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.

 

DEPA Commercial VDR expected to open for bidders by end of week

A virtual data room offering financial and technical information concerning the privatization of DEPA Commercial, an offshoot of gas utility DEPA, will be opened to prospective bidders by the end of this week, sources have informed.

A final meeting between DEPA Commercial’s administration and privatization fund TAIPED may be staged today or tomorrow before the VDR is opened up for investors.

The sale of DEPA Commercial, expected to be fiercely contested by the country’s major energy players, should produce a result by December, according to an updated TAIPED schedule for its Asset Development Plan. This plan has already been approved by KYSOIP, the Government Council for Economic Policy.

A VDR for DEPA’s other privatization, DEPA Infrastracture, was opened in late August. Despite its earlier launch, binding offers are expected sooner for DEPA Commercial, whose conclusion has been scheduled for January, 2021 by TAIPED.

Well-informed sources have attributed this differing pace of schedules to a more complex sale procedure demanded for DEPA Infrastructure, requiring intervention by RAE, the Regulatory Authority for Energy. In addition, EU authorities will need to provide certification, needed for transfers of distribution networks and energy transmission systems.

For the time being, all of the country’s energy players are expected to gain access into the DEPA Commercial VDR as a first step before deciding on whether to place binding bids. Partnerships could be sought.

 

 

 

Clearer framework needed for new gas distribution networks

RAE, the Regulatory Authority for Energy, has identified the need for clear-cut, objective terms, based on technocratic criteria, for an improved strategy to help take natural gas to regions around the country without distribution network access at present.

Approval procedures for development plans submitted by gas distribution companies are currently in progress, and, in addition, the distribution sector is being restructured.

The energy ministry has made clear it wants a consistent and modern framework to facilitate the development of new distribution networks in as many parts of Greece as possible, a government objective.

Gas sector conditions also need to be made as clear as possible ahead of the privatization of DEPA Infrastructure, owning gas distributor EDA Attiki, servicing the wider Athens area; 51 percent of EDA Thess, covering the Thessaloniki area; and DEDA, distributing to all other regions not serviced by the two aforementioned firms.

RAE is now preparing a new framework concerning the appraisal and approval of development plans by gas distribution companies, as well as a formula for their earnings.

 

 

 

DEPA Infrastructure VDR open, DEPA Commercial data soon

A virtual data room has just been opened for the six bidding teams preparing to make second-round offers in the privatization of gas company DEPA Infrastracture, an offshoot of gas utility DEPA.

Czech company EPH, Italy’s Italgas, the Australian investment funds First State Investments and Macquarie, US firm KKR and China’s Sino-CEEF & Shanghai Dazhong Public Utilities now have access to all relevant data concerning the DEPA Infrastructure sale.

Another VDR is expected to be opened within the next few days for bidders participating in the privatization of DEPA Commercial, DEPA’s other entity up for sale.

The participants in this sale, seven entries in total, are: Motor Oil Hellas-PPC, ELPE-Edison, Mytilineos, GEK-TERNA, the Copelouzos group, Dutch company Shell and the Swiss-based MET Group.

VDR information for the DEPA Commercial sale will be made available over three phases as a protective measure intended to ensure competition. The first phase, offering non-sensitive data, will be open for all. Access to VDR information during the second stage, offering sensitive data, will be restricted to consultants. Bidders will be offered conditional access to confidential information in the third phase.

Greece’s privatization fund TAIPED is aiming to declare preferred bidders for both sales in the final quarter of this year. Market officials, however, believe this is more likely to occur in the first quarter of 2021.

DEPA Commercial bidders are allowed to team up and establish consortiums but partnerships for the DEPA Infrastructure sale are not permitted.

Bidders participating in the DEPA Commercial sale are mainly eyeing the company’s prized asset, retail gas supplier and subsidiary Fysiko Aerio Attikis, covering the wider Athens area. This company already serves close to 400,000 households and 10,000 businesses.

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.