DEPA Commercial sale over, DEPA Infrastructure completion June

Privatization fund TAIPED’s attempted sale of gas company DEPA Commercial is officially over, the European Commission admitting that the procedure cannot proceed as a result of an ongoing legal battle between the company and fertilizer producer ELFE, which, Brussels noted, in a report on the Greek economy, is expected to take two to three years to be resolved.

ELFE is seeking compensation from DEPA, claiming overpriced gas supply between 2010 and 2015, while DEPA has filed a legal case seeking overdue amounts from the fertilizer producer, based in Kavala, northern Greece.

TAIPED is now examining alternative sale solutions, according to the Brussels report.

As for the yet-to-be-finalized sale of gas company DEPA Infrastructure, acquired by Italgas, Europe’s second largest gas distributor, it is expected to be finalized in mid-June, the European Commission’s report noted.

The Brussels report made no mention of recent certification issues raised by RAE, the Regulatory Authority for Energy, which has changed its stance on the certification conditions for DEPA Infrastructure’s three subsidiaries, the gas distributors EDA Attiki, EDA THESS and DEDA.

DEPA Infrastructure sale facing hurdle on final stretch

The yet-to-be-finalized sale of gas company DEPA Infrastructure, acquired by Italgas, Europe’s second largest gas distributor, has encountered a hurdle on the final stretch as a result of certification issues raised by RAE, Greece’s Regulatory Authority for Energy.

The unexpected issues faced by this privatization, promising to provide 733 million euros to TAIPED, the country’s privatization fund, are serious and threaten to derail a sale and purchase agreement signed last December by the two sellers, the Greek State and Hellenic Petroleum (ELPE), and the Italian buyer.

The sale’s procedure had progressed swiftly, leading to competition committee approval, but events over the past few days, instigated by RAE’s change of stance on the certification conditions of DEPA Infrastructure’s three subsidiaries, the gas distributors EDA Attiki, EDA THESS and DEDA, have suddenly led to confusion, bringing the sale to a standstill.

RAE has offered conditional certification for the three subsidiaries, setting terms that did not exist in the lead-up to the sale and its conditions, according to sources.

Consequently, certification offered to the subsidiaries will not be considered valid if the buyer proceeds with an equity capital increase within three years of the DEPA Infrastructure sale’s finalization. Also, the agendas of all three subsidiaries will need to remain unchanged for their certification to remain valid, according to the sources.

TAIPED officials are believed to have been angered by these initiatives, considering them to be beyond RAE’s authority. Officials at Greece’s finance and energy ministries, as well as Italgas, have also been annoyed by RAE’s decision.

TAIPED and Italgas officials are believed to be engaged in talks in search of a compromise solution.

 

DEDA: Framework ‘pending’ for biomethane, hydrogen

Procedures leading to the establishment of legal and regulatory frameworks needed for commercial utilization of biomethane and hydrogen need to be accelerated by the government and the regulatory authority, Marios Tsakas, chief executive of gas distributor DEDA, has stressed in an interview with energypress.

Greece, from a technical and technological point of view, is ready to move ahead in the biomethane and hydrogen domains, the DEDA official pointed out.

Two pilot projects carried out by the company could develop into twenty mass-production projects if the pending legal and regulatory frameworks are completed and authorities give the green light, Tsakas noted.

The DEDA chief executive expressed optimism on the prospects of natural gas, noting that wild price fluctuations amid the energy crisis do not diminish the strategic advantages offered by this fuel, which can contribute significantly to reduced energy cost.

DEDA is preparing for the Greek market entry of sector giant Italgas, which has acquired gas company DEPA Infrastructure, Tsakas noted, adding that the arrival of this new investor, possessing enormous expertise of over 100 years in the natural gas sector, will lead to further growth that will benefit DEDA.

“We are network operators and, therefore, must be able to respond efficiently and responsibly, whether we are talking about pure gas networks or a mixture of gas and hydrogen, or biomethane,” Tsakas remarked.

 

Italgas’ DEPA Infrastructure deal to be finalized late March

The sale of gas company DEPA Infrastructure, acquired by Italgas, Italy’s biggest natural gas distribution company and the third largest in Europe, is expected to be completed in the first quarter of the year, energypress sources closely monitoring the procedure have informed.

Final sale procedures will have been completed towards the end of March, enabling Italgas to make its payment, an amount of 733 million euros, the sources noted.

The competition committee needs to approve the sales and purchase agreement, signed between the buyer and two sellers, privatization fund TAIPED and Hellenic Petroleum ELPE, on December 10, 2021.

RAE, Greece’s Regulatory Authority for Energy, also needs to issue necessary certification for the acquisition, but the competition committee’s approval is a prerequisite for this stage.

The acquisition will be fully completed once Italgas also purchases purchase gas distributor EDA THESS’s 49 percent stake held by Italy’s Eni gas e Luce, wanting to sell. This follow-up purchase of the EDA THESS stake has been set as a condition for Italgas, the winning bidder.

DEPA Infrastructure, EDA THESS’s parent company, holds a 51 percent stake in the gas distributor covering the Thessaloniki and Thessaly areas, while Eni gas e Luce, holds 49 percent.

The overall sum expected to be spent by Italgas for DEPA Infrastructure and EDA THESS’s 49 percent stake is expected to reach 940 million euros.

Then, Copelouzos group subsidiary Faethon is expected to enter DEPA Infrastructure with a stake seen ranging between 10 and 20 percent

Italgas and the Copelouzos group had reached a related agreement on this minority-stake arrangement prior to the DEPA Infrastructure tender.

Copelouzos group enters DEPA Infrastucture alongside Italgas

The Copelouzos Group is set to acquire a minor stake in Italgas’ 100 percent acquisition of DEPA Infrastructure, to be completed tomorrow when Italgas is expected to sign a final agreement with Greek privatization fund TAIPED.

The Copelouzos Group is expected to acquire a stake of between 10 and 20 percent in DEPA Infrastructure through Faethon, a group company controlled by family member Elmina Copelouzou.

The Copelouzos Group and Italgas had reached an agreement on this partnership while the DEPA Infrastructure tender was still in progress.

The total value of the DEPA Infrastructure acquisition by Italgas is worth 940 million euros, making it one of the biggest deals reached in Greece in recent years.

The 100 percent privatization of DEPA Infrastructure comprises 100 percent of gas distributor EDA Attiki, covering the wider Athens area; 100 percent of gas distributor DEDA, representing all other areas in Greece except for Thessaloniki and Thessaly; as well as a 51 percent stake in gas distributor EDA THESS, covering the Thessaloniki and Thessaly areas.

As its next step, Italgas will also buy the remaining 49 percent of EDA THESS following a decision by Eni Gas e Luce to sell this stake.

DEPA Infrastructure sale to Italgas nearing completion

The sale procedure for DEPA Infrastructure, acquired by Italgas, Italy’s biggest natural gas distribution company and the third largest in Europe, is now nearing completion, with its sales and purchase agreement expected to be signed within the next few days.

The agreement was forwarded to the inspection committee on October 26 and approved a fortnight later. Once the SPA is signed all financial aspects of the agreement are expected to be completed by early 2022 as Italgas will need to be certified by RAE, Greece’s Regulatory Authority for Energy, and receive necessary approvals from the competition committee.

Italgas emerged as the winning bidder in a tender offering 100 percent of DEPA Infrastructure with an offer that exceeded the most optimistic of expectations to reach 733 million euros.

The 100 percent privatization of DEPA Infrastructure comprises 100 percent of gas distributor EDA Attiki, covering the wider Athens area; 100 percent of gas distributor DEDA, representing all other areas in Greece except for Thessaloniki and Thessaly; as well as a 51 percent stake in gas distributor EDA THESS, covering the Thessaloniki and Thessaly areas.

Italgas has announced, as part of its strategic plan for 2021 to 2027, an investment plan totaling 7.5 billion euros, the aim being to reinforce the natural gas distribution network’s strategic role in the decarbonization procedure.

Italgas, whose roots stretch back 180 years, operates 70,000 kilometers of distribution networks in Italy, servicing over 1,800 municipalities.

Regulatory framework, potential key to Italgas’ DEPA Infr. move

The existing regulatory framework and country’s gas penetration prospects were key attractions in Italgas’ decision to develop an interest in DEPA Infrastructure, according to the Italian company, the preferred bidder in a privatization offering a 100 percent stake.

Given the Greek government’s approval, the agreement is expected to be completed by the end of the year, the Italian company’s administration has just informed. Bidding procedures were completed last week.

Italgas began considering its DEPA move back in the spring of 2018 and views its acquisition as a significant step signaling the company’s return to the Greek market following a presence some years ago through gas distributor EDA THESS, covering the Thessaloniki and Thessaly areas, chief executive Paolo Gallo noted.

“Greece is similar to Sardinia. Investments are needed. We can also develop our knowhow here for new, fully digital networks that will lead Greece through the energy transition,” Gallo commented.

The DEPA Infrastructure deal perfectly matches Italgas’ long-term strategic vision, while the Italian company, through this investment, can maintain a strong presence in Greece for decades, possibly right up until 2043, Gallo projected.

Italgas plans to increase DEPA Infrastructure’s network supply points from 509 last year to 870 by 2026 and over 1,050 by 2030. It also aims to extend the network’s total length from 6,875 km to 10,800 km in 2026 and 11,500 km in 2030.

Italgas expects DEPA Infrastructure’s revenue to increase from 129 million euros last year to 210 million euros in 2026 and 240 million euros in 2030, while operating profit is expected to rise from 81 million euros to 160 million euros in 2026 and 185 million euros in 2030.

Energy privatizations exceed forecasts, raising nearly €3bn

Two major energy-sector privatizations whose bidding procedures were completed last week, the 100 percent sale of gas company DEPA Infrastructure and 49 percent sale of electricity distribution network operator DEDDIE/HEDNO, exceeded even the most optimistic of expectations, resulting in total revenue, from both sales, of 2.849 billion euros, well over initial projections of 2.2 billion euros.

Australian fund Macquarie’s 2.116 billion-euro winning offer for 49 percent of DEDDIE/HEDNO, being offered without managerial control, stands as a record sum for Greek privatizations.

The DEDDIE/HEDNO sale’s amount will be used by power utility PPC, the parent company, for network modernization, RES growth, and improved customer services.

Italy’s Italgas secured 100 percent of DEPA Infrastructure with an improved follow-up offer of 733 million euros. Thus sum is expected to exceed 800 million euros once the buyer’s bid for a 49 percent stake in distributor EDA THESS, covering the Thessaloniki and Thessaly areas, is submitted and added to the tally.

According to the DEPA Infrastructure sale’s terms, the winning bidder must also purchase EDA THESS’s 49 percent stake, held by Italy’s Eni gas e Luce, wanting to sell.

The favorable outcomes of the two privatizations highlight the country’s improving investment climate as well as the confidence of foreign institutional and strategic investors in the prospects of the Greek economy, Prime Minister Kyriakos Mitsotakis noted. This improvement is also confirmed by yet another upgrade of the Greek economy, this time by Scope Rating, he added.

Besides signaling good news for the Greek economy, the DEDDIE/HEDNO and DEPA Infrastructure privatizations also send an upbeat message on the prospects of the domestic energy market.

 

Big week for energy privatizations, approaching finales

It is a big week for the country’s energy privatizations with gas company DEPA Infrastructure’s tender set to reach a concluding stage tomorrow and that of distribution network operator DEDDIE/HEDNO also approaching its finale as its binding bids are scheduled to be opened on Friday.

Italgas, Italy’s biggest natural gas distribution company and the third largest in Europe, has, according to sources, submitted the highest bid in the DEPA Infrastructure sale, offering an 100 percent stake, and is the only bidder to which the privatization fund TAIPED has extended a request for an improved offer, by tomorrow.

The Italgas offer is believed to be close to 700 million euros, a figure expected to rise further, and well above an offer submitted by rival bidder EPH from the Czech Republic.

As for the privatization of DEDDIE/HEDNO, a power utility PPC subsidiary, four binding offers, for a 49% stake, have been submitted by major international funds CVC Capital Partners Group, First Sentier Investors Group, KKR Group, and the Macquarie Group. This level of participation could boost bid levels. Offers of over 1.5 billion euros, or even 1.7 billion euros, could be unveiled, sources have anticipated.

The rebounding economy, potential of Greece’s energy market, as well as the statures of all five suitors involved in the two sales could result in two of the country’s most lucrative privatization agreements, in all sectors.

Italgas, DEPA Infrastructure’s top bidder, step from acquisition

Italgas, Italy’s biggest natural gas distribution company and the third largest in Europe, is now one step away from acquiring Greece’s DEPA Infrastructure as, according to energypresss sources, it has submitted the highest bid in the DEPA Infrastructure sale and is the only bidder to which the privatization fund TAIPED has extended a request for an improved offer, by September 8.

The Italgas offer is believed to be close to 700 million euros, a figure expected to rise further, and well above an offer submitted by rival bidder EPH from the Czech Republic.

The preferred bidder may be officially announced on September 9. The sale procedure is expected to be finalized by the end of the year as national and European authorities will need to re-certify DEPA Infrastructure as a natural gas network operator under its new ownership to emerge from the sale.

The 100 percent privatization of DEPA Infrastructure comprises 100 percent of gas distributor EDA Attiki, covering the wider Athens area; 100 percent of gas distributor DEDA, representing all other areas in Greece except for Thessaloniki and Thessaly; as well as a 51 percent stake in gas distributor EDA THESS, covering the Thessaloniki and Thessaly areas.

The preferred bidder will also submit an offer for the remaining 49 percent stake in EDA THESS, based on an agreement reached between TAIPED, the privatization fund, with Italy’s Eni Gas e Luce, the current holder of this minority stake.

As a result, DEPA Infrastructure’s winning bidder stands to become the sole stakeholder in the three gas distribution companies.

DEPA Infrastructure bidder legal files opened ahead of offers

Privatization fund TAIPED has opened first-stage files carrying legal documents submitted by two bidders, Italy’s gas network operator Italgas and the Czech Republic’s EP INVESTMENT ADVISORS, for the 100 percent sale of gas company DEPA Infrastructure.

This is the first step before the financial offers submitted by the two bidders are opened.

TAIPED officials are now examining the legal documents in case any clarification is needed before the sale’s procedure advances to the second and final stage, when the financial offers are opened, probably towards the end of August or early September.

The possibility of the bidders being asked to improve their offers has not been ruled out.

 

Italgas, Czech Republic’s EPH bid for DEPA Infrastructure

Italy’s gas network operator Italgas and the Czech Republic’s EP INVESTMENT ADVISORS (EPH) met yesterday’s deadline to submit binding bids for the 100 percent sale of gas company DEPA Infrastructure, bringing this privatization to its final stretch.

TAIPED, Greece’s privatization fund, will now need to check if the files submitted by the suitors are complete before opening up their respective financial offers.

The privatization fund’s board will inspect the first-stage files, carrying legal documents, at its next meeting, sources informed. If the files are complete, TAIPED will proceed to the next step of opening up the financial offers, but not before some time has elapsed to allow for possible objections.

If the price difference in the financial offers is no more than 15 percent, TAIPED will request improved follow-up bids from both bidders.

The preferred bidder is expected to be announced by the end of August or early September. DG Comp and DG Energy approval will then be required before an agreement can be signed for the transfer, to the winning bidder, of TAIPED’s 65 percent stake control of DEPA Infrastructure and the 35 percent stake held by Hellenic Petroleum (ELPE).

The sale of DEPA Infrastructure, controlling the distribution networks of EDA Attiki, covering the wider Athens area, EDA Thess, covering Thessaloniki and Thessaly, as well as DEDA, covering the rest of Greece, will spell the end of the Greek State’s control of the country’s low and medium-pressure natural gas pipelines.

DEPA Infrastructure sale now a showdown for two, Italgas, EPH

With the deadline for binding bids in the 100 percent sale of gas company DEPA Infrastructure expiring tomorrow, a latest update from sources indicates that two suitors will submit offers, Italy’s gas network operator Italgas and the Czech Republic’s EP INVESTMENT ADVISORS (EPH). An additional bid by a third participant has not been ruled out.

Besides Italgas and EPH, four other bidders have qualified for the privatization’s final round, these being two Australian funds, FIRST STATE INVESTMENTS (European Diversified Infrastructure Fund II) and MACQUARIE (MEIF 6 DI HOLDINGS), international fund KKR and Chinese consortium SINO-CEE FUND & SHANGHAI DAZHONG PUBLIC UTILITIES (GROUP) Co., Ltd.

The Greek State is selling its 65 percent stake in DEPA Infrastructure, through the privatization fund TAIPED, and Hellenic Petroleum (ELPE) the other 35 percent.

Italgas’ chief executive Paolo Gallo, in an interview with Greek daily Ta Nea, has stated the company will be submitting a binding offer for the DEPA Infrastructure sale.

Italgas is Italy’s biggest natural gas distributor, holding a 34 percent market share, and also ranks as Europe’s third biggest network operator. Italgas operates 70,000 kilometers of networks serving over 1,800 municipalities.

Rival bidder EPH is a formidable energy group with vertically integrated investments in central Europe. It owns and utilizes assets in the Czech Republic, Slovakia, Germany, Italy, the UK, France, Hungary and Poland, covering a range of domains such as energy and heat production, natural gas transmission and storage, as well as distribution and supply of natural gas, heating and electricity.

DEPA Infrastructure controls gas distributors EDA Attiki and EDA THESS, both with 51 percent stakes, as well as DEDA.

DEPA Infrastructure sale’s July 15 deadline confirmed, 2-3 bids expected

Privatization fund TAIPED has decided to keep unchanged a July 15 deadline for binding bids concerning the 100 percent sale of gas company DEPA Infrastructure, meaning this privatization procedure, now 17 months long, has hit the final stretch.

The Greek State is selling its 65 percent stake in DEPA Infrastructure and Hellenic Petroleum (ELPE) the other 35 percent.

The deadline date was reconfirmed following the energy ministry’s settlement of pending issues.

Just days ago, a legislative revision was ratified to grant 30-year license extensions to the EDA distribution companies, DEPA subsidiaries.

Also, a rule enabling the removal of geographical areas from the control of EDA companies if delays in their development of distribution networks in these areas have reached 18 months will not be applied if the EDA companies are found to not be responsible for these delays.

Moreover, the legislative revision has introduced a new mechanism enabling required revenue recovery underperformance by one of the country’s three EDA distribution company to be covered by the other EDA companies, through revenue offsetting procedures concerning equivalent periods.

If this procedure fails to resolve required revenue recovery underperformances, then any discrepancy will be covered through price adjustments at all three EDA companies.

A total of six participants have qualified for the final round of the DEPA Infrastructure sale. According to sources, two or three suitors are seen submitting binding bids in just over a week, but this remains to be confirmed.

The six qualifiers are:

  • EP INVESTMENT ADVISORS
  • FIRST STATE INVESTMENTS (European Diversified Infrastructure Fund II)
  • ITALGAS SpA
  • KKR (KKR Global Infrastructure Investors III L.P.)
  • MACQUARIE (MEIF 6 DI HOLDINGS)
  • SINO-CEE FUND & SHANGHAI DAZHONG PUBLIC UTILITIES (GROUP) Co., Ltd consortium.

 

DEPA Infrastructure revisions, for clarity, in Parliament, sale deadline nearing

A legislative revision prepared by the energy ministry for DEPA Infrastructure, containing measures that aim to offer greater clarity to bidders in the ongoing sale of the gas company, has been submitted to Parliament.

DEPA Infrastructure suitors face a July 15 second-round deadline for binding bids.

The legislative revision includes provisions for 30-year extensions of gas distribution licenses as well as the creation of a new mechanism enabling required revenue recovery underperformance by one of the country’s three EDA distribution company to be covered by the other EDA companies, through revenue offsetting procedures concerning equivalent periods.

If this procedure fails to resolve required revenue recovery underperformances, then any discrepancy will be covered through  price adjustments at all three EDA companies.

 

DEPA Infrastructure buyer must also buy Eni 49% in EDA Thess

The winning bidder in a privatization offering gas company DEPA Infrastructure will be obligated to also purchase gas distributor EDA THESS’s 49 percent stake held by Italy’s Eni gas e Luce, wanting to sell, according to an agreement between the two sides, revealed by a European Commission post-bailout surveillance report, the 10th edition, on Greece.

DEPA Infrastructure, EDA THESS’s parent company, holds a 51 percent stake in the gas distributor covering the Thessaloniki and Thessaly areas, while Eni gas e Luce, holding 49 percent, wants to withdraw.

A total of six qualifiers through to the DEPA Infrastructure privatization’s final round have been informed of the condition requiring the eventual DEPA Infrastructure buyer to also purchase Eni gas e Luce’s 49 percent stake in EDA THESS.

Investors have also been informed on, and agreed to, a formula to be applied to evaluate the additional sum that will be required by the DEPA Infrastructure buyer for the 49 percent stake of EDA THESS.

The finalists face a July 15 deadline for binding bids in the DEPA Infrastructure privatization, according to the European Commission report.

Until then, the government has a series of pending issues to resolve, including legislative revisions to unify the asset bases of the DEPA Infrastructure subsidiaries EDA THESS, EDA Attiki, distributing in Athens, and DEDA, covering the rest of Greece.

These legislative revisions will be needed for both the sales of DEPA Infrastructure and Eni gas e Luce’s 49 percent stake in EDA THESS, sources informed.

DEPA Infrastructure bids July 16, Commercial sale delayed

Privatization fund TAIPED has set a July 16 deadline for binding bids concerning the sale of a 65 percent stake in gas company DEPA Infrastructure.

This sale represents Greece’s only energy-sector privatization proceeding as planned, based on the fund’s updated Asset Development Plan.

A total of six bidding formations have qualified for the privatization’s second round. They are: EP INVESTMENT ADVISORS; FIRST STATE INVESTMENTS (European Diversified Infrastructure Fund II); ITALGAS SpA; KKR (KKR Global Infrastructure Investors III L.P.); MACQUARIE (MEIF 6 DI HOLDINGS); SINO-CEE FUND & SHANGHAI DAZHONG PUBLIC UTILITIES (GROUP) Co., Ltd.

On the contrary, TAIPED has decided to delay bids for the sale of gas supplier DEPA Commercial until the third quarter of this year as a result of the company’s ongoing legal dispute with ELFE (Hellenic Fertilizers and Chemicals).

DEPA Commercial has challenged an Athens Court of First Instance verdict that ordered the company to return 61 million euros to ELFE for alleged overcharging between 2010 and 2015. The appeal has been deferred for September and may be jointly heard with a separate case involving the two companies over a similar amount of unpaid receivables that is allegedly owed by the fertilizer and chemicals producer to DEPA.

The DEPA Commercial sale, offering the Greek State’s 65 percent stake of the company, has attracted all the country’s major energy players as well as foreign companies.

Seven bidders are participating: C.G. GAS LIMITED (Copelouzos group); MET HOLDING AG; SHELL GAS B.V.; GEK TERNA; ELPE & EDISON INTERNATIONAL HOLDING N.V.; Motor Oil Hellas & PPC; and Mytilineos.

Legislative revisions to unblock DEPA Infrastructure sale

The energy ministry is planning to soon submit to Parliament legislative revisions designed to resolve pending issues that have held back the final stage of a privatization concerning gas company DEPA Infrastructure, sources have informed. The ministry will aim for the submission of binding offers by July.

Issues that have held back the sale, offering suitors 100 percent of DEPA Infrastructure, include a pending unification of the asset base of DEPA Infrastructure’s trio of EDA gas distribution subsidiaries and the establishment of a sale procedure for Eni Gas e Luce’s 49 percent stake in EDA THESS.

DEPA Infrastructure, EDA THESS’s parent company, holds a 51 percent stake in the gas distributor covering the Thessaloniki and Thessaly areas, while Italy’s Eni gas e Luce, maintaining the management rights with its 49 percent share in the gas distributor, wants to sell its stake.

Eni gas e Luce’s involvement in distribution has remained secondary to retail energy, the company’s primary focus, on an international scale.

The ministry’s anticipated legislative revisions promise to unify the asset bases of EDA Attiki, distributing to the wider Athens area, EDA THESS (Thessaly and Thessaloniki), as well as DEDA, covering the rest of Greece.

This asset base unification concerning the three distributors will lessen DEDA’s cost burden resulting from its network expansion projects as small distribution surcharge hikes by the two other EDA companies will hasten DEDA’s recovery of investment costs.

EP INVESTMENT ADVISORS; FIRST STATE INVESTMENTS (European Diversified Infrastructure Fund II); ITALGAS SpA; KKR (KKR Global Infrastructure Investors III L.P.); MACQUARIE (MEIF 6 DI HOLDINGS); and a consortium comprising SINO-CEE FUND & SHANGHAI DAZHONG PUBLIC UTILITIES (GROUP) Co., Ltd are the qualifiers through to the final round of the DEPA Infrastructure privatization.

Energy privatization plans delayed by negative conditions

The government has decided to slam the brakes on procedures for major energy-sector privatizations, preferring to defer bidding deadlines as a result of a series of administrative hurdles and external factors, exacerbated by challenges and uncertainties caused by the pandemic over the past year.

Binding-bid deadlines for the sales of two gas utility DEPA offshoots, DEPA Commercial and DEPA Infrastructure, initially planned for this month by privatization fund TAIPED, will now be reset for early autumn, sources have informed.

Lockdown measures have prevented possible buyers from visiting the DEPA Commercial and DEPA Infrastructure headquarters and facilities as part of their due diligence procedures.

In addition, an ongoing legal battle between DEPA Commercial and ELFE (Hellenic Fertilizers and Chemicals) has also unsettled potential buyers. According to sources, investors are demanding protection in the form of guarantees should any court verdict require DEPA Commercial to compensate ELFE over a gas-pricing dispute.

As for issues surrounding the DEPA Infrastructure sale, Italy’s Eni, currently holding a 49 percent stake in EDA THESS, a DEPA Infrastructure subsidiary distributing to the Thessaloniki and Thessaly areas, wants to sell its stake. Officials are now examining a solution that would enable the DEPA Infrastructure privatization to be completed and followed up by the sale of Eni’s 49 percent stake in EDA THESS.

TAIPED’s announcement of second-round qualifiers in a tender offering development and operation of an underground gas storage facility (UGS) in the almost depleted natural gas field of “South Kavala” in northern Greece is expected in April. But the overall procedure will not be completed until next year.

A privatization plan for ELPE (Hellenic Petroleum) has been put on hold given the unfavorable conditions surrounding the global oil industry at present.

DEPA Commercial, Infrastructure sales delayed, new June bids deadline seen

The privatization schedule for gas utility DEPA’s two offshoots, DEPA Commercial and DEPA Infrastructure, appears headed for further delay as a result of four main issues holding back procedures, sources closely monitoring these sales have informed.

The privatization fund TAIPED had initially planned to accept financial offers for DEPA Commercial and DEPA Infrastructure this month but has since unofficially extended these offer deadlines to April. Further revisions cannot be ruled out, the most likely outcome being a deferral of these deadlines to the end of June.

As for the DEPA Commercial sale, lockdown restrictions have made it difficult for potential buyers to visit the company facilities for on-the-spot technical and financial appraisals as well as clarification on vague points. This has delayed the accumulation of information needed by possible buyers for a complete picture on the gas company’s financial standing.

In addition, an ongoing legal battle between DEPA Commercial and ELFE (Hellenic Fertilizers and Chemicals) has also unsettled potential buyers. According to sources, investors are demanding protection in the form of guarantees should any court verdict require DEPA Commercial to compensate ELFE over a gas-pricing dispute.

Two issues are also obstructing the DEPA Infrastructure sale. Firstly, Italy’s Eni, currently holding a 49 percent stake in EDA THESS, a DEPA Infrastructure subsidiary distributing to the Thessaloniki and Thessaly areas, wants to sell its stake. As a result, two options are being examined. One entails DEPA Infrastructure buying Eni’s 49 percent stake in EDA THESS. The other involves incorporating EDA THESS into the DEPA Infrastructure sale.

The other concern holding back proceedings for the DEPA Infrastructure sale has to do with pending appraisals, by the possible buyers, of new distribution network development plans prepared by the gas company’s three distribution subsidiaries, which, besides EDA THESS, include EDA Attiki, covering Athens, and DEDA, covering the rest of Greece. Suitors may require as much as two months to complete their respective appraisals.

DEPA Infrastructure sale could include Eni’s 49% in EDA Thess

The likelihood of revisions to Greek privatization fund TAIPED’s ongoing sale of DEPA Infrastructure that would incorporate the sale of a 49 percent stake in gas distributor EDA THESS, held by Italy’s Eni gas e Luce, into the procedure is now seen as probable as talks on the prospect have advanced.

DEPA Infrastructure, EDA THESS’s parent company, holds a 51 percent stake in the gas distributor covering the Thessaloniki and Thessaly areas, while Eni gas e Luce maintains the management rights with its 49 percent stake in the gas distributor.

Though Eni gas e Luce has been particularly upbeat in its judgement of EDA THESS’s performance until now, its involvement in distribution has remained secondary to retail energy, the company’s primary focus, on an international scale.

Eni gas e Luce’s 49 percent stake in EDA THESS is the Italian company’s sole distribution investment.

Prior to TAIPED’s launch of the DEPA Infrastructure sale, Eni gas e Luce had made clear its intentions to withdraw from its Greek investment in gas distribution.

DEPA has decided not to exercise priority rights it holds for EDA THESS’s 49 percent stake.

Eni gas e Luce initially seemed to reach an agreement to transfer its EDA THESS stake to Italgas, Italy’s biggest gas distributor and Europe’s third largest. However, Greek officials objected, deeming such a move would have given Italgas an advantage over rivals in the sale of DEPA Infrastructure. Italgas is one of six bidding teams through to this privatization’s second round.

Following a period of stagnancy, Eni gas e Luce returned, late in 2020, with a fresh proposal to TAIPED, calling for the attachment of its 49 percent stake in EDA THESS to the DEPA Infrastructure sale.

Besides Italgas, the other five bidding formations that have qualified for the second round of the DEPA Infrastructure sale are: EP INVESTMENT ADVISORS; FIRST STATE INVESTMENTS (European Diversified Infrastructure Fund II); KKR (KKR Global Infrastructure Investors III L.P.); MACQUARIE (MEIF 6 DI HOLDINGS); SINO-CEE FUND & SHANGHAI DAZHONG PUBLIC UTILITIES (GROUP) Co., Ltd.

 

Outcome of ELFE legal battle crucial for DEPA’s privatization

The outcome of an appeal filed by gas supplier DEPA Commercial to challenge a 2019 ruling by an Athens Court of First Instance that vindicated an overcharging claim by ELFE (Hellenic Fertilizers and Chemicals), scheduled to be heard next week, is pivotal for the gas company’s privatization plan.

If ELFE overcomes the appeal lodged by DEPA Commercial – which, as things stand, is expected to return 63 million euros to the fertilizer and chemicals company for overcharged gas supply between 2012 and 2015 – then this precedent will prompt more overcharging cases, for the same period, by other customers, primarily electricity producers and industrial enterprises.

Such a development, which, according to sources, could end up costing DEPA Commercial a total of up to one billion euros in rebates, threatens to derail the company’s privatization procedure as investors would not want to take on such a financial burden. Worse still, DEPA Commercial’s sustainability would be severely tested, the sources added.

DEPA Commercial was formed by gas utility DEPA specifically for its privatization.

The appeals court will require some time before it delivers its verdict. If the ruling is in favor of ELFE, then DEPA Commercial is expected to take the case to the Supreme Court. A prolonged legal battle would surely impact the gas company’s growth plans.

In 2019, the Athens Court of First Instance ruled that DEPA passed on to its customers the cost of an oil-indexed purchase agreement with Russian gas company Gazprom without considering lower prices available at natural gas hubs.

Taking into account this ongoing legal battle, privatization fund TAIPED has set an early-spring deadline for binding bids by potential buyers of DEPA Commercial as well as DEPA Infrastructure, the gas utility’s other new entity.

New minister, just appointed, has issues to resolve in 2021

Kostas Skrekas, just appointed new energy minister as part of the government’s cabinet reshuffle, in place of Costis Hatzidakis, who has headed the ministry for a constructive year and a half, faces a series of pending energy-sector matters that remained unresolved in 2020. They need to be addressed as soon as possible. Developments and conditions this year will be pivotal for these matters.

Skrekas was previously deputy minister for agricultural development and food.

Also in 2021, a year during which takeovers and mergers are seen occurring in the retail electricity and gas markets, rivals will continue battling for market share gains. The target model’s launch two months ago has brought about new conditions, strengthening the positions of vertically integrated suppliers.

The need for a normalization of the target model’s new markets stands as the energy ministry’s most pressing task at present. A sharp rise in wholesale electricity prices as a result of soaring balancing market costs has deeply unsettled the market, impacting the standings of non-vertically integrated suppliers, as well as industrial enterprises and consumers, who face rising bills.

Market coupling with Bulgaria’s day-ahead market, scheduled to take place within the first three months of the new year, is the next step of the target model, a procedure designed to harmonize EU energy markets and promote competition.

New energy-intensive industrial tariffs also need to be set soon. Though essentially a matter concerning state-controlled power utility PPC and Greece’s industrial players, the cost of industrial energy is crucial for Greek industry, carrying particular political and economic weight.

Also, Greece has little time left in its negotiations with Brussels for a framework to offer third parties access to PPC’s lignite-based generation. This issue is no longer as crucial as it once was because the country’s lignite output has been drastically reduced. Even so, it remains important for independent suppliers.

A number of energy-sector privatizations could be completed this year. Gas utility DEPA’s two new entities, DEPA Infrastructure and DEPA Commercial, electricity distribution network operator DEDDIE/HEDNO, and a tender for a tender for the development of an underground natural gas storage facility (UGS) in the almost depleted natural gas field of “South Kavala” in northern Greece are all on this year’s privatization list.

In renewable energy, the ministry needs to take decisions within the first few months to clarify terms regulating the sector. RES investment interest is currently high. Steps still need to be taken in an ongoing effort to simplify RES licensing procedures, while a legal framework must be established for energy storage, offshore wind farms and hydrogen use.

 

RAE approval of gas distributor tariffs paves way for DEPA Infrastructure sale

RAE, the Regulatory Authority for Energy, has approved tariffs for gas utility DEPA’s distribution companies EDA Attiki, covering the wider Athens area, EDA Thess, covering Thessaloniki and Thessaly, and DEDA, covering the rest of Greece, a move that paves the way for the sale of DEPA Infrastructure, one of DEPA’s new entities established for the utility’s privatization procedure.

DEPA Infrastructure is now the parent company of the three distribution firms.

RAE examined tariff-related data submitted by the gas distributors before giving the green light.

The authority hesitated to deliver a decision on distributor tariffs over concerns that connection term discounts offered by the distributors could be regarded as a form of state aid.

RAE also appears to have approved revisions made by the distribution companies to their five-year development plans from 2020 to 2024 after making slight alterations.

The revisions by the gas distributors concern the entry of certain areas to networks as well as more rational use of CNG solutions.

The regulatory authority’s approval of the tariffs, development plans of the distribution companies, and their connection term incentives were all a prerequisite for the continuation of the DEPA Infrastructure sale.

Solid bidder turnout for DEDA east Macedonia, Thrace gas network tenders

Five construction companies and one consortium have taken part in the first two tenders staged by gas distributor DEDA for the development of gas distribution networks in Xanthi/Drama and Alexandroupoli/Komotini, respectively, in Greece’s north and northeast.

Key Greek construction firms such as Aktor, Avax and Intracom were among the bidders, sources informed. Newcomers and older companies also took part in the tenders, totaling 33.4 million euros, including Edil Hellas, Ergo ATE and Vermion ATEE-Sourla Bros ATEBE.

The level of participation on the two tenders was described as satisfactory by DEDA’s managing director Marios Tsakas and a vote of confidence for the gas company’s ambitious plans to broaden the coverage of networks in provincial Greece.

DEDA covers all parts of Greece not represented by fellow DEPA Infrastructure subsidiaries EDA Attiki, covering the wider Athens area, and EDA THES, covering Thessaloniki and Thessaly.

Project contracts with winning bidders could be signed by the end of the year so that construction work of the new networks can begin early in 2021 in all four provincial cities, sources said.

Avax, Aktor, Ergo ATE, Edil Hellas, Vermion ATEE-Sourla Bros ATEBE and Intracom took part in the DEDA tender for the development of gas networks in the Xanthi and Drama areas, budgeted at 17.1 million euros.

Avax, Aktor, Ergo ATE, Edil Hellas and Intracom also took part in the Alexandroupoli/Komotini tender, budgeted at 16.3 million euros.

The two regional projects are being funded by own funds, loans and business development funds for the east Macedonia and Thrace regions.

Gas distribution networks totaling at least 200 kilometers for 4,066 connections concerning all gas consumer categories by 2024 are planned for the Xanthi and Drama areas.

As for the Alexandroupoli and Komotini areas, the DEDA plan entails construction of gas distribution networks totaling 170 kilometers for at least 5,279 connections by 2024.

DEDA plans to launch new tenders next month for construction of gas networks in Orestiada and Kavala, northern Greece, sources said.

Overall, the new gas distribution networks planned by DEDA in the six provincial cities are budgeted at 56.6 million euros, plus 24% VAT, and will provide a total of 496,000 kilometers of mid and low-pressure gas supply lines for at least 15,000 consumer connections of all categories.

DEDA is also planning tenders next month for gas network projects in central Greece and the central Macedonia region.

RAE set to permit gas link fee discounts after initial hesitation

Following initial hesitation, RAE, the Regulatory Authority for Energy, appears set to permit distribution network connection fee discounts offered by natural gas distributors to attract new customer. But this approval will only apply to areas where gas market penetration levels remain low.

RAE has hesitated to approve such discounts offered by gas utility DEPA’s subsidiaries EDA Attiki, EDA Thess and DEDA – the three gas distributors covering the wider Athens area, Thessaloniki-Thessaly and rest of Greece, respectively – fearing the special offers could be regarded as a form of state aid by the European Commission’s competition officials.

However, DEPA Infrastructure, a new DEPA entity now controlling these three gas distribution subsidiaries, recently warned that RAE’s delays are undermining its privatization procedure. This warning was highlighted in a letter to the authority that was also shared with privatization fund TAIPED and the energy ministry.

RAE’s delay in endorsing EDA tariffs for 2019 to 2022 has consequently also placed the gas company’s development plan in turmoil, DEPA Infrastructure pointed out in the letter.

RAE has overcome its concerns and is now preparing to endorse the tariffs. The authority will also permit connection fee discounts in areas where natural gas market penetration levels do not exceed 25 percent.

In areas where natural gas market penetration levels are exceeded but not greater than 75 percent, RAE will permit connection fee discounts of up to 90 percent in 2022, 80 percent in 2023, 70 percent in 2024 and 60 percent in 2025.

The authority will not endorse any connection fee discounts for municipalities where natural gas market penetration levels exceed 75 percent.

 

DEPA Comm VDR open; 5-year stay for Infrastructure buyer

The video data room for the privatization procedure of DEPA Commercial, one of two new gas utility DEPA entities placed for sale, is now open to prospective bidders, but initial information made available is limited to non-financial details.

Financial details on DEPA Commercial will be made available as a second step to all consultants representing the potential buyers, while a third and final stage will follow to conditionally offer bidders confidential information in person at the DEPA headquarters.

As previously reported, the second-round, binding-bids deadline for the DEPA Commercial sale, offering investors a 65 percent stake, has been extended to March, 2021.

The field of second-round qualifiers is comprised of two partnerships, Hellenic Petroleum (ELPE) with Edison and power utility PPC with Motor Oil Hellas, plus Mytilineos, TERNA, the Copelouzos group, Shell, and the Swiss-based MET Group.

As for DEPA Infrastructure, the other new DEPA entity up for sale, energy minister Costis Hatzidakis is preparing a legislative revision that will require the winning bidder to retain its company shares for a period of at least five years.

This condition will also apply for the DEPA Infrastructure subsidiaries EDA Attiki, EDA Thess and DEDA, the gas distributors covering the wider Athens area, Thessaloniki-Thessaly and rest of Greece, respectively. DEPA fully owns DEDA and EDA Attiki and holds a 51 percent stake in EDA Thess.

The DEPA Infrastructure binding-bids deadline has also been extended to the end of February, 2021. Italgas, EPH, First State Investments, KKR, Macquarie and Sino-CEEF have qualified for the final round.

 

RAE issues undermining DEPA Infrastructure privatization

Delays, instability and flawed intervention by RAE, the Regulatory Authority for Energy, on important operating issues concerning gas utility DEPA’s subsidiaries EDA Attiki, EDA Thess and DEDA – the three distributors covering the wider Athens area, Thessaloniki-Thessaly and rest of Greece, respectively – are undermining the privatization procedure for DEPA Infrastructure, a new DEPA entity placed for sale, DEPA Infrastructure has warned in a letter to the authority.

In the letter, also forwarded to privatization fund TAIPED and the energy ministry, DEPA Infrastructure complains of a RAE delay in endorsing EDA tariffs for 2019 to 2022, which has consequently placed the gas company’s development plan in turmoil.

Besides not having reached a decision on gas distribution pricing policy, the authority has changed the WACC level three times since last year, including recently, which has negatively impacted the yields of DEPA subsidiary investments, sources noted.

Also, RAE regards initiatives taken by the three gas distributors to attract more consumers to the natural gas market as a form of state aid, DEPA Infrastructure protests in the letter, referring to distribution network connection fee discounts offered by the distributors, as well as subsidy support for natural gas system installations.

Any moves to curb these initiatives promoting gas usage would derail the natural gas sector’s energy-mix penetration target for 2030, as specified in the National Energy and Climate Plan, DEPA Infrastructure contends.

These unfavorable conditions threaten to delay the DEPA Infrastructure privatization, company sources stressed.

The sale procedure’s video data room is still lacking vital information for prospective bidders, who could begin seeing the DEPA Infrastructure privatization as a high-risk investment, the sources noted, adding that WACC level reductions will ultimately reduce the market value of DEPA Infrastructure and the subsidiaries.

DEPA Commercial, DEPA Infrastructure binding-bid deadlines extended

The second-round, binding-bid deadlines for the privatizations of gas utility DEPA’s two new entities, DEPA Commercial and DEPA Infrastructure, have once again been reset for latter dates despite the government’s recent approval of privatization fund TAIPED’s revised Asset Development Plan.

According to sources, the new binding-bids deadline for DEPA Commercial, a privatization expected to draw major interest as a result of the company’s strong market standing and potential, has been reset for March, instead of December.

According to some sources, TAIPED wants to include improved DEPA Commercial results anticipated for the third quarter into the sale’s video data room, whose data will be assessed by prospective bidders once they sign confidentiality agreements.

TAIPED will, as a result, aim to achieve a higher selling price for DEPA Commercial, which has recaptured market share losses.

Other sources insist the rescheduled date is linked to an uncertainty felt by investors over DEPA’s ongoing legal dispute with ELFE (Hellenic Fertilizers and Chemicals).

A DEPA appeal of a court verdict that disapproved the utility’s pricing policy for ELFE is scheduled to take place in January, while a ruling will be delivered even later. Investors want clarity on this front before they can submit binding bids.

DEPA Infrastructure’s deadline for binding bids has now been rescheduled for February instead of January.

Pundits have attributed this development to a failure by RAE, the Regulatory Authority for Energy, to finalize a gas distribution network pricing policy by September, as had been planned. The authority has yet to offer a new date for the new network pricing policy, sources said.

Prospective bidders consider this pricing detail crucial as it determines the earnings level of DEPA Infrastructure.