Motor Oil Hellas.

Natural gas sales in the Greek market, currently dominated by three key players, have skyrocketed in recent times. Sales are expected to total 5 billion cubic meters in 2017, nearly double the sales figure of registered 2.9 billion cubic meters in 2015. worth slightly below one billion euros.

Despite the emergence of new players, DEPA, the gas utility, has managed to increase its sales by 9 percent in terms of volume and 32 percent in terms of operating profit. The utility’s EBITDA figure is estimated at 223 million euros.

The market data clearly shows that all players, including DEPA, have benefited from the overall rise in demand for natural gas. This trend may be repeated in 2018, a year during which PPC’s Megalopoli V power plant is expected to enter the system, which will further increase local natural gas demand.

 

 

Three investors interested in Amynteo facility upgrade

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Three investors have expressed an interest to environmentally upgrade the main power utility PPC’s 600-MW Amynteo lignite-fired power station, until recently regarded as an ageing, discarded unit of limited lifespan and potential, energypress has been informed.

The Copelouzos corporate group, joined by China’s Shenhua, is believed to have emerged first to express an interest in the upgrade project in exchange for a majority share in the venture to sell its electricity output to the grid.

In addition, a representative of an unnamed major local energy group is also believed to have forwarded a specific proposal concerning the utilization of state-controlled PPC’s Amynteo power station to the utility’s CEO Manolis Panagiotakis and energy minister Giorgos Stathakis. This expression of interest was apparently made a few months ago, well ahead of the recent finalization of a list of PPC lignite units to be included in a bailout-required sale package.

An intention by PPC to have Amynteo included in this sale package was stopped by the lenders as a result of the facility’s limited lifespan – in its current condition.

A third proposal was apparently forwarded by an energy-intensive industrial producer interested in upgrading the Amynteo power station in exchange for favorably priced electricity supply to its facilities. A fellow industrial producer may also be involved in this initiative.

This third proposal is believed to have resulted from a recent appeal by Panagiotakis, the PPC boss, to the industrial sector, urging its players to capitalize on the developments and secure reliable, competitively priced electricity.

Panagiotakis, presenting his thoughts at a recent American-Hellenic Chamber of Commerce conference, invited investors to take part in an upcoming market test for the sale package of PPC lignite units, representing 40 percent of the utility’s total lignite capacity, as well as environmental upgrades of ageing units not included in the sale, in exchange for favorably priced electricity supply deals.

For quite some time now, PPC’s administration has turned to the private sector in search of capital for the environmental upgrades of old units as the utility’s coffers are currently unable to cover the cost of such investments.

The purported cost of the Amynteo power station’s environmental upgrade, as well as the stabilization of the area’s mine affected by a landslide last June, has varied. Some authorities estimate both projects, combined, could require 200 million euros.  investments.

It remains unclear what percentage of Amynteo PPC could retain if negotiations with investors proceed.