DEPA Infrastructure yield, 8.2% + 1.5%, a drawcard for bidders

Though not yet officially announced, a new annual regulated yield for distribution network operators, now set, represents one of the strongest drawcards for the sale of DEPA Infrastructure, a new entity established by gas utility DEPA for privatization.

Prospective bidders engaged in preliminary contact with authorities linked to the DEPA Infrastructure sale ahead of a February 14 deadline for non-binding expression of interest have been told the WACC figure has been set at 8.2 percent plus a 1.5 percent premium if certain investment objectives are achieved.

These objectives include swift network development in areas covered by gas distributor EDA, achievement of pipeline addition goals, specified in kilometers, as well as the development of projects not included in DEPA Infrastructure’s initial development plan.

Prospective participants, including funds, will enter this privatization procedure knowing their investment’s potential yield can reach 9.7 percent, far higher than WACC performances enjoyed by network operators in central Europe.

This higher yield offering has generated all-round optimism for a solid turnout by participants Friday week.

Potential bidders, so far, are believed to include Greek gas grid operator DESFA, France’s Engie, Italy’s Italgas and Germany’s Eon.

Besides European operators, the privatization is also expected to attract a number of funds, seen partnering with operators for the sale’s second round of binding bids.

DEPA Infrastructure has taken under its wings DEPA’s interests in the distribution networks of wider Athens (EDA Attiki), Thessaloniki and Thessalia (EDA Thess) and the rest of Greece (DEDA).

 

RAE decisions on network fees, industrial sector hike in June

RAE, the Regulatory Authority for Energy, is expected to decide on the levels of regulated charges for gas distribution networks in the wider Athens area, Thessaloniki and the rest of Greece within June, sources have informed.

It is believed that these charges will essentially remain unchanged. A minor reduction could be made.

A decision on a 4-euro per MWh distribution charge set for the industrial sector in the summer of 2015 will be a key a factor in setting the new regulated charges. Action taken by EVIKEN, the Association of Industrial Energy Consumers, against this charge at a European Commission level was successful.

This charge increase was implemented across the board for all industrial consumers, regardless of profile.

RAE is expected to reach a decision this summer on a five-year development plan covering 2019 to 2023 for gas distribution companies. It is waiting for related data from the DEDA and EDA Attikis distributors.

DEDA set for new hirings to support network expansion in 18 cities

Gas distributor DEDA, a wholly-owned subsidiary of DEPA, the public gas corporation, is preparing to hire additional technical personnel to support a natural gas network expansion plan in 18 Greek provincial cities, Stefania Mosse, the distributor’s CEO, told yesterday’s Power & Gas Supply Forum in Athens.

Though Mosse did not elaborate on how many new hirings would be made, nor when, she stressed the expansion plan requires a reinforcement of staff as the existing DEDA team, numbering 30 persons, does not suffice.

The network’s expansion is planned to cover three prefectures: east Macedonia-Thrace, central Macedonia, as well as a mainland area further south, in central Greece, comprised of Fthiotida, Boetia, Evritania, and the island Evia, slightly northeast of Athens.

Tenders for procurement and sub-contracts are a top priority for the board at DEDA, the aim being to begin work in the summer, according to an announcement released by the distributor in January.

DEDA’s overall network expansion plan entails network development measuring up to 1,130 kilometers and 30,800 new consumer connections by 2023. The project is budgeted at 172 million euros.

 

Ministry’s DEPA hiring plan raises privatization concerns

An energy ministry plan to orchestrate hirings of 200 subcontracted external associates working for gas utility DEPA through a procedure that would skip bailout-related employment restrictions imposed on public sector enterprises has swiftly raised objections on a number of fronts and troubled authorities over the move’s impact on the utility’s prospective privatization.

Company shareholders fear the currently profitable utility’s market value will be diminished as a result of these hirings, seen as unnecessary additions that will bloat the payroll and reduce DEPA’s operating profit levels.

Besides the shareholders, DEPA employees on the payroll have also reacted fearing these hirings could affect their interests.

The ministry, looking to hand out favors as this is an election year, is planning to hire the 200 subcontracted workers through three subsidiaries not subject to the bailout-related employment restrictions imposed on public sector enterprises.

These are gas supplier EPA Attiki and gas distributor EDA Attiki, both covering the wider Athens area, as well as DEDA, responsible for gas network development in regions not covered by the parent company. Head officials at these subsidiaries have also expressed concerns over the repercussions of the energy ministry’s recruitment plan.

The DEPA privatization, not expected to be launched before July, may end up being loaded onto the agenda of the country’s next administration.

DEPA will be split into two new entities, DEPA Infrastructure and DEPA Trade, for the privatization, to begin with a tender offering a majority stake (50% plus one share) in DEPA Trade. A 14 percent stake of DEPA Infrastructure will also be placed for sale at a latter date.

Ministry preparing 200 hirings at privatization-bound DEPA

The energy ministry is maneuvering to clear bailout-related employment restrictions imposed on public sector enterprises and facilitate the recruitment at privatization-destined gas utility DEPA of the majority of 200 workers currently subcontracted as external associates.

The ministry’s leadership appears to have bowed to worker union pressure, ensuring the hirings will go ahead, sources informed. If so, they would bypass ASEP (Supreme Council for Civil Personnel Selection) restrictions.

As a result, 150 workers subcontracted by DEPA would be distributed to three gas utility subsidiaries: the wider Athens area gas supplier EPA Attiki; distributor EDA Attiki, also covering the wider Athens area; and DEDA, responsible for gas network development in regions not covered by the parent company. All three can hire personnel without conforming to ASEP restrictions. A further 23 workers are currently subcontracted with DEDA and between 30 and 35 with CNG refueling stations.

New employees are expected to be offered individual work agreements. The duration of these agreements remains unclear.

An energy ministry DEPA draft bill scheduled to be submitted to parliament on February 28 and designed to split the gas utility into two entities, DEPA Trade and DEPA Infrastructure, ahead of its privatization, is not expected to include extensive details on personnel matters, including the ministry’s recruitment plan.

In addition, pay cuts are also planned for DEPA’s current staff on the payroll.

 

 

Country’s gas distributors striving to meet terms to secure licenses

The country’s three gas distribution companies exclusively covering the Greek market are preparing dossiers including investment plans to be submitted to RAE, the Regulatory Authority for Energy, in efforts to secure operating licenses, yet to be officially granted.

The three natural gas distributors are EDA Attiki, covering the wider Athens area, EDA Thess, serving the Thessaloniki area, and DEDA, covering the rest of Greece.

The three companies, undergoing separate licencing procedures, each need to prove that they are capable of developing investment plans previously submitted.

The authority wants to avoid any overambitious – and ultimately unachievable – network planning by the three distributors to prevent obstructing other investors who could be interested in developing networks.

Distribution companies will risk losing their regional licenses if they do not develop networks as planned.

EDA Thess, sporting a reliable track record, is believed to have made the most progress of the three distributors in its preparation of a five-year plan. EDA Attiki, according to statements made by company officials, is reworking its five-year investment plan, while DEDA, operating in a far wider area, has catching up to do.

Gas network expansion to 18 cities qualifies for EU subsidies

Greece’s natural gas network will be expanded to cover 18 provincial cities in northern and central regions following a European Commission decision reached to secure EU cohesion policy funds for the expansion plan through the Multiannual Financial Framework, running from 2014 to 2020.

The plan’s funding framework inclusion will enable subsidies of 50 percent for the project, whose total budget is estimated at over 172 million euros.

Driven by the now-certain prospect of EU subsidies for the expansion plan, gas distributor DEDA, a subsidiary of gas utility DEPA responsible for the country’s natural gas networks – except the wider Athens area – is believed to be finalizing the details of  related tenders expected to be announced in January.

According to the plan, the country’s gas network will be expanded in the East Macedonia-Thrace, Central Macedonia and central Greece regions.

The provincial cities listed in the gas network expansion plan are: Thebes, Amfissa, Lamia, Karpenisi, Livadia, Halkida, Alexandria, Giannitsa, Veria, Katerini, Kilkis, Serres, Komotini, Alexandroupoli, Drama, Kavala, Xanthi and Orestiada.

 

Two options most probable in DEPA restructuring plan

Consultants working on Greek gas utility DEPA’s split plan, entailing a division of the firm’s commercial interests and infrastructure, have arrived at two most probable proposals, energypress sources have informed.

One of the two options being considered would split the utility’s commercial activity from DEPA, as the corporation currently stands, and incorporate it into greater Athens area gas supplier EPA Attiki, a fully operational enterprise with an existing customer base.

According to the other scenario, the company’s commercial activity would remain a part of DEPA while the utility’s networks and international projects would be split and transferred to prospective firm DEPA Infrastructure along with gas distribution venture DEDA, a wholly-owned subsidiary of DEPA, and Athens network operator EDA Attiki.

Financial criteria, taxation issues and personnel concerns will be taken into account before a finalized plan is shaped. It is believed that a limited voluntary retirement scheme is being examined.

Work on a draft bill concerning DEPA’s restructuring plan and the commitments of the resulting firms will commence as soon as the consultants, DEPA’s administration and the energy ministry have agreed on the details. According to the original plan, the draft bill was scheduled for delivery in October.

 

Industrialists, PPC question cost impact of gas network expansion

EVIKEN, the Association of Industrial Energy Consumers, and the main power utility PPC have both raised sustainability-related objections to a gas network expansion plan covering 18 municipalities in northern and central Greece, included by gas distributor DEDA in its five-year development plan.

Participating in public consultation staged by DEDA, EVIKEN pointed out that the gas distributor’s five-year plan makes no mention of the impact on distribution network surcharges.

RAE, the Regulatory Authority for Energy, has already endorsed distribution network surcharges for central Greece, a region of heightened industrial activity. The area’s gas network is already developed but will be expanded. RAE will need to ensure that existing network charges are not increased to cover the cost of the network’s expansion, the industrial consumers association stressed in its intervention.

PPC also raised sustainability concerns regarding the gas network’s expansion to previously non-serviced areas.

RAE is expected to approve DEDA’s five-year development plan by October 10, when the gas distributor, a wholly-owned subsidiary of DEPA, the public gas corporation, plans to proceed with tenders for the development of the natural gas networks.

The DEDA tenders are planned to cover all development aspects of the projects, including procurement, project management and construction. A total of 11 or 12 tenders are being planned.

 

Gas network tenders for 18 mid, central cities planned by Oct 10

Gas distributor DEDA, a wholly-owned subsidiary of DEPA, the public gas corporation, plans to proceed with tenders for the development of natural gas networks in 18 municipalities covering northern and central Greece by October 10, once the terms of all the planned tenders have been endorsed by regional authorities.

The DEDA tenders are planned to cover all development aspects of the projects, including procurement, project management and construction. A total of 11 or 12 tenders are being planned.

Projects envisioned include the construction of a low and medium-pressure gas distribution network in the Eastern Macedonia-Thrace region, budgeted at 64.2 million euros, half of which may be funded by the Public Investments Program (PIP). The low-pressure network’s section is planned to cover roughly 485 km in length and the medium-pressure network about 9 km. The provincial cities Alexandroupoli, Orestiada, Komotini, Xanthi, Drama and Kavala will be served.

The DEDA project also includes a plan for the construction of a low and medium-pressure gas distribution network in the Central Macedonia region, budgeted at 44.1 million euro. PIP funding here could reach 48.5 percent. Six municipalities are planned to be covered, these being Veria, Alexandria, Katerini, Serres, Giannitsa and Kilkis. The low-pressure network is planned to run 327 km and the medium-pressure network 9 km.

The project’s third section, covering central Greece’s cities of Lamia, Halkida, Thebes, Livadia, Amfissa and Karpenisi, has a budget estimate of 47.4 million euros, 45 percent of which may be funded by the Public Investments Program (PIP).

A low and high-pressure network running approximately 210 km already exists and covers parts of the region to serve commercial and industrial consumers. A low-pressure network of approximately 320 km and a medium-pressure 7 km network will need to be constructed.

The completion time for the project’s three sections is estimated at 5 years.

 

DEDA, authorities join forces for network in north, central Greece

Regional authorities representing various parts of northern Greece have established joint committees and are working closely with gas distributor DEDA to secure EU cohesion policy funds through the Multiannual Financial Framework, covering 2014 to 2020, for the development of natural gas networks in the country’s north.

The decision by regional authorities to join forces for this effort is expected to accelerate procedures as all technical and contractual matters concerning the wider network’s development are being handled collectively.

Officials at DEDA, a wholly-owned subsidiary of DEPA, the public gas corporation, believe contractors for the natural gas network’s development could be appointed within the first quarter of 2019.

The network’s development is planned to cover the regions of east Macedonia-Thrace, central Macedonia, as well as mainland prefectures further south, in central Greece, namely Fthiotida, Boetia and Evritania, and the island Evia, slightly northeast of Athens.

The gas distribution network planned to cover the east Macedonia-Thrace prefectures of Evros, Rodopi, Xanthi, Kavala and Drama, is budgeted at an estimated 64.2 million euros, 50 percent of which may be financed through the public investment program (PIP).

The gas distribution network planned to cover the central Macedonia prefectures of Imathia, Kilkis, Pella, Pieria, Serres and Halkdiki, is budgeted at an estimated 44.1 million euros, 48.5 percent of which may be covered by the public investment program.

The distribution network to cover the regions further south is budgeted at an estimated 647.4 million euros, 45 percent of which may be financed through the public investment program.

 

DEDA starts gas network links in Serres, Halkida, Lamia

The response to a pilot program staged by the recently established gas distributor DEDA, offering gas network connections to consumers in the provincial cities of Serres, Halkida and Lami, has proven positive.

According to energypress sources, at least 1,200 applications have already been submitted and DEDA, a wholly-owned subsidiary of DEPA, the public gas corporation, is now proceeding with connections.

Contractors tasked with maintaining the network are handling these initial connections while a tender offering the task to additional sub-contractors is expected to be held within the next three months.

DEDA is also working on developing the gas networks in central Greece, central Macedonia and eastern Macedonia-Thrace.

A loan from the European Bank, DEDA company capital worth 19.6 million euros, as well as EU funds, through the National Strategic Reference Framework (NSRF), will finance these network development projects.

They are planned to cover a total distance of 1,215 kilometers, offer an annual gas transmission capacity of 6.2 TWh, and serve the natural gas needs of 124,000 buildings.

DEDA also plans to follow up with network development work in the west Macedonia region. The gas supplier will seek European Investment Bank (EIB) funding for this stage.

Development of the west Macedonian region’s gas network has been made possible following negotiations with the TAP consortium, which led to an agreement offering DEDA gas supply via three points along the Trans Adriatic Pipeline, now being developed and planned to run across northern Greece. Two of these supply points will cover needs in the west Macedonia, Ptolemaida and Kastoria regions.

DEDA was founded at the beginning of 2017 and charged with operating most of the country’s natural gas network, except for the wider Athens area, Thessaly and Thessaloniki.

 

 

 

 

DEDA, sole provider of smart meters, set for pilot program in north

Gas distributor DEDA is preparing to launch a pilot program offering direct connections to interested, network-located consumers in Serres, northern Greece. Halkida will follow, and if the response by consumers is positive, DEDA intends to further pursue its pilot program plan in the provincial cities of Lamia, Thebes and Katerini. The inclusion of Kilkis and Drama, both in the north, is also being considered.

Based on its five-year business plan, DEDA plans to develop distribution networks and create new markets in cities situated in Greece’s northern regions of central Macedonia, eastern Macedonia and Thrace, as well as other mainland areas.

DEDA plans to invest 142 million euros in the aforementioned areas between 2018 and 2022. Of this amount, 74.4 million has been secured through EU funding, the European Investment Bank (EIB) will provide 48 million euros, while the company, itself, intends to contribute 19.6 million euros.

DEDA, a wholly owned subsidiary of DEPA, the Public Gas Corporation, established to cover supply to all parts of Greece except for the wider Athens area, Thessaly and Thessaloniki, currently stands as the only distributor installing smart meters for all its consumers.

DEDA, through its network, is currently supplying Halkor, Anoxal, Elval, Fulgor, Heron, M&M, Elpedison, Promitheas, as well as DEPA, EPA Attiki and EPA Thes.

These firms supply natural gas to a total of 162 industrial and commercial sector consumers through DEDA’s network. In 2016, their total natural gas consumption exceeded 2.3 TWh.

 

DEDA network links plan to start from Serres next month

DEDA, an enterprise established recently following DEPA’s (Public Gas Corporation) retreat from the country’s gas networks, plans to soon move ahead with a plan to offer network connections to customers in the provincial cities of Serres and Halkida, as well as Lamia, Thebes and Katerini, if the required consumer interest exists, while pilot programs for Kilkis and Drama are being considered.

DEDA, which has ensured EU development funding to cover connection costs for existing networks, plans to begin the initiative from Serres next month.

The reliance on EU funding is expected to keep network usage fees at relatively low levels and minimize connection costs for customers, a key company principal at DEDA.

As part of its five-year business plan covering 2018 to 2022, already endorsed, the newly established gas company also plans to develop gas distribution networks and create new markets in a total of 18 provincial cities in Greece’s north and central mainland.

Coverage of the investment’s cost, budgeted at 142 million euros, is expected to include 74.4 million euros of EU development funds and 48 million euros from the European Investment Bank. DEDA plans to provide 19.6 million euros of its own capital.

The company plans to rely on CNG for the Orestiada, Veria, Giannitsa, Amfissa and Karpenisi markets.

An entirely owned DEPA subsidiary, DEDA was founded last January to cover all local gas markets except wider Athens, Thessaly and Thessaloniki.

 

 

Lebedev bid for gas distribution license in Greece’s north set for rejection

Russian entrepreneur Leonid Lebedev may have previously been granted a local gas supply license through his Sintez Green Energy Hellas company, but an initiative by Sintez Energy Europe Constructing Limited, a Cyprus-based subsidiary also controlled by Lebedev, for a distribution license covering the Serres, Veria and Kilkis areas in the country’s north, will most likely be rejected, according to latest indications.

Sintez Energy Europe Constructing Limited is essentially aiming to set up a gas distribution company for a region targeted by DEDA, a recently established DEPA (Public Gas Corporation) spin-off founded to serve areas not covered by DEPA, including Serres, Veria and Kilkis. DEPA has retreated from the country’s network.

Serres, Veria and Kilkis have been included in a five-year development plan submitted by DEDA to RAE, the Regulatory Authority for Energy, meaning that the Sintez application for a distribution license concerning these areas had little or no chance of succeeding from the start.

This application will most likely be rejected – probably soon – unless RAE deems that DEDA does not possess the needed capital to execute the business plan it has submitted.

The Sintez application concerns a 50-year gas distribution license, via pipelines, for CNG and LNG.

This is the third entrepreneurial initiative taken by Lebedev in the Greek market. Previously, the Russian businessman’s Sintez Green Energy Hellas applied for a natural gas supply license to RAE, which proved successful. This move was preceded by an application from Windows International Hellas, another Lebedev-linked venture, seeking a license to construct a natural gas pipeline from Thessaloniki to Fyrom (Former Yugoslav Republic of Macedonia). Though this bid has yet to be examined by RAE, the Windows International Hellas proposal appears favorable compared to an equivalent plan prepared by DESFA, the natural gas grid operator.

Four years ago, Lebedev had offered 1.9 billion euros to aquire DEPA and DESFA in a tender that did not proceed.

DEPA planning new gas infrastructure for west Macedonia region

DEPA, the Public Gas Corporation, responding to energy infrastructure development needs addressed by local authorities in the west Macedonia region of northern Greece, has designed a natural gas compressor unit for installation at the TAP project’s GBV21 Block Valve Station in the Perdikkas area, located slightly north of Ptolemaida.

The gas corporation intends to include the compressor unit project in its investment program. Its development will enable tankers to load and transfer natural gas to existing telethermal units in the northern provincial cities of Kozani, Prolemaida, Amynteo and Florina.

The same compressor unit will also be used to transfer natural gas to the nearby provincial city Grevena and supply its prospective natural gas distribution network to be constructed by DEDA, a DEPA offshoot. The distribution network is planned to cater to Grevena household and commercial consumers.

Lebedev gas license bid for north facing DEDA obstacle

An application submitted by Sintez Energy Europe Constructing Limited, a Cyprus-based subsidiary controlled by Russian entrepreneur Leonid Lebedev, for a gas distribution license covering Greece’s Serres, Veria and Kilkis areas in the north, currently being processed by RAE, the Regulatory Authority for Energy, is likely to stumble as a result of plans envisioned by DEDA, a DEPA (Public Gas Corporation) spin-off, in these markets.

DEDA, an enterprise established recently following DEPA’s step back from the country’s gas networks, appears to have already secured distribution rights in these parts of northern Greece. DEDA included the Serres, Veria and Kilkis areas in a five-year development plan submitted to RAE.

As a result, DEDA’s plan to develop distribution networks in these three regions will most likely stop other firms from being granted gas disttribution licenses here – unless RAE deems that DEDA does not possess sufficient funds to actualize the business plan it has submitted.

Sintez Energy Europe Constructing Limited, reportedly being represented by a local law firm headed by Eleni Tzouli, wife of Greece’s defense minister Panos Kammenos, is seeking a 50-year license for distribution of CNG and LNG.

DEDA has been tasked with developing, expanding and activating natural gas networks in regions not covered by the parent company DEPA’s existing ventures serving the wider Athens area, Thessaly and Thessaloniki.

This latest move by Lebedev represents his third enrepreneurial initiave in the Greek market. Previously, Sintez Green Energy Hellas applied for a natural gas supply license, which, according to sources, has been granted by RAE. In addition, Windows International Hellas, another Lebedev-linked venture, is seeking to construct a natural gas pipeline to transmit gas from Thessaloniki to Fyrom (Former Yugoslav Republic of Macedonia). Though the licence bid for this project has yet to be examined, it seems to be better positioned, in terms of maturity, than an equivalent project plan submitted by DESFA, the natural gas grid operator.

 

 

 

 

 

DEDA, new DEPA distribution subsidiary, just launched

DEDA, a recently established subsidiary of DEPA, the Public Gas Corporation, tasked with developing, expanding and activating natural gas networks in regions not covered by the parent company’s existing ventures serving the wider Athens area, Thessaly and Thessaloniki, has just begun operating.

Founded on January 1, DEDA intends to add provincial city Kilkis and other regions into its network expansion program by the end of 2017.

Natural gas supply in the Kilkis region is expected to soon begin with the Kilkis General Hospital as the local network’s first recipient.

Given this development, DEDA is currently examining the prospect of constructing an associated network of limited reach in the Kilkis area, as a pilot program for the full-scale project.