DEPA Commercial privatization on hold, awaiting ELFE dispute

Energy minister Kostas Skrekas’ admission of concern over the impact, on DEPA Commercial’s privatization prospects, of the gas company’s ongoing legal dispute with ELFE (Hellenic Fertilizers and Chemicals) increases the likelihood of this sale being deferred until late this year, if not later, sources contend.

The minister, speaking at Power & Supply Forum, an online event staged earlier this week by energypress, admitted being troubled by DEPA Commercial’s unresolved legal battle with “a major consumer”.

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 government will most likely wait for the outcome of this legal dispute to be settled before taking any further steps in the DEPA Commercial privatization, planned to offer the Greek State’s 65 percent stake of the company and a 35 percent stake held by Hellenic Petroleum (ELPE).

Regardless of the outcome at the appeals court, this legal wrangle is expected to be taken all the way to the Council of State, Greece’s Supreme Administrative Court, the sources noted.

Should ELFE be vindicated in the overcharging case, other DEPA customers – even bigger consumers than ELFE – can also be expected to also take legal action, which could end up costing the gas company as much as a billion euros in refunds, the sources said.

Cancellation of the current privatization procedure and an ensuing company split of DEPA Commercial that would enable the sale of subsidiary Fysiko Aerio/Hellenic Energy Company is an unlikely prospect, the sources added.

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.

Alexandroupoli FSRU 2Q investment decision, work to start in ’21

The shareholders of Gastrade, a company founded by the Copelouzos Group for the development and operation of the Alexandroupoli FSRU planned for Greece’s northeast, are gearing up for an investment decision, expected in the second quarter, ahead of the beginning of the project’s development, anticipated within the current year.

Gastrade’s shareholders will most likely make an investment decision in May, sources informed.

The consortium’s shareholders are currently awaiting final administrative details that will formalize the entry into Gastrade of Bulgaria’s Bulgartransgaz and DESFA, the Greek gas grid operator.

Last week, Thanassis Dagoumas, the head official at RAE, the Regulatory Authority for Energy, approved the transfer of a 20 percent Gastrade stake from the Copelouzos Group’s Asimina Eleni Copelouzou to the Bulgarian gas company.

Copelouzou now controls 40 percent of Gastrade, with three stakeholders, Gaslog, DEPA Commercial and Bulgartransgaz each holding 20 percent.

Within the next few weeks, the RAE chief is also expected to endorse a further 20 percent transfer from Copelouzou to DESFA, giving the consortium’s five partners equal shares of 20 percent each.

Gastrade has already announced a tender offering an EPC contract for the floating LNG terminal in Alexandroupoli. Participants face a February 18 deadline.

An investment decision promises to push forth engineering studies, including geotechnical, as well as the order of a floating vessel for the project during the year. The FSRU will be completed in 2023, Gastrade shareholders have announced.

The shareholders appear receptive to the idea of North Macedonian involvement in the Gastrade consortium. They are awaiting bilateral developments at a diplomatic level, sources informed.

DEPA Commercial RES entry adds value to its ongoing privatization

Gas supplier DEPA Commercial’s move into the renewable energy sector through a 49 percent acquisition of North Solar, a company developing solar energy projects with a total capacity of 499.61 MW in northern Greece’s west Macedonia region, provides new prospects and added value to the gas company’s ongoing privatization procedure.

The agreement between DEPA Commercial and North Solar, announced last Friday, diversifies the gas company’s energy portfolio, activities, earnings potential and risk.

The move follows in the footsteps of strategies adopted by numerous international gas companies, expanding their reach into the RES sector to broaden their revenue sources and reduce environmental footprints.

DEPA Commercial is currently at the final stage of a sale launched by privatization fund TAIPED.

In addition to the prospective benefits promised by its RES entry, the gas company is also expected to gain in value as a result of its detachment from previous gas-auction responsibilities maintained during the market’s liberalization process.

DEPA Commercial’s market share appears to have stabilized at levels of approximately 40 percent, while the company’s financial performance, according to sources, improved in 2020.

 

DEPA Commercial sale moving ahead as planned despite ELFE legal dispute

Privatization fund TAIPED intends to move ahead as planned with the next round of the sale of gas company DEPA Commercial by setting a spring binding-bids deadline for candidates, despite concerns that an ongoing legal dispute between the company and ELFE (Hellenic Fertilizers and Chemicals) could impact the privatization’s proceedings, sources have informed.

An appeal filed by gas utility DEPA, DEPA Commercial’s parent company, challenging an Athens Court of First Instance verdict that ordered the company to return 61 million euros to ELFE as a result of overcharging was yesterday deferred for September and will now probably be jointly heard along with a separate appeal case involving the two companies over a similar amount of unpaid receivables owed by the fertilizer and chemicals producer to DEPA.

This ongoing legal dispute has caused uncertainty among potential buyers of DEPA Commercial as it is complicating their bid calculations.

TAIPED is currently engaged in talks with the finance and energy ministries for the establishment of an appropriate formula concerning a related term in the privatization’s sale and purchase agreement that would offer candidates security to a great extent.

A court ruling in favor of ELFE, in the DEPA overcharging case, could prompt other DEPA customers, such as electricity producers and industrial producers, to take legal action against the utility over overcharging claims. This could end up costing DEPA many hundreds of millions.

Outcome of DEPA appeal against ELFE crucial for sale

The outcome of tomorrow’s appeal filed by gas utility DEPA against ELFE (Hellenic Fertilizers and Chemicals) following an Athens Court of First Instance verdict ordering a 61 million-euro return from the gas utility for gas supply overcharging will be crucial for the privatization of DEPA Commercial, a new DEPA entity formed for the sale.

According to legal experts, tomorrow’s hearing could be deferred until September so that it may be concurrently heard with an ensuing appeal filed, in response, by ELFE against DEPA to challenge a separate Court of First Instance decision in October, 2019 that ordered ELFE to pay the gas company about 60 million euros in unpaid receivables. DEPA had sought 86.7 million euros. This ELFE appeal was given a September, 2021 date.

Combining appeal cases is commonly practiced by courts, the legal sources pointed out.

Postponement of tomorrow’s appeal case until September may prompt the privatization fund TAIPED to extend a March deadline it had set for binding bids concerning the DEPA Commercial privatization. Potential buyers would want to know the outcome of the DELA-ELFE legal dispute before placing any offers.

A court ruling in favor of ELFE could prompt other DEPA customers, such as electricity producers and industrial producers, to take legal action against the utility over overcharging claims.

The Court of First Instance ruled DEPA overcharged ELFE between 2010 and 2015 by applying an oil-indexed gas pricing formula used by Russia’s Gazprom. ELFE sought 302 million euros, well over the a 61 million-euro return determined by the court.

Key issues in new minister’s first session with EC officials

Today’s first meeting, via teleconference, between Greece’s recently appointed energy minister Kostas Skrekas and European Commission authorities, as part of Brussels’ ninth post-bailout review, will focus on four key issues: power utility PPC’s lignite monopoly; the proper functioning of target model markets; energy-sector privatizations, and the decarbonization plan for west Macedonia, a lignite-dependent area in the country’s north.

The four issues were addressed in preliminary talks last week between Alexandra Sdoukou, secretary-general of Greece’s environment and energy ministry and Brussels technocrats.

It remains to be seen if the European Commission will again commend Athens, and to what extent, for the target model’s functioning, as Brussels had done last November, when the model’s new markets in Greece were launched as a step to harmonize EU energy markets.

However, weeks into the launch, balancing market costs skyrocketed, leading to sharply increased wholesale electricity prices. RAE, the Regulatory Authority for Energy, is now considering to introduce an adjustable price-containing measure to be set as a percentage of day-ahead market prices.

The European Commission, in the latest talks, can also be expected to push for the launch of a market test concerning an agreement offering independent players access to PPC’s lignite-based electricity production.

Though the interest of independent players for lignite-based electricity may have diminished given its increased cost, this antitrust case, unresolved for years, remains a big concern for the government as Brussels could associate it with pending Greek issues.

The complexity of PPC’s lignite monopoly case was deepened following a decision by the previous energy minister, Costis Hatzidakis, to bundle the matter with a Greek compensation request based on the utility’s need to keep running lignite-fired power stations for energy sufficiency. According to reports, his successor, Skrekas, will not sway from this policy.

As for energy-sector privatizations, a sale plan for gas supplier DEPA Commercial has attracted considerable interest but officials are concerned as parent company DEPA is embroiled in an ongoing lawsuit with ELFE (Hellenic Fertilizers and Chemicals).

DEPA has appealed a verdict awarding the producer a compensation amount of 60 million euros following overcharging claims. The case could be deferred until September, meaning binding bids by possible DEPA Commercial buyers may need to be delayed.

Greece’s decarbonization master plan features 16 key investment proposals that are expected to create over 8,000 jobs, directly and indirectly, in lignite-dependent areas. However, numerous complex matters need to be resolved, including the transfer of related property controlled by PPC, Brussels’ approval of a series of incentives for new investments, and scores of licensing issues.

DEPA appeal against ELFE on January 28, deferral possible

A January 28 date has been set for 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), awarding the producer a compensation amount worth 61 million euros.

ELFE was seeking a compensation amount of 302 million euros, arguing DEPA – the gas utility from which DEPA Commercial later sprung forth as a new group entity – overcharged between 2010 and 2015 for supply to the producer’s facility in Kavala, northern Greece, by passing on the increased cost of DEPA’s oil-indexed contract with Gazprom.

Also in 2019, the Athens Court of First had concurrently delivered a separate verdict in favor of DEPA, vindicating the gas company for unpaid receivables owed by ELFE. The producer was ordered to pay a sum estimated between 59.5 and 60 million euros.

In response, ELFE, too, filed an appeal opposing this 2019 decision, the hearing’s date set for September, 2021, sources informed.

Legal sources explained that the two appeals could end up being heard concurrently in September, based on a decision that may emerge from the forthcoming appeal ten days from now. Combining appeal cases is commonly practiced by courts, the sources noted.

If so, the amount of time needed to resolve this legal dispute will be extended, which would impact privatization fund TAIPED’s scheduling of the DEPA Commercial privatization.

TAIPED has set a March deadline for binding offers. This deadline could end up being stretched beyond September.

Should DEPA Commercial’s appeal against ELFE ultimately fail, then other customers of the gas company, primarily electricity producers and industrial enterprises, could also seek compensation amounts for overcharging.

Some pundits have pointed out that electricity producers were probably able to pass on to their customers any cost increase resulting from DEPA’s oil-indexed contract with Gazprom. On the contrary, industries did not have such leeway.

Preliminary talks for 9th post-bailout review begin today

Power utility PPC’s lignite monopoly ordeal, the effort to ensure proper functioning of target model markets, the progress of privatization plans, and Greece’s decarbonization master plan for the lignite-dependent local economies of west Macedonia, in the country’s north, and Megalopoli, Peloponnese, are the key issues on the agenda of the ninth post-bailout review set to be conducted by the European Commission.

Preliminary review talks are scheduled to commence today between energy ministry officials and Brussels technocrats. These will be followed by higher-level talks involving technocrat chiefs and Greece’s newly appointed energy minister Kostas Skrekas.

Though his predecessors faced plenty of pressure, especially over PPC’s dominance, the new minister could be in for a hard time if pending energy-sector issues are not directly dealt with.

RAE, the Regulatory Authority for Energy, and power grid operator IPTO are still seeking solutions to tackle problems faced by the target model’s new markets. They got off to a problem-laden start in November, prompting a sharp rise in balancing market costs during the first few weeks.

As for energy-sector privatizations, the plan to offer a 49 percent stake in distribution network operator DEDDIE/HEDNO appears to be making sound progress and attracting strong interest, as exemplified by the participation of 19 participants in December’s market test.

On the contrary, the privatization plan for gas supplier DEPA Commercial could be destabilized by the company’s ongoing legal battle with ELFE (Hellenic Fertilizers and Chemicals) over an overcharging claim made by the latter. This battle could delay and affect the DEPA Commercial sale.

The Just Transition Plan for Greece’s decarbonization effort is now beginning to make some progress, but this unprecedented endeavor’s degree of complexity cannot be overlooked. Vast amounts of land controlled by PPC need to be repurposed, Brussels must approve investment incentives, and licensing matters need to be resolved, amongst other matters.

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.

 

DEPA Commercial, reshaping, seeks electricity supply license

DEPA Commercial, one of gas utility DEPA’s new entities established as part of its privatization, has applied for a 500-MW electricity supply license, RAE, the Regulatory Authority for Energy, has announced.

This move by DEPA Commercial comes as part of the utility’s restructuring and transformation effort, sources said.

An electricity supply license promises to broaden DEPA Commercial’s portfolio, regardless of whether it will actually be used or not. In essence, the company, through this initiative, is making the most of tools available in the market, sources have concluded.

DEPA Commercial owns Fysiko Aerio – Hellenic Energy Company (EPA Attiki), a subsidiary already active in Greece’s electricity market. DEPA Commercial, however, could use its own electricity supply license for PPAs.

DEPA Commercial invites RES companies for collaboration

DEPA Commercial, one of two new entities formed by gas utility DEPA for its upcoming privatization, has invited renewable energy companies with existing production units or advanced projects to express interest in prospective collaborations.

DEPA Commercial is aiming to transform into an energy company with emphasis on green energy activities, chief executive Costas Xifaras has noted.

According to sources, DEPA Commercial is looking to develop a RES portfolio totaling 240 MW.

Related investments at DEPA Commercial are expected to reach 120 million euros, the company head has stated.

DEPA Commercial, interested in both solar and wind energy projects, is looking to acquire RES production licenses and, especially, mature-stage projects, sources informed, adding the company is seriously considering takeovers.

For the time being, DEPA Commercial does not intend to partner with energy groups active in the RES market as well as the company’s privatization procedure.

Besides its plan to expand into the RES market, DEPA Commercial, currently developing major LNG projects, is also exploring the possibility of entering the hydrogen sector.

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.

 

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.

 

PPC, going green, to present transformation plan on Monday

Power utility PPC’s new three-year business plan, to transform the company from a lignite-centered utility into a RES-focused enterprise backed by a range of modern and digital commercial services, will be officially presented on Monday by the state-controlled company’s board, headed by chief executive Giorgos Stassis (photo), with Prime Minister Kyriakos Mitsotakis in attendance.

A new company logo symbolizing PPC’s shift from lignite to renewables will also be unveiled at the event along with the launch of the motto “PPC welcomes the future”.

PPC’s trademark lightning bolt-bearing logo that has featured for years at the façade of the company’s Athens headquarters has already been removed to make way for the the new logo, to be unveiled at Monday’s event.

On the day, PPC will present details on its plan to develop a RES portfolio with a capacity of between 2,000 and 3,000 MW over the next three years. This effort will coincide with the utility’s phase-out of lignite-fired power stations.

The privatization plan for the forthcoming sale of a 49 percent stake in subsidiary DEDDIE/HEDNO, the distribution network operator, expected to begin towards the end of this year, will also be presented at Monday’s event.

So, too, will an abundance of new services, including house repair and maintenance insurance.

PPC’s new three-year plan, at its core, will aim for high profitability and an annual EBITDA figure of between 700 and 900 million euros. It will also detail the company’s interest in DEPA Commercial, a new gas utility DEPA entity headed for privatization.

On Monday, PPC will also offer an update on ongoing talks with investors, including Germany’s RWE, for the development of solar farms worth 1.2 billion euros in northern Greece’s lignite-dependent west Macedonia region.

Funds of between 500 and 550 million euros stemming from PPC’s securitization of unpaid receivables will be used to help finance RES investments. The company is also considering a bond issue for the end of the year. Funds to be raised through the prospective DEDDIE/HEDNO sale will also be used for these investments.

Sensing a bright future at PPC, a growing number of institutional investors and hedge funds from abroad are considering the company’s share. They include Allianz Global Investors, Bell Rock Capital, Helm Investment Partners, Bluecrest Capital Management, Polygon, Fiera Capital, Zenon and Prince Street Capital.

 

 

 

DEPA Commercial to enter RES field, starting with 200-MW goal

DEPA Commercial, the new entity emerging from gas utility DEPA, will enter renewable energy production as part of the company’s transformation from a gas to energy company, its administration has decided.

The firm has already held talks with green energy players with the aim of involving DEPA Commercial in solar and wind energy projects about to enter the construction stage or already being constructed, sources informed.

An initial objective for the accumulation of a green-energy portfolio comprising approximately 200 MW has been set by the company, sources added.

Careful steps are being taken in the RES sector, Dr. Konstantinos Karagiannakos, the company’s Coordinating Director of Trading Activities, recently noted.

Having lost a steady and reliable market share in gas distribution, a sector that guaranteed DEPA annual profit of about 25 million euros, DEPA Commercial is now eyeing new activities and revenues from domains that offer more consistency than trade, entailing higher risk.

Besides the RES sector, DEPA Commercial’s lower-risk approach has also led to an interest in the prospective Alexandroupoli FSRU in northeastern Greece.

The company is also broadening its activities to cover gas supply for the industrial sector and customers in areas without gas networks, through small-scale LNG and remote CNG solutions, as well as the gas-run vehicle market through the development of a nationwide network of refueling stations.

In addition, the company is also making plans to enter eco-friendly alternative fuel markets such as hydrogen and biomethane.

 

Business plan, better results, new activities in DEPA Commercial VDR

The virtual data room for a forthcoming privatization to offer a 65 percent stake in DEPA Commercial, an offshoot of gas utility DEPA, expected to be opened for potential buyers to assess by the end of this week, will present a business plan, improved financial figures at DEPA, new company activities envisaged, as well as DEPA’s outlook on the course of the country’s natural gas market and the company’s position within it.

According to privatization fund TAIPED’s revised Asset Development Plan, participants will submit binding bids in December.

The field of first-round entries, comprising two consortiums and five companies, will have roughly three months to prepare binding bids, according to the schedule.

Hellenic Petroleum ELPE and Italy’s Edison are one of the privatization’s two participating consortiums, the other formed by power utility PPC and Motor Oil Hellas. The five individual participants are: Mytilineos, TERNA, Copelouzos group, Shell and the Swiss-based MET group.

New partnerships could be established by the field of participants as long as they do not affect the sale’s competition standards and have been approved by TAIPED.

The sale of DEPA Commercial is a major attraction for potential buyers as it offers a big slice of the wholesale and retail markets, including gas supplier Fysiko Aerio Attikis, a subsidiary covering the wider Athens area. Fysiko Aerio Attikis already serves close to 400,000 households and 10,000 businesses.

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.

 

 

 

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.

PPC triggers options for 2021 gas orders from DEPA, Prometheus Gas

Power utility PPC has activated options to extend, by an additional year, its 2020 gas supply contracts with gas utility DEPA and Prometheus Gas, a joint venture involving the Copelouzos group and Russia’s Gazprom, for respective gas orders of 2 million MWh and 2.5 million MWh, according to sources.

PPC expects to require a total gas amount of between 17 million and 18 million MWh for its electricity generation needs in 2021, unchanged compared to the estimate for this year.

A nine-year gas supply agreement between PPC and DEPA securing the power utility approximately 11 million MWh of gas, annually, expires at the end of this year. As a result, PPC will need to reshape its gas supply policy from scratch.

The gas supply prices secured by PPC through its aforementioned one-year contract extensions with DEPA and Prometheus Gas are roughly 8 to 9 percent lower compared to the prices of the power utility’s long-term agreement with DEPA.

The cost of PPC’s additional one-year gas order from DEPA is believed to be about 30 million euros, while the 2021 order from Prometheus Gas is estimated to be worth 36 million euros, sources said.

Early this year, PPC purchased additional gas amounts totaling 4.5 million MWh from DEPA and the Copelouzos group, through a competitive procedure, to primarily cover needs at its Aliveri and Megalopoli power stations.

PPC is also covering this year’s gas needs through supplementary LNG orders. The power utility has so far brought in three shipments of 2 million MW each, and may order a further 2 million MWh in the second half.

Natural gas market forecasts for 2021 remain hazy. RAE, the Regulatory Authority for Energy, has yet to determine the manner in which slots will be distributed at gas grid operator DESFA’s LNG terminal on the islet Revythoussa, just off Athens. In addition, the sale of DEPA Commerce, a new DEPA entity established for the gas utility’s privatization, is expected next year.

 

DEPA Commerce 5-year business plan includes turn to RES sector

Gas company DEPA Commerce’s five-year business plan for 2020-2024, containing investments estimated at 200 million euros, aspires to broaden the company’s interests by also incorporating renewable energy projects totaling 200 MW, either through independent development or acquisitions of mature plans.

Privatization fund TAIPED and the energy ministry are expected to approve the DEPA Commerce business plan within July.

DEPA Commerce was formed by gas utility DEPA as a new entity for its privatization procedure.

Besides RES projects, the DEPA Commerce business plan also includes hydrogen and biomethane projects, as well as electromobility initiatives.

The company’s expansion of business activities is expected to lead to greatly increased EBITDA and profit figures.

Once finalized and approved, the DEPA Commerce five-year business plan will be included in the due diligence package for prospective bidders.

DEPA Commerce sale may change gas, electricity markets

Ongoing procedures in the sale of DEPA Commerce could serve as a catalyst for major changes in the retail gas and electricity markets, leaving fewer players in these markets.

Challenges of the new era, from electromobility to renewable energy, are expected to soon lead to the establishment of various energy-sector mergers and partnerships in Greece.

Talks between company officials for potential partnerships have proliferated since seven consortiums were confirmed as the qualifiers through to the second and final round in the sale of gas utility DEPA’s commercial division.

Hellenic Petroleum (ELPE) chief executive Andreas Siamisiis, during a press conference yesterday, left open the prospect of an entry by an additional partner into the consortium formed by ELPE and Italy’s Edison. This consortium is among the sale’s seven qualifiers.

Such a development could even influence the line-up of electricity supplier Elpedison, a joint venture formed by ELPE and Edison for Greece’s retail market, Siamisiis admitted.

It is believed that fellow qualifiers Motor Oil and Greek power utility PPC, who also joined forces for the DEPA Commerce sale, are moving to expand their consortium for this sale.

Highlight the importance of the DEPA Commerce sale, and its potential to lead to sweeping changes, six major Greek energy companies are involved in the DEPA Commerce sale, a record level of interest for any local energy-market sale in recent years.

Besides the three aforementioned Greek players, Mytilineos, GEK-TERNA and Copelouzos are also vying for DEPA Commerce.

Electricity producers are the market’s biggest gas consumers, which entwines the interests of gas and electricity players.

Six Greek heavyweights among DEPA Commercial contenders

Six major Greek energy market players are among the contenders through to the second round of the DEPA Commercial sale, the biggest domestic turnout for an energy-sector tender in recent years, highlighting the gas market’s significance and prospects over the next decade.

The country’s energy transition plan is aiming for zero emissions by 2030.

Hellenic Petroleum (ELPE), joined by Italian partner Edison, a Motor Oil and power utility PPC partnership, Mytilineos, Gek-Terna and the Copelouzos group are the six Greek contenders, among a list of seven bidding teams shortlisted for the DEPA Commercial sale’s final round, entailing binding bids.

Gas utility DEPA, from which DEPA Commercial has been established for the utility’s privatization, may have lost its monopoly in the natural gas market, but its assets and market share promise the new owner a leading position during Greece’s decade of decarbonization, electric vehicle market growth and drastic reduction in fuel consumption.

As a result, fierce bidding for DEPA Commercial is expected.

The company’s acquisition will provide the new owner with a portfolio of 350,000 customers plus DEPA Commercial’s international supply contracts with Russia’s Gazprom, supplying pipeline gas to the Greek company for years; Algeria’s Sonatrach, supplying LNG; and Turkey’s Botas.

Gas quantities from Azerbaijan have also been reserved by DEPA Commercial via the imminent TAP route.

 

 

 

Seven bidders through to DEPA Commercial sale’s final round

The Board of Directors of the Hellenic Republic Asset Development Fund (HRADF), during today’s meeting decided, that seven interested parties meet the criteria to participate in Phase B (Binding Offers Phase) of the tender process for the acquisition of 65% of the share capital of DEPA Commercial (Trade) S.A., with an option of acquiring the total of its issued share capital by virtue of a Memorandum of Understanding (MoU) between DEPA S.A. shareholders, HRADF and Hellenic Petroleum S.A. (HELPE), the development fund has announced in a statement.

The prequalified interested parties to participate in Phase B of the tender are (in alphabetical order):

  1. C. G. GAS LIMITED
  2. Consortium HELLENIC PETROLEUM SA & EDISON INTERNATIONAL HOLDING N.V
  3. Consortium MOTOR OIL HELLAS CORINTH REFINERIES SA & PPC SA
  4. GEK TERNA SA
  5. MET HOLDING AG
  6. MYTILINEOS SA
  7. SHELL GAS BV

Following the signing of the relevant Confidentiality Agreement, the prequalified interested parties will receive the documents of Phase B (Binding Offers Phase) and will grant access to the virtual data room (VDR), where data and information related to DEPA Commercial S.A. are uploaded, the statement added.

 

 

 

 

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.

 

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.

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.