DEPA sales progressing, DEPA Infrastructure VDR in a fortnight

Gas utility DEPA’s double privatization effort involving DEPA Infrastructure and DEPA Trade appears to be making progress.

The sale’s authorities expect to make accessible a DEPA Infrastructure video data room to prospective buyers between late June and early July. Then, approximately a month later, once a shortlist of final-round qualifiers has been announced, authorities plan to also open a VDR for DEPA Trade.

Meanwhile, DEPA has agreed to a new pricing formula with Russian supplier Gazprom, sources have informed.

The current pricing formula, indexing 40 percent of supply to the Dutch gas trading platform TTF, one of Europe’s biggest hubs, and 60 percent to oil prices, will be reversed.

DEPA and Gazprom also appear to have reached an agreement on an amount the Greek utility will need to pay its Russian supplier for natural gas not absorbed in 2019. A take-or-pay clause is included in their supply contract.

DEPA will pay a little over 40 million euros, well below a figure of 130,000 million euros believed to have been initially tabled. The take-or-pay amount that may result for 2020 remains to be discussed.

DEPA’s agreement with Gazprom is particularly significant for the prospects of the DEPA Trade privatization, as besides its retail gas market presence, this company will also pitch the details of its supply contracts as an important company asset.

DEPA Trade’s list of nine first-round bidders include Shell, which had sold its 49 percent share in EPA Attiki and EDA Attiki to DEPA in 2018 but is again interested in reentering the Greek gas market. The other bidders are: fellow-Dutch company Vitol; Qatar’s Power Globe; Met Holding, a subsidiary of Hungarian group MOL; C.G GAS; as well as four Greek bidders, Motor Oil Hellas with power utility PPC, a surprise partnership; Gek Terna; ELPE-Edison; and Mytilineos.

 

DEPA Trade sale short list this month, sooner than expected

Privatization fund TAIPED is expected to announce its short list of final-round qualifiers in a tender offering a stake of at least 65 percent, possibly even 100 percent, of DEPA Trade – a new entity formed by gas utility DEPA as part of its privatization – within the next few weeks, far sooner than expected.

Deteriorated international investment conditions have prompted fears of a slower sale procedure.

The privatization fund, now close to finalizing its appraisals of nine first-round bids, has requested clarification from participants.

The DEPA Trade privatization was expected to drag well behind that of DEPA Infrastructure, seen as a lower-risk sale effort offering investors regulated earnings, but the two privatization efforts now appear likely to move ahead almost concurrently, or a few weeks apart.

A list of six final-round qualifiers in the DEPA Infrastructure sale was announced a week ago. Authorities are aiming to complete this sale towards the end of the year.

As for DEPA Trade, this entity promises the winning bidder an immediate advantage in Greece’s natural gas market as more than 200,000 customers around the country will be gained.

DEPA Trade’s wholesale gas trading activity is another appealing factor, despite the fact that it shrunk to 40 percent of the market’s total last year, as the growing southeast European market offers huge potential.

DEPA Trade’s nine first-round bidders are: C.G GAS LIMITED; MET HOLDING AG; POWER GLOBE LLC; SHELL GAS B.V.; VITOL HOLDING B.V.; GEK TERNA; HELLENIC PETROLEUM (ELPE) & EDISON INTERNATIONAL HOLDING N.V. consortium; MOTOR OIL HELLAS & GREEK POWER UTILITY PPC (consortium); MYTILINEOS.

 

DESFA trio may return to DEPA Infrastructure sale, Italgas link-up seen

Italgas, one of six bidders through to the second round of a tender offering DEPA Infrastructure, a new entity established by gas utility DEPA as part of its privatization, intends to join forces with Snam, Fluxys and Enagas, the three members of the Senfluga consortium that acquired a 66 percent of Greek gas grid operator DESFA late in 2018.

The trio of companies controlling DESFA had expressed first-round interest in the DEPA Infrastructure sale but failed to show up for the procedure’s second round.

Snam, head of the Senfluga consortium with a 60 percent stake, is associated with Italgas as it has held a 13.5 percent stake since 2016.

Italgas is widely tipped to emerge victorious in the DEPA Infrastructure sale.

Besides Italgas, the five other qualifiers through to 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); and the Sino-Cee Fund & Shanghai Dazhong Public Utilities consortium.

Once they have signed confidentiality agreements, the six qualifiers will receive second-round texts and access to a virtual data room hosting DEPA Infrastructure data and information.

DEPA Infrastructure privatization shortlist minus some initial candidates

Fewer than nine of the initial candidates expressing interest in the sale of DEPA Infrastructure, a new entity formed by gas utility DEPA as part of its privatization, will make the second round’s short list, which could be announced early next week by the privatization fund TAIPED, energypress sources informed.

One or two funds that had emerged for the first round will not remain contenders as a result of the pandemic’s impact on their investment plans, representatives have informed Greek privatization authorities.

Also,  another candidate not fulfilling qualification criteria will be excluded from the next round, sources said.

A shortening of the initial list of candidates is normal for any sale, privatization officials noted, stressing there is no reason for concern about the DEPA Infrastructure sale.

DEPA Infrastructure, backed by a fixed WACC rate of between 7 and 8 percent, one of Europe’s highest in this sector, is regarded as one of Greece’s most secure privatization prospects, local officials noted.

Investors will be offered a full 100 percent stake in the company.

The privatization’s initial list of nine candidates is comprised of: ANTIN INFRASTRUCTURE PARTNERS SAS; CHINA RESOURCES GAS (HONG KONG) INVESTMENT LIMITED; EP INVESTMENT ADVISORS; FIRST STATE INVESTMENTS (European Diversified Infrastructure Fund II); ISQUARED CAPITAL ADVISORS (UK) LLP; ITALGAS SpA; KKR (KKR Global Infrastructure Investors III L.P.); MAQOUARIE (MEIF 6 DI HOLDINGS); SINO-CEE FUND & SHANGHAI DAZHONG PUBLIC UTILITIES (GROUP) Co., Ltd.

 

DEPA Trade, Infrastructure sales delayed for after summer

The final rounds of privatization procedures for DEPA Infrastructure and DEPA Trade, two new entities formed by gas utility DEPA to facilitate its sale, will be postponed until after summer as a result of the pandemic’s impact on global economic activity and investments, pressuring asset values, sources have informed.

Investors are being offered the Greek State’s 65 percent stake and Hellenic Petroleum ELPE’s 35 percent share of DEPA Infrastructure and DEPA Trade.

However, the privatization fund TAIPED, combining its efforts with the energy ministry and RAE, the Regulatory Authority for Energy, intends to press ahead with a June launch of a privatization procedure for a depleted offshore gas field south of Kavala planned to be developed as an underground gas storage facility.

An appraisal of first-round offers submitted by nine investment teams for DEPA Infrastructure and that many more for DEPA Trade is expected to be completed within June.

Barring unexpected developments, TAIPED should announce its list of finalists for both sales next month. This will be followed by the opening of a virtual data room facilitating due diligence procedures for both companies.

DEDA to challenge RAE removal of 8 cities from 5-year development plan

Gas distributor DEDA is examining legal options in order to challenge a decision by RAE, the Regulatory Authority for Energy, to remove the entire Peloponnese and the provincial cities of Veria and Giannitsa from the distributor’s five-year development plan covering 2020 to 2024.

The authority excluded these areas as estimated completion dates for projects exceeded deadlines by more than 18 months.

At the very least, DEDA is expected to ask RAE to reconsider its decisions and request further details concerning the exclusion of a total of eight cities from its five-year development plan.

Besides Veria and Giannitsa, both in the north, RAE removed six Peloponnesian towns, Tripoli, Corinth, Argos, Nafplio, Kalamata and Sparti, from DEDA’s development plan.

DEDA, now under the wings of DEPA Infrastructure, a new entity formed by gas utility DEPA ahead of its privatization, covers areas not served by EDA Attiki (wider Athens) and EDA Thess (Thessaloniki and Thessaly).

It remains unclear whether DEDA will publish the shortened five-year plan in the government gazette. Failure to do so would delay procedures for the remainder of projects on the list, including the setting of customer tariffs. The company’s administration wants to avoid such delays.

 

DEPA Infrastructure bidder shortlist expected end of month

A shortlist of second-round bidders for DEPA Infrastructure, a new entity formed by gas utility DEPA ahead of its privatization, is anticipated towards the end of May, while the cut for DEPA Trade bidders, the utility’s other new division being privatized, could be announced a month later, government sources have informed.

DEPA Infrastructure, whose earnings are regulated by RAE, the Regulatory Authority for Energy, is less vulnerable to the impact of the pandemic, which is not the case for DEPA Trade, fully exposed to market forces.

“We will not rush, for any reason, to take action that would lead us to much lower offers than the prices we are seeking,” Aris Xenofos, president of the privatization fund TAIPED, told Reuters yesterday.

Weighted Average Cost of Capital (WACC) levels set for network operators by RAE before the coronavirus crisis emerged offer protection to certain privatizations against the global economic uncertainty, government sources told energypress.

Though absolute safety can never be assured, DEPA Infrastructure, whose WACC level has been set at around 7 to 8 percent, is less susceptible to financial volatility compared to other companies on Greece’s privatization list.

DEPA Trade, Hellenic Petroleum ELPE, and power grid operator IPTO – its earnings are regulated but the company is listed through IPTO (ADMIE) Holding – are all far less resilient.

Gas distributor DEDA’s 5-year development plan minus 8 cities

Gas distribution network projects in eight provincial cities have been removed from gas distributor DEDA’s five-year development plan approved by RAE, the Regulatory Authority for Energy, as their estimated completion dates exceeded deadlines by more than 18 months.

Projects in a total of six Peloponnesian cities as well as northern Greece’s Veria and Giannitsa had been included in the previous version of the DEDA development plan, covering 2020 to 2024.

DEDA, now under the wings of DEPA Infrastructure, a new entity formed by gas utility DEPA ahead of its privatization, distributes to Greece’s areas not served by EDA Attiki (wider Athens) and EDA Thess (Thessaloniki and Thessaly).

According to DEDA’s initial five-year plan, Tripoli, Corinth, Argos and Nafplio, all in the Peloponnese, were planned to gain network infrastructure enabling gas supply via a high-pressure pipeline operated by gas grid operator DESFA.

The plan also entailed the development of infrastructure for LNG supply from DESFA’s Revythoussa terminal, close to Athens, to the Peloponnesian cities Kalamata and Sparti.

Projects for CNG supply to Veria and Giannitsa in the country’s north were also excluded by RAE from the five-year DEDA plan it approved.

 

‘Firm steps for privatizations but pandemic’s impact considered’

Decisive steps are being taken for Greece’s energy-sector privatizations, representing two thirds of the country’s overall privatization program, but the pandemic’s impact on international markets will not be neglected, energy minister Costis Hatzidakis has pointed out in an interview with Greek daily To Ethnos.

There is no need to rush a plan to reduce the Greek State’s stake in Hellenic Petroleum (ELPE) as this sale is not one of restructuring character, the minister noted.

A government decision to sell stakes in DEPA Infrastructure and DEPA Trade, two new entities emerging from a split at gas utility DEPA, is moving ahead as planned, Hatzidakis informed.

First steps have been taken to reduce, below 51 percent, the Greek State’s share in power grid operator IPTO, “but this does not mean we will proceed tomorrow morning,” he said.

State-controlled power utility PPC is preparing terms of an international tender for the sale of at least 49 percent of distribution network operator DEDDIE/HEDNO, a subsidiary, the minister said. This procedure is scheduled to commence in the third quarter of this year, he added.

DEPA Infrastructure board soon, bidders shortlist in June

Corporate revisions at gas utility DEPA, shaped by legislation ratified in December, have just about been completed ahead of the enterprise’s privatization plan.

All that remains, according to sources, is an announcement of the board members at DEPA Infrastructure, one of the new corporate entities established as part of the utility’s transformation.

This announcement is expected to be made within the next one or two weeks. DEPA Infrastructure will be established as an entirely new company with its own tax file number.

DEPA Trade, another new entity emerging from the wider corporate revision, will succeed the existing DEPA utility.

The utility’s other division, DEPA International Projects will, for the time being, remain a subsidiary of DEPA Trade before it is broken away 60 days prior to the submission of bids for its parent company.

Then, as the final step of its process, DEPA International Projects will be merged with EDEY, the Greek Hydrocarbon Management Company, the government has announced.

Nine bidding teams that have expressed official interest for DEPA Infrastructure are currently providing data to the privatization fund TAIPED, expected to shortlist candidates around June, sources estimate.

Meanwhile, DEPA is preparing its video data room as well as financial and technical reports that will be examined and evaluated by investors before they shape their bids. DEPA is expected to complete these reports in May.

Ministry seeking to reignite stalled energy sector initiatives

The energy ministry is seeking to resume coronavirus-interrupted actions on a number of fronts, which, prior to the crisis, were expected to lead to major energy sector changes in 2020. These include the decarbonization effort, privatizations, green-energy infrastructure investments and a launch of the energy exchange.

The ministry’s strategic plan aiming to inject new impetus into these initiatives includes market liquidity protection through support mechanisms and bank loans for operators and key market players such as power utility PPC.

Efforts will also be made to accelerate decarbonization initiatives and keep alive pending energy sector privatizations, including those of gas utility DEPA’s two new entities, DEPA Infrastructure and DEPA Trade; the prospective sale of a 49 percent stake of distribution network operator DEDDIE/HEDNO, a PPC subsidiary; as well as an underground gas storage facility at a depleted offshore gas field south of Kavala.

Green energy investments, a key party of Greece’s revised and more ambitious National Energy Climate Plan, are expected to regain dynamic momentum as of 2021, following this year’s pandemic-induced disruption.

This is also the case for major infrastructure projects such as power grid operator IPTO’s grid interconnections for Crete, the south, west and north Cyclades and other areas. These interconnection projects require investments totaling more than 4 billion euros. These are expected to be completed by 2030.

Grid interconnection projects are also being worked on for the gas sector. Gas grid operator DESFA is looking to expand its network to cover 39 cities.

IPTO, DEPA Trade, DEPA Infrastucture sales put on hold

Energy-sector privatizations planned for launch in the second quarter, as well as sales already in progress, are being put on hold as a result of the coronavirus pandemic’s impact on the global economy and the plans of the government and privatization fund TAIPED.

Two thirds of Greece’s privatization program this year concerns energy utilities, as energy minister Costis Hatzidakis has noted.

The freeze on plans includes the sale of an additional stake of power grid operator IPTO, which was planned for the second quarter.

State Grid Corp of China (SGCC), already holding a 24 percent share of IPTO and possessing first-offer rights, has expressed an interest to boost its stake.

However, IPTO and SGCC officials have not been able to meet for talks as a result of the extreme conditions. Greece’s deputy energy minister Gerassimos Thomas had planned a trip to China one-and-a-half months ago but was unable to travel as a result of a travel ban imposed by the Chinese government following the coronavirus outbreak in China early this year.

Two privatization procedures for gas utility DEPA’s new entities, DEPA Trade and DEPA Infrastructure, both of which have drawn considerable interest, have also been put on hold.

The DEPA Trade sale attracted nine bidding teams, domestic and international, for its first round, a turnout interpreted as a vote of confidence for the Greek economy. The sale’s first-round expressions of interest could be appraised in the summer.

No date change, at present, for DEPA Trade privatization effort

No further scheduling revisions are intended – at present – for the DEPA Trade privatization procedure, whose first-round deadline has already been reset for March 23, government officials have told energypress.

Officials at privatization fund TAIPED are concerned the coronavirus crisis could impact the sale and subdue bidding interest.

DEPA Trade was established as a new gas utility DEPA entity for the privatization, offering the Greek State’s 65 percent stake.

The DEPA Trade privatization procedure can move ahead as planned because the aforementioned deadline has already been extended once and is non-binding, the energy ministry has contended, adding extension requests are limited to a very small number of investors.

Essentially, the ministry, and government as a whole, are determined to avoid any sale delays as this would reinforce the picture of a halt in economic activity.  The government sees the next fortnight as a crucial period for the coronoavirus preventive measures and economy.

Subdued interest by prospective bidders, including funds and consortiums, cannot be ruled out as Greece is still regarded as a high-risk market. These concerns also apply for the country’s two other upcoming major privatizations concerning DEPA Infrastructure and Athens International Airport.

 

Energy firms react against RAE plan for WACC reduction

The prospect of upcoming WACC level reductions reportedly planned by RAE, the Regulatory Authority for Energy, for gas grid operator DESFA, power grid operator IPTO, as well as the country’s gas distributors EDA Attiki, EDA Thess, DEDA and their parent company DEPA, the gas utility, has unsettled the administrations of all these companies.

Though RAE has not yet reached a decision on the matter, the aforementioned energy companies understand the authority is working to soon lower their WACC levels as a follow-up adjustment to the government’s business tax rate reduction, from 29 to 24 percent.

RAE has endorsed the current WACC levels for a four-year period. A revision at this point would cancel out this endorsement.

The energy companies will push for a delay of any WACC rate revisions until the four-year period has expired, it is believed.

DESFA officials have already pointed out a need for stability and predictability, also stressing the company has invested heavily in the operator during a difficult period for the country.

DEPA’s gas distribution companies fear a WACC revision may negatively impact an ongoing privatization procedure for DEPA Infrastructure, a new DEPA entity established for the privatization.

DEPA and its associated firms have warned DEPA Infrastructure would become a less attractive prospect for nine candidates who have expressed first-round interest, while a revision before the WACC level’s four-year period has been completed could be interpreted as a signal of uncertainty by investors.

Energy sector transactions forecast to grow in 2020

Energy sector acquisitions and mergers are expected to represent an increased share of overall transactions this year, according to officials at professional services multinational PwC.

The combined effect of a European turn towards investments for green energy growth and Greece’s decarbonization plan is focusing Greek investment interest on the renewable energy sector, PwC officials pointed out during a presentation of an annual report.

Hellenic Petroleum ELPE’s recent decision to purchase an unfinished 204-MW solar energy park from Germany’s Juwi for 130 million euros, as well as petroleum group Motor Oil’s move to acquire a 47-MW RES project from Mytilineos for 45.8 million euros were highlighted as signs of things to come.

PwC officials also confirmed the interest of major foreign funds for RES investment opportunities in Greece, as was disclosed by energypress earlier this week.

Gas utility DEPA’s privatization of DEPA Infrastructure, a new company entity, will be completed this year, while nine prospective bidders, in the procedure’s preliminary stage, have already emerged to express official interest, PwC officials pointed out.

In 2019, Greece’s energy sector represented 5.8 percent of the country’s total number of takeovers and mergers, transactions worth a total of 4.3 billion euros.

 

Italy’s Snam, Italgas face off in DEPA Infrastructure sale

Snam, Italy’s gas grid operator, and Italgas, the neighboring country’s biggest natural gas distribution company, have emerged as rivals, despite sharing common interests, in a Greek privatization offering a full stake in DEPA Infrastructure, a new entity formed by Greece’s gas utility DEPA.

The Snam group holds a 13.5 percent stake in Italgas. Also, the two companies have a common key shareholder, CDP Reti, holding a 28.98 percent stake in Snam and a 26.05 percent share of Italgas.

The showdown between Snam and Italgas could end up leaving both bidders out of the DEPA Infrastructure privatization, whose deadline for first-round expressions of interest expires today following a slight extension.

The participation of both players in the DEPA Infrastructure privatization would represent a violation of the sale’s terms, privatization fund TAIPED has already pointed out following a related query.

Fully aware of the situation, Snam has sought a solution. The Italian firm could form another consortium as it had done for the sale of Greek gas grid operator DESFA. Snam led a consortium, Senfluga, joined by Fluxys and Enagas, for the acquisition of a 66 percent stake of DESFA.

Two major US funds, KKR and Blackrock, as well as Australia’s Macquarie, are among the field of players tipped to submit expressions of interest today. Two other funds, both undisclosed, one from China, the other from the Middle East, could also participate. Additional entries have not been ruled out.

Strong turnout seen for DEPA Infrastructure sale tomorrow

A solid build-up to tomorrow’s first-round deadline for a tender offering a full stake in DEPA Infrastructure, a new entity formed by gas utility DEPA, has indicated at least ten European operators as well as funds from beyond the continent will submit expressions of interest.

Snam, Fluxys, Enagas, Italgas, two major US funds, KKR and Blackrock, as well as Australia’s Macquarie, are among the field of players tipped to turn up.

Two undisclosed funds, one from China, the other from the Middle East, are also believed to be among the prospective bidders.

Candidates see DEPA Infrastructure’s investment plan as an opportunity for prospective synergies. Budgeted at 400 million euros, it envisions the development of a series of pipeline projects and other infrastructure in the wider southeast European region over the next five years.

Snam, Fluxys and Enagas, who formed a consortium named Senfluga to acquire a 66 percent of Greek gas grid operator DESFA in 2018, are expected to move independently for the DEPA Infrastructure tender’s first round, fearing antitrust regulations, before regrouping later on.

DESFA wants key role in country’s infrastructure projects

Gas grid operator DESFA, controlled by Senfluga, a consortium formed by Snam, Enagas and Fluxys for their acquisition of a 66 percent stake of the operator in 2018, is determined to play a leading role in all the country’s infrastructure projects as well as Greece’s wider natural gas-related developments.

“We see our role as being that of the leader in Greece’s gas sector and the wider region. We are interested in every gas project and want to be able to claim it. We also have the know-how and strong shareholders to play such a role,” a DESFA official told energypress.

According to sources, DESFA’s emergence as a prospective buyer of DEPA Infrastructure, a new entity established by gas utility DEPA as part of its privatization procedure, prompted officials to slightly extend the sale deadline.

More specifically, Snam, the Senfluga consortium’s chief member with a 54 percent stake, requested a deadline extension for the DEPA Infrastructure as it has yet to decide on its partners for this bidding quest. Enagas and Fluxys each hold 18 percent stakes in Senfluga. The Copelouzos group’s Damco recently joined this consortium, buying a 10 percent stake.

DESFA’s influence is also believed to have persuaded officials to delay a decision on whether to classify the development of a natural gas storage facility at a depleted offshore gas field in the south Kavala region as a national or independent grid project.

Snam, Enagas and Fluxys are part of the six-member Trans Adriatic Pipeline (TAP) consortium.

DESFA, which has signed a Memorandum of Understanding for the Alexandroupoli FSRU, is now seriously considering to acquire a 20 percent stake in this venture, headed by Gastrade.

Other projects being considered by DESFA include a 175 million-euro Cretan LNG terminal that promises to resolve the island’s energy sufficiency concerns, as well as a 57.3-km gas pipeline connection linking the Thessaloniki area with North Macedonia, already included in the operator’s ten-year strategic plan.

 

Additional IPTO stake seen offered within next three months

The government, gearing up for a series of energy sector privatizations, plans to hasten the sale of an additional yet unspecified stake in power grid operator IPTO. The procedure could now be launched within the next three months.

Investor interest in IPTO has risen as the operator’s asset value is projected to increase sharply over the next decade.

The Greek State currently controls a 51 percent share of IPTO, directly and indirectly. Late in 2019, State Grid Corp of China (SGCC), the buyer of a 24 percent stake in IPTO and holder of priority rights should any additional stake be offered, expressed an interest to boost its stake in the operator and also acquire a 20 percent stake in subsidiary firm Ariadne Interconnector, project promoter of the Crete-Athens electricity grid interconnection, a project budgeted at one billion euros.

The size of the additional IPTO stake to be placed for sale remains unclear, but, without a doubt, SGCC’s decision on whether or not to exercise its priority right will be influential.

Italy’s Terna, holding a 30 percent stake in CDP Reti, an Italian holding company, is also believed to be interested in the upcoming IPTO sale. SGCC would also be involved here as the Chinese company holds a 35 percent stake in CDP Reti. French operator RTE and a variety of funds are also considered believed to be considering the IPTO sale.

IPTO’s assets are seen rising from a present level of 1.5 billion euros to five billion euros over the next ten years as a result of the development of major grid interconnection projects to link the country’s Dodecanese and North Aegean Islands with the mainland.

Greece’s energy-sector privatizations will not be limited to gas utility DEPA’s two new entities, DEPA Infrastructure and DEPA Trade, both underway, nor will there be a gap until the next sale, distribution network operator DEDDIE/HEDNO, scheduled for September, energy ministry officials have informed. The Hellenic Petroleum ELPE sale will be deferred.

 

DEPA Infrastructure sale luring bidders, deadline Friday

The government and privatization fund TAIPED are expecting strong investor interest in the full sale of gas utility DEPA’s new entity DEPA Infrastructure, a procedure whose deadline for non-binding expression of interest expires this Friday at 5pm.

Authorities will not offer a deadline extension despite requests for more time, sources informed.

Italy’s Italgas, France’s Engie, Spain’s Reganosa as well as two major US funds, KKR and Blackrock, and, possibly, Australia’s Macquarie, are believed to be among the field of players eyeing the DEPA Infrastructure privatization. Senfluga, a consortium made up of Greek gas grid operator DESFA shareholders, is also considering participating in what should be a last-minute decision following related preparations.

Italgas, Italy’s biggest distribution network operator and third biggest in Europe, is believed to have held talks with fellow Italian company Eni for the acquisition of a 49 percent stake of gas distributor EDA Thess, covering the Thessaloniki and Thessaly areas. This stake is currently held by Eni subsidiary Eni Gas e Luce.

France’s Engie, also eyeing other opportunities in the Greek market, has partnered with Energean Oil & Gas and GEK-Terna with the intention of jointly bidding for an underground gas storage facility to be developed at a depleted offshore gas field in the south Kavala region.

TAIPED, the privatization fund, is offering DEPA’s 65 percent share in DEPA Infrastructure while Hellenic Petroleum ELPE is selling its 35 percent stake.

‘DEPA key to Greece’s leading Balkan role, energy diversification’

Greek gas utility DEPA chief executive Konstantinos Xifaras met earlier today with the U.S. Ambassador to Greece, Geoffrey Pyatt (photo), for a meeting focused on the recent energy-related developments in Southeast Europe as well as on the progress of significant projects in the wider region, currently under way or in design phase, such as the IGB pipeline, the Alexandroupoli FSRU and the EastMed pipeline, a project of strategic importance.

Following the meeting, Ambassador Pyatt remarked: “Greece is a leader in the Balkans in providing energy security and diversification of energy sources, and DEPA is key to its strategy. The U.S. therefore strongly supports DEPA’s participation in major projects that advance this strategy, particularly the Alexandroupoli FSRU, the IGB, TAP and potential EastMed pipeline, which are literally changing the energy map of Europe. These projects are critical for regional peace and security and will make Greece a regional energy hub.”

The DEPA chief commented: “We discussed, with the Ambassador, the course of significant energy projects currently under way in our region, in which DEPA has a leading role.  Over the past months, our company has striven to strengthen its position in the regional energy market, achieving notable cost reductions as well as expanding its activities in new sectors and products. At the same time, we remain focused on the double privatization [DEPA Trade, DEPA Infrastructure] and we are upgrading our participation in these international projects developing Greece into a regional energy hub, safeguarding, at the same time, the diversity of supply sources to the benefit of the country and consumers.”

 

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).

 

ELPE not on 2020 privatizations list despite priority status, unclear why

The schedule for the Greek State’s sale of its 35.47 percent stake in Hellenic Petroleum (ELPE) remains unclear despite this privatization being declared a priority by the New Democracy government immediately following its election victory last summer.

Speaking yesterday at an energy conference, Athens Energy Dialogues, energy minister Costis Hatzidakis offered a rundown of the government’s planned privatizations for 2020. ELPE was not on the list.

Signs of a slowdown in the ELPE plan emerged in early autumn when energy minister Costis Hatzidakis requested patience from investors for this particular sale. Ministry officials reiterated this call for patience yesterday.

Towards the end of 2019, the privatization fund TAIPED declared that its 2.4 billion-euro revenue target for 2020 would be achieved as a result of a series of planned privatizations.

TAIPED, at the time, included the ELPE sale on its privatization agenda for 2020, along with Athens International Airport and the two new gas utility DEPA entities, DEPA Trade and DEPA Infrastructure.

Some pundits have attributed the government’s ELPE delay to a decision by the Latsis Group, ELPE’s main shareholder with a 45.48 percent share, not to sell and not wish the entry of any new investor into the petroleum group’s equity make-up.

Certain industry experts have gone as far as to say that the ELPE privatization has been cancelled.

Others are attributing the ELPE sale delay to the launch of the DEPA Trade and DEPA Infrastructure privatizations. ELPE holds a 35 percent stake in DEPA and these new entities, established to serve the DEPA privatization.

Also, less favorable international conditions at present cannot be overlooked. Hatzidakis, the energy minister, has, from early on, been adamant on selling at the right time, when international conditions are at an optimal level.

Operator DESFA seeks role in Greek infrastructure projects

Greek gas grid operator DESFA, driven by the three-member consortium of Snam, Enagas and Fluxys now controlling the company with a 66 percent stake, appears determined to stretch beyond its operator role and become one of the biggest and most pivotal players in the domestic energy market, judging by its interest in major Greek-related natural gas projects now in progress.

According to energypress sources, DESFA’s administration is looking to acquire stakes in three key energy infrastructure projects: the prospective floating LNG terminal (FSRU) in Alexandroupoli, northeastern Greece; the planned underground gas storage facility at a depleted natural gas field in the offshore south Kavala region; and DEPA Infrastructure, one of gas utility DEPA’s two new corporate entities heading for privatization.

The chief executives of Snam, Enagas and Fluxys, major European operators also holding respective stakes in the TAP project, met yesterday with Greek Prime Minister Kyriakos Mitsotakis.

The officials requested first-hand information on the government’s energy market decisions following the delivery of a new and more ambitious National Energy and Climate Plan and the signing of a trilateral agreement between Greece, Cyprus and Israel for the East Med gas pipeline.

The Greek operator’s controlling consortium also presented investment plans supporting the country’s decarbonization strategy and aspirations to become a regional energy hub.

DEPA, ELPE, south Kavala gas storage privatizations in 2020

The privatizations of gas utility DEPA – through two separate tenders offering the utility’s trade and infrastructure divisions that have resulted from a split designed for the sale – as well as the Greek State’s 35.48 percent stake in Hellenic Petroleum (ELPE), stand as the major sales planned by privatization fund TAIPED in 2020.

TAIPED also plans to push ahead with a tender for the conversion of a depleted natural gas field in the offshore South Kavala region into an underground gas storage facility in the New Year.

The DEPA and ELPE privatizations are expected to raise one billion euros from a target of 2.4 billion euros set for 2020. If achieved, this amount will represent a new privatization revenue record for TAIPED.

The DEPA Infrastructure tender is already in progress. Participants are due to express non-binding interest by February 14. The DEPA Trade tender is expected to be launched within January. TAIPED is confident both these sales can be completed in 2020.

A planned privatization to offer a 30 percent stake in Athens International Airport ranks as TAIPED’s other major sale plan for 2020. The Greek State currently holds a 55 percent stake in Athens International Airport S.A. or AIA, the airport authority that owns and manages Athens International Airport.

DEPA Infrastructure sale first-round deadline set for Feb.14

Interested buyers of DEPA Infrastructure, a new entity emerging from a split at gas utility DEPA, have until February 14 to express non-binding first-round interest in its sale, offering the entire stake, the privatization fund TAIPED has announced.

TAIPED is selling the Greek State’s 65 percent stake and Hellenic Petroleum has contributed its full 35 percent stake.

Strategic investors as well as investment funds seeking strong yields have already displayed strong interest in the sale, TAIPED sources have informed media.

Procedures concerning the privatization of DEPA’s other new entity, DEPA Trade, are expected to begin in the first quarter of 2020. It remains unclear whether ELPE will contribute its 35 percent DEPA stake to this sale. ELPE has noted it will seek to take full control of this new company by acquiring the other 65 percent.

Greek groups, all involved in the energy sector, and foreign groups, some of which have already entered the country’s energy market, are interested in DEPA Trade, TAIPED sources added.

Energy deputy in Berlin Thursday for new round of bilateral talks

Moving on from his participation at this year’s Greek-themed Capital Link Forum in New York, deputy energy minister Gerassimos Thomas will be in Berlin Thursday for the third round of a Greek-German Action Plan on Bilateral Cooperation.

Greek and German officials will have an opportunity to discuss ensuing steps for energy-sector projects.

Germany’s energy minister is already familiar with Greece’s new National Energy and Climate Plan (NECP), presented by the Greek energy deputy last week at an EU council of energy ministers.

The Greek government has already shown an interest to utilize German decarbonization know-how following the fellow EU member state’s initiatives taken in this domain. The matter was discussed in October by Prime Minister Kyriakos Mitsotakis with the head of RWE.

Germany’s investment interest, consistently firm, has grown even stronger following the Greek government’s recent announcement of a plan aiming for a swifter withdrawal of power utility PPC’s coal generators.

Bilateral energy-sector cooperation was also keenly discussed at a Berlin meeting in August between the Greek leader and German Chancellor Angela Merkel.

Strong German interest exists for all of Greece’s forthcoming energy-sector privatizations. E.on, for example, is among the firms interested in a sale, announced yesterday, offering 100 percent of DEPA Infrastructure, a new entity that has emerged from a split at gas utility DEPA.

DEPA Infrastructure sale to be announced mid-December

Privatization fund TAIPED is preparing swift privatization action at gas utility DEPA to follow the government’s ratification of a restructuring plan at the company that will place for sale two new corporate entities, DEPA Trade and DEPA Infrastructure, emerging through this process.

A tender offering investors the Greek State’s 65 percent of DEPA Infrastructure – resulting from the Greek State’s equivalent stake in DEPA – will be announced no later than December 15, according to energypress sources.

Hellenic Petroleum ELPE’s 35 percent stake – resulting from the Greek State’s equivalent stake in DEPA – is expected to be included in the DEPA Infrastructure sale, sources noted. The petroleum group has indicated it is not interested in maintaining interests in DEPA Infrastructure. If this is so, then the potential buyer or buyers of DEPA Infrastructure will become full owner.

DEPA Infrastructure is the full owner of Attiki gas distributor, covering the wider Athens area, and DEDA, covering the rest of Greece. DEPA Infrastructure also holds a 51 percent stake in distributor EDA Thess (Thessaloniki and Thessaly). Italy’s ENI is the minority partner in this venture.

DEPA Infrastructure, through all its interests, has lined up a five-year investment program worth 250 million euros. Revenues at DEPA Infrastructure are regulated and worth a total of approximately 130 million euros.

Italy’s Italgas and Germany’s E.ON are believed to be among the potential bidders for DEPA Infrastructure. Belgium’s Fluxys and Spain’s Enagas, both part of a three-member consortium controlling Greek gas grid operator DESFA, may also participate in the DEPA Infrastructure sale.

The announcement of a sale procedure for DEPA Trade will follow and is expected by the end of January.

ELPE is not expected to offer its 35 percent stake to this sale, meaning bidders will most probably be bidding for the Greek State’s 65 percent.

The Mytilineos group, Motor Oil and a partnership comprised of Copelouzos and KKCG, the Czech company holding a stake in Greek lottery company OPAP, are seen as likely participants in the privatization fund’s ELPE Trade sale. International players ENI and Edison have also been mentioned by pundits.

 

LNG bunkering network for key Greek ports discussed in Rome

The development of an LNG bunkering network covering Greece’s main ports is one of the features included in a Greek-Italian Memorandum of Cooperation signed yesterday in Rome.

Italian officials, driven by increased LNG usage, internationally, proposed the development of LNG bunkering stations at major Greek ports during Prime Minister Kyriakos Mitsotakis’ visit to the neighboring country. The Greek leader was joined by energy deputy Gerassimos Thomas.

Discussion on the development of an LNG bunkering network in Greece goes back a number of years, steered by an EU directive from 2012 focused on the use of cleaner shipping fuel.

Unlike Italian ports, Greece’s ports have lagged behind in this department. In Italy, Edison has pushed ahead with many such investments, big and small-scale.

The objective, in Greece, is to develop a network to cover 15 percent of bunkering needs over the next decade and 25 percent by 2050. Italian know-how would provide valuable support.

Italgas, Italy’s biggest natural gas distributor, has displayed an interest in bidding for DEPA Infrastructure, one of two new gas utility DEPA entities emerging for the gas company’s upcoming privatization.

In a lesser-known development, Greece has received a proposal concerning the use of Italian gas storage facilities, for a fee, until an underground offshore facility south of Kavala is developed to bolster the country’s energy security, according to sources.

The Greek-Italian collaboration plan includes an upgrade of the existing submarine electricity grid interconnection linking the two countries. This line has been plagued by technical problems over recent years, often shutting down for repair work.

Italian energy firms eyeing array of local investments, PM in Italy

Italian investors are displaying widespread interest for energy investments in the Greek market, including possible stakes in distribution network operator DEDDIE/HEDNO, power grid operator IPTO, gas utility DEPA’s two new entities DEPA Trade and DEPA Infrastructure, as well as joint ventures in wind energy stations, electric vehicle projects and smart grids.

Deputy energy minister Gerassimos Thomas, joining Prime Minister Kyriakos Mitsotakis on an official visit to Rome today, is expected to be informed of this Italian investment interest. Thomas is scheduled to meet with Italian economic development minister Stefano Patuanelli.

The Greek Prime Minister, to meet with his Italian counterpart Giuseppe Conte, can also expect to hear of this Italian investment interest during talks which, besides the refugee crisis, will also address cross-border energy projects such as TAP and East Med.

Snam maintains the most emblematic of Italian investments in the Greek market at present with a 66 percent stake in gas grid operator DESFA, including control of the country’s natural gas transmission and storage infrastructure.

Italian firms are regarded as pioneers in a number of green-energy domains, including smart grids, electric vehicle recharging station installations along highways, even wave power projects.

Just days ago, a consortium comprising Eni, Fincantieri and Terna announced it would commercially develop its pilot project Inertial Sea Wave Energy Converter (ISWEC) for wave energy generation, initially at small Italian islands, followed by projects abroad.

The Greek Prime Minister and his energy deputy will also meet with Italian entrepreneurs, including Eni gas e luce chief executive Alberto Chiarini.

Italy’s Terna, one of Europe’s biggest transmission system operators, is believed to be interested in acquiring a stake of IPTO and its Ariadne subsidiary, project promoter of the submarine Crete-Athens grid interconnection.

Enel is considering moves into networks, renewable energy investments and the electric vehicles sector.

Italgas, Italy’s biggest gas distributor and the continent’s third biggest, appears interested in DEPA Infrastructure. Italgas is believed to have reached a preliminary agreement to acquire fellow Italian company Eni gas e luce’s 49 percent stake and management rights in EDA Thess, covering the Thessaloniki and Thessaly areas.

Eni, increasing its involvement in pioneering projects, including wave energy, is believed to be looking to increase its Greek market presence, possibly through acquisitions.