‘Energy ministry policies crucial in effort to revitalize economy’

The energy ministry’s policies promise to play a pivotal role in the challenge faced by the government to revitalize the national economy following lockdown, energy minister Costis Hatzidakis has noted in an article featuring in GREEK ENERGY 2020, the energypress team’s latest annual publication covering the Greek energy sector.

Action is already being taken by the ministry through a decisive energy-sector agenda that aims for growth and is fully aligned with the European Green Deal, now a key economic growth tool throughout Europe, the minister notes.

New financial tools such as an EU recovery fund, worth 750 billion euros, according to a European Commission proposal, are designed to help the EU achieve its goal of transition towards a zero-emission economy through support for the gradual elimination of fossil-fuel dependence, RES growth and energy savings, the minister writes.

Greece is ready to make the most of this EU support package, effectively an additional NSRF funding program for the country promising capital worth around 32 billion euros, in order to achieve sustainable green-energy growth, according to Hatzidakis.

Besides decarbonization and RES development, other aspects incorporated into the energy ministry’s wider plan include:  electromobility growth; a third Saving at Home subsidy program for domestic energy-efficiency upgrades; reforms for greater competition, transparency and more attractive price offers in the energy market; reduced industrial energy costs; and energy-sector privatizations, the minister notes.

 

Energy projects a main focus of new financial support tool

A financial-support plan backing energy projects, the circular economy – waste elimination and continual use of resources – as well as pivotal infrastructure features in a wider support program announced by government officials yesterday for the economy and enterprises.

The support plan, to involve public and private-sector money, will seek to achieve economic regrowth as lockdown measures are gradually eased.

Development and Investment Minister Adonis Georgiadis presented the various facets of the support program yesterday following a speech from Prime Minister Kyriakos Mitsotakis on the government’s plan for a restart of the economy.

The government intends to provide state support worth 400 million euros for the support plan’s section concerning energy, the circular economy and pivotal infrastructure. The amount will be channeled into the market by the Hellenic Development Bank.

In addition, this support fund will also seek to attract private-sector capital worth 600 million euros and ultimately generate energy-sector investments totaling approximately 3 billion euros.

Renewable energy and energy storage projects will be the main focus of this part of the support program, while qualification will be based on transparent criteria and banking rationale, officials noted.

The support plan’s section for energy, the circular economy and pivotal infrastructure, along with another section supporting strategic sectors of the economy, share the top spot in terms of state support – 400 million euros for each – among eight sections in total.

The total sum to be provided by the state for the support plan’s eight sections amounts to 1.8 billion euros, projected to snowball into investments worth 5 billion euros overall.

 

 

Cyprus on track for Industry 4.0

By Constantinos Kesentes

Chairman of the Board of Directors at GAIAOSE

Member of Innovation Advisory Team at HCAP

After the difficult period of the economic crisis, the Republic of Cyprus has been impressive in the way it is preparing the future. A characteristic example is the field of innovation. The Republic of Cyprus has turned its attention to the fourth industrial revolution and strives to create the right environment, at the level of enterprises, companies, services and investments, by adopting innovative practices and processes.

On the initiative of the President of the House of Representatives, Mr. Dimitris Syllouris and through a systematic effort of three years, Cyprus has already developed a National Strategy for Blockchain Technologies and Distributed Ledger Technology (DLT) while the corresponding National Strategy for the Development of Artificial Intelligence is already at the stage of completion. With a clear vision, strategic goals, priorities and a precise roadmap that includes pilot projects and the necessary legislative reforms the Republic of Cyprus is claiming a position among the pioneering EU states and a coordinating role at a regional level.

Given the recent experience of attending the Conference of the House of Representatives on “The Fourth Industrial Revolution: Innovation, Artificial Intelligence, and Integration”, I would like to point out some aspects that impressed me:

– The high symbolism of organizing such a specialized conference inside the House of Representatives and with the active participation of Members of the House, which signifies the importance that the Republic of Cyprus attaches to the issues of innovation.

– The harmonious cooperation of public and private academic institutions with public and private bodies with the sole aim of advancing the country.

– The inspirational leadership of President D. Syllouris who bears the characteristics of a visionary politician and a result-oriented manager. An example of his effectiveness and determination was his statement to a participant who noticed that “In order for the pilot projects to begin the completion of the legislative reforms is required.” The President’s answer was: “If we want to be among the successful countries, we have to move fast. We will find the way to realize the pilot projects without having to wait for the completion of the legislative work.”

Having these thoughts, I met the President Mr. D. Syllouris during his recent visit in Athens to discuss about the conclusions of the Conference and investigate the cooperation opportunities between Greece and Cyprus for the development of innovative infrastructure and services.

Right after the Conference, at the initiative of the House of Representatives, the process for developing an integrated legislative framework for blockchain/DLT has begun. With the help of experts from Europe and the US, a modern and flexible institutional framework is being designed with a particular emphasis on supervisory mechanisms, which will ensure the transparency and the avoidance of the use of blockchain services to serve illegal activities.

The medium-term goal of President D. Syllouris is the establishment of a Network of Understanding and Cooperation among all interested parties for the implementation of the National Strategy of the Republic of Cyprus for the fourth industrial revolution. Academic institutions, research centers, the business world, startup ecosystems and funds will be invited to participate in this network and to cooperate in order to make Cyprus a benchmark for industry 4.0.

In this context, significant opportunities of cooperation between Greece, Cyprus and States of the wider region are created to develop public blockchain services infrastructure and to engage companies in the provision of value added services in sectors such as supply chain, real estate, transportation, fintech, retail, intelligent agriculture, food safety & traceability and many more. These co operations could be the catalyst for the overall upgrade of the two countries’ economy.

It is worth mentioning that, according to a recent report of the World Economic Forum, blockchain could lead to 1.5% global GDP growth in the next decade. With this expectation a global race to develop such infrastructure and services has begun. The recent “Worldwide Semiannual Blockchain Spending Guide” report of International Data Corporation (IDC) forecasts that spending on developing blockchain solutions in 2019 will increase by 80% comparing to 2018 and will reach 15.9 billion USD in 2023.

The position of Greece and Cyprus in this scene is reinforced by the fact that the fourth industrial revolution is of high priority for the EU. The European Commission has a holistic approach to blockchain technologies and DLT, which aims at positioning Europe at the forefront of blockchain innovation and uptake. In this context, the EU aims through a series of initiatives to reinforce cooperation on the development of blockchain/DLT based applications, support international standard setting and facilitate dialogue between industry stakeholders and regulators, notably for a regulatory framework, that builds on the EU acquis.

An important initiative that is involved in the above context is the European Blockchain Partnership (EBP) for the establishment of a European Blockchain Services Infrastructure (EBSI) that will support the delivery of cross-border digital public services, with the highest standards of security and privacy. Both Greece and Cyprus are members of EBP. At the same time the EU, in order to encourage cooperation between public and private sector, has launched the International Association for Trusted Blockchain Applications (INATBA), which brings together industry, startups and SMEs, policy makers, international organisations, regulators, civil society and standard setting bodies to support blockchain/DLT to be mainstreamed and scaled-up across multiple sectors. The EU context of initiatives is complemented with appropriate funding. Already 180 M€ of EU funding spent to support research and innovation in blockchain/DLT while a new investment fund, “The blockchain and AI fund”, is being created. In 2020, 100 M€ will be allocated to the European Investment Fund (EIF) for being invested in Venture Capital funds, who will then invest a total of 300 to 400 M€ in AI and blockchain startups.

This favorable framework, which appears to be in place, is an important opportunity for growth for the economies of Cyprus and Greece. Initiatives like the one of the President of the House of Representatives, Mr. D. Syllouris, contribute to this very direction.

 

 

Electricity demand up 3.8% in first half, indicating improved Greek economy

Domestic electricity demand has increased by 3.8 percent in the first half of 2019 compared to the equivalent period a year earlier, indicating an improved Greek economy, latest power utility PPC figures have shown.

PPC’s total turnover increased by 94 million euros, or 4.3 percent, in the first half, despite a 4.6 percent, or 921 GWh, reduction in sales as a result of the utility’s retail market share loss, from 83.2 percent in the first half last year to 77.1 percent in the first half this year, the utility’s first-half results showed.

The power utility’s total turnover increase was attributed to the increased local demand for electricity; a partial recovery of CO2-related expenses from mid and high-voltage electricity sales; and a reduction of PPC’s punctuality discount from 15 to 10 percent as of April 1, 2019, it noted.

ELPE roadshow ahead of bond issue, €300-400m sought

Hellenic Petroleum ELPE has organized a series of meetings with institutional investors over the next few days to pitch an imminent five-year bond issue aiming to attract a capital amount of between 300 and 400 million euros at an interest rate, according to some sources, of just under 3 percent.

The ELPE bond issue could take place this week, sources have informed.

The listed petroleum group has asked participating banks to organize a series of presentations, the first in London today. Zurich and Paris follow tomorrow, while an Athens session is planned for Thursday.

ELPE officials are optimistic on the prospects of the bond issue, whose objectives include premature settlement of a bond with a 4.875 percent interest rate, expiring October 2021. This bond is worth 449.53 million euros.

The new ELPE bond issue comes amid a favorable time for the Greek economy and following a successful bond issue by Hellenic Telecommunications OTE.

A privatization plan to offer part of the Greek State’s 35.48 percent stake of ELPE has yet to be finalized, according to energy minister Costis Hatzidakis. Sources insist the privatization will take place through the Athens bourse.

RES targets, sector investments of €8.5bn at risk, officials warn

Greece needs to move swiftly to simplify renewable energy licensing procedures, ratify energy storage regulations and push ahead with electricity grid interconnections, especially the Dodecanese project, if RES objectives set for 2020 is are to be met and investments made, two key RES sector associations have stressed.

An objective aiming for RES-generated energy consumption of 40 percent by 2020 will be difficult to achieve, officials of ESIAPE, the Greek Association of Renewable Energy Source Electricity Producers, and ELETAEN, the Greek Wind Energy Association, have highlighted at a news conference.

RES-generated electricity represented 26.5 percent of total consumption in 2018, they noted.

Major bureaucratic issues continue to plague the sector despite significant steps taken both at an international level and locally, through the implementation of new terms, the respective chiefs of ESIAPE and ELETAEN, Giorgos Peristeris and Panagiotis Ladakakos, pointed out.

RES storage and grid interconnections investments worth 8.5 billion euros and planned for over the next five years, according to a related study, are in danger of not been executed, Peristeris warned. These promise to provide a 1.5 percent GDP boost, the ESIAPE president added.

 

 

 

Lower RES auction prices a vote of confidence for economy

Lower prices prompted by aggressive bidding at Greece’s second RES auction for the year yesterday, offering capacities to investors for new projects, can be interpreted as a vote of confidence by investors, local and foreign, for the Greek economy and RES sector.

The session’s lower prices, which reached levels of major European markets, also reflect an anticipation of further RES equipment cost reductions and higher facility yields.

The biggest price drop was produced by the auction’s third category, offering capacities for wind energy installations of between 3 and 50 MW, where the lowest price registered was 55 euros per MWh and the highest 65.15 euros per MWh, according to sources.

Prices for this category ranged between 68.18 and 71.93 euros per MWh at the previous RES auction, held in July.

Successful bidders in this category included Terna, Rokas, Portugal’s EDPR, Volterra and Ostria. Representing 14 projects with a total capacity of 281.65 MW, they vied for 160.94 MW. Bidding for the category started at 79.77 euros per MWh.

In the category for small-scale photovoltaic installations of up to one MW, the lowest price was 64 euros per MWh and highest 69 euros per MWh. Bidders representing 180 projects with a total capacity of 102.19 MW contested for 61.95 MW at a starting price of 81.71 euros per MWh.

Prices for this category ranged between 75.87 and 80 euros per MWh at the previous RES auction.

In the session’s other category, offering capacities for larger-scale PV installations of between one and 20 MW at a starting price of 71.9 euros per MWh, bidders representing a large proportion of projects totaling roughly 35 MW secured capacities at prices of approximately 63 euros per MWh, sources informed.

Investors representing 27 projects with a total capacity of 151.32 MW contested for 86.47 MW in this category.

The Solar Cells group acquired capacities for four projects at elevated prices, while PPC Renewables secured satisfactory price levels of just below 70 euros per MWh, sources noted.

Prices for this category ranged between 62.97 and 71 euros per MWh at the previous RES auction.

 

RES benefits for economy more than €12bn over next decade

Overall RES electricity production investments to be made between 2020 and 2030 are expected to add more than 12 billion euros to the value of the national economy, according to the National Energy and Climate Plan, forwarded yesterday by the energy ministry for public consultation.

The plan also projects the creation of over 15,000 full-time jobs for the ensuing 25-year period.

Wind energy installed capacity is seen almost tripling to 6.4 GW in 2030 from 2.4 GW in 2016, as is PV capacity, to 6.9 GW from 2.6 GW in 2016, while hydropower capacity, including the main power utility PPC’s big units, is forecast to achieve a milder increase to 3.9 GW from 3.4 GW in 2016.

The wind energy sub-sector’s production is expected to increase to 14,933 GWh in 2030 from 5,146 GWH in 2016, PV output is forecast to rise to 10,514 GWh from 3,930 GWh in 2016, and hydropower production should grow to 6,269 GWh from 5,603 GWh in 2016, according to the plan.

PM, EBRD chief discuss increasing bank’s RES sector involvement

Prime Minister Alexis Tsipras and the president of the European Bank for Reconstruction and Development (EBRD) Suma Chakrabarti discussed the prospect of the bank’s increased involvement in the country’s RES sector, among various issues, at a meeting in Athens yesterday.

The Greek prime minister made note of the country’s economic recovery in progress and the objective to swiften growth rates of small and medium-sized enterprises. Tsipras also highlighted the Greek economy’s benefits as a result of the EBRD’s activities in Greece, noting the bank’s presence will contribute to an acceleration of economic growth.

Chakrabarti, the EBRD head, commended the government for putting the economy back into growth territory and boosting employment, while adding that the bank is determined to continue offering support.

The bank’s involvement will be stretched to 2025 for financial support to small and medium-sized enterprises, the sectors of tourism, real estate, green energy, agricultural food production, as well as investments for improved municipal services.

EBRD financial investments in Greece have reached 2.5 billion euros, making Greece Europe’s fifth highest recipient. A total of 600 million euros of EBRD financial investments are expected to be made in 2018.

During his visit to Greece, the EBRD president also noted the bank intends to establish a branch in Thessaloniki for business services to small and medium-sized enterprises.

US support to boost Greek energy hub role, PM tells Chicago event

US support promises to bolster Greece’s role as an energy hub, Greek Prime Minister Alexis Tsipras noted during a speech delivered at the Chicago Council on Global Affairs, included on the agenda of his current official US visit.

On the economy, a key part of his speech, the Greek leader declared that the country’s growth trajectory is now a reality. Greece’s economic recovery is not based on a return to the past but the establishment of new, strong foundations, he stressed.

The objective is to now move ahead with a new and sustainable model for economic growth, placing emphasis on innovation, export orientation, investment attraction and social justice, Tsipras stressed.

The Greek leader made special reference to energy sector projects and developments concerning Greece, citing a long list of projects, these being: the TAP gas pipeline, IGB gas pipeline; the Revythoussa LNG terminal’s expansion; the Alexandroupoli FSRU; plans for additional natural gas imports from the USA; developments leading to US shale gas imports into Europe via Greece; the East Med gas pipeline; the Euro-Asia Interconnector, to link the electricity systems of Greece, Cyprus and Israel; new tenders for offshore hydrocarbon exploration in Cretan and Ionian waters, which have engaged US firms; as well as negotiations with Turkey for the development of a pipeline to supply Russian natural gas to Europe.

 

Gasoline demand drop of 4.6% dampens economic outlook

Gasoline demand fell by 4.6 percent in the first quarter of 2017, compared to the equivalent period a year earlier, official market data released by the energy ministry has shown.

The downward trajectory of market trends, especially in fuel demand, a key economic indicator, runs contrary to more optimistic forecasts trumpeted by the government, claiming the country is now set for an economic recovery.

Diesel (ULSD) demand registered a marginal 0.6 percent increase in the first quarter and auto LPG demand rose by 2.9 percent.

Howewer, in March, gasoline demand dropped by 1.4 percent, LPG sales slumped by 7 percent and heating fuel – in a seasonal development – plunged by 25.4 percent.

Market officials expect a further overall slump in fuel demand to be registered for April. Unofficial data suggests a double-digit drop in diesel sales, but refineries have not confirmed such a development.

Diesel demand fell by 6.1 pecent and 2.2 percent in January and February, respectively, before rising sharply, by 8.5 percent, in March. Diesel is the leading fuel of choice among drivers in Greece.

Pre-recession power demand to be reached as of 2022, IPTO notes

Recession-battered Greece will need an entire fifteen-year period to reach record electricity demand figures set in 2008, prior to the prolonged recession’s emergence, IPTO, the power grid operator, has foreacast.

This prediction was included in a ten-year electricity transmission network development plan submitted by the operator to RAE, the Regulatory Authority for Energy, for approval.

The operator noted that electricity demand in Greece is expected to regain the ground lost over the past few years from 2022 onwards.

IPTO factored in its GDP forecasts to estimate Greece’s future electricity demand levels. The operator presumes GDP growth of between 2.2 and 3.1 percent for 2018, 1.8 to 2.8 percent for 2019, 1.4 to 2.4 percent for 2020, 0.8 to 1.8 percent for 2021, and, from then on, annual growth of 0.3 to 1.3 percent until 2027.

 

 

 

US president Obama stresses need for Greek debt relief

US President Barack Obama, during a meeting in Athens today with Greek Prime Minister Alexis Tsipras, congratulated the Greek government and the Greek people for moving forward through a very challenging period.

“My hope is that given the growth we saw this year, we can build on that progress. The reforms have not been easy but have been necessary to boost the competitiveness of the economy… In my message to the rest of Europe I will continue to emphasize our view that austerity alone cannot deliver prosperity,” he said, stressing the need for debt relief.

“It is going to be important both with respect to debt relief and other accommodative strategies to help the Greek people during this period of adjustment,” Obama added.

On his part, Prime Minister Alexis Tsipras noted: “It is a great honor that you visit Greece during your final Europe tour, giving a special message to the world.”

Referring to the economic crisis, Tsipras said that Greece “stands strong and will continue, despite the difficulties over the last 5 years.”

The US President said the US hopes to work with Greece, Turkey and other interested parties to support and encourage a just and durable solution for the Cyprus issue and expressed his deep appreciation for the compassion shown by Greek people to the refugees.

He also voiced the US’s commitment to cooperate and assist Greece in implementing the programs that have reduced refugee inflows and emphasized the need to “assist these people who are in enormous need even as we try to resolve the issues that have led to the crisis.”

 

Brexit freezes investment prospects, including in energy

The investment freeze expected until decisions are reached and repercussions analyzed with regards to the UK referendum’s Brexit outcome, if the result is implemented, is the greatest concern for the real economy, the energy sector being no exception.

At present, the perceived elevated risk and possible impact on borrowing costs, rather than the direct effects of a Brexit, is the biggest threat faced by energy-sector investments in Greece. Investments in the wind-energy sector could be exposed to this threat. The same applies for investments in energy networks, natural gas, as well as the breakaway plan for IPTO, the power grid operator, from parent company PPC, the main power utility, in a procedure to include the sale of between 20 and 25 percent to a European strategic investor.

This Thursday (June 30), PPC is scheduled to hold a general shareholders meeting during which approval of the plan to offer at least 20 percent of IPTO is expected.

Authorities hope the interest being expressed by European companies for IPTO will not be affected by the latest investment risk increase perceived for Europe’s south.

The current deteriorated investment climate may not exclusively concern Greece, but it does once again put the spotlight on the country as one of the fundamental weak spots of the EU.

“The market uncertainty being caused by the vote in favor of Brexit will affect the fragile eurozone economies in Europe’s south. Bond yields for Spain, Italy, Portugal and Greece will possibly increase,” geopolitical analyst Strafor warned in a recent report.

This new crisis hailing from the UK comes at a crucial time for Greece and the effort being made to revive the Greek economy. The investment climate has suddenly become negative amid the meltdown of markets. Developments between the UK and EU over the next few weeks will be crucial.

Fuel demand down by 8% amid recession despite lower prices

The prolonged recession, its consequent intensifying anxiety felt by consumers, and the government’s barrage of taxes are further subduing households and disposable income levels, which is flattening any favorable market prospects offered by lower fuel prices.

Although the current average of fuel prices is 10 percent lower compared to last year, consumption levels have fallen and also establishing themselves at these lower levels.

Unofficial petroleum company data for the month of May showed total sales at fuel stations fell by eight percent, year-on-year, in volume terms.

Yiannis Aligizakis, president at EEPE, the Hellenic Petroleum Marketing Companies Association, noted that this considerable fuel demand drop concerns both unleaded fuel and diesel.

The official pointed out that last month’s drop in the demand for auto diesel was the first to be registered in two years, which, he added, reflects reduced business and industrial enterprise orders as a result of subdued overall demand.

Households, too, affected by increasing financial burdens and a negative psychology generated by a general fear that worse could still lie ahead, are limiting their car use, as indicated by last month’s eight percent drop in fuel demand, as well as other necessities, which, in turn, is reducing manufacturing levels, delivery transport, and diesel sales.

Worse still, many analysts forecast that international crude prices will rise over the next few months, which makes the country’s new fuel taxes an untimely addition for consumers as well as the government’s tax revenue objectives.

New fuel taxes will affect heating fuel in autumn and auto fuel – unleaded and diesel – as of 2017. A just-imposed one percent VAT hike on fuel, from 23 percent to 24 percent, prompted slight fuel price increases of about one cent per liter, but this is seen as a prelude compared to the prospective hikes to be caused by special tax consumption (EFK) increases.

At present, taxes in Greece represent 69.5 percent of fuel prices, whereas, as of 2017, the figure will increase to 71 percent once the special tax consumption on fuel is hiked.

Heating fuel is expected to increase by 7 to 8 cents per liter in October. As of January, 2017, the rise in diesel prices is expected to reach 11 to 12 cents per liter once the EFK hike is introduced on top of the VAT increase. Also at the beginning of 2017, unleaded fuel prices are foreast to increase by 5 to 6 cents per liter.

 

Local industrialists set to invest as soon as conditions stabilize

A large number of local entrpreneurs, especially industrialists active in the fields of energy, infrastructure and manufacturing, are keen to make investments as soon as conditions allow, judging by the content of speeches, as well as the sideline talk, at a SEV (Hellenic Association of Industrialists) conference staged at the Athens Hilton.

Mihalis Stasinopoulos, chief at Elval (Hellenic Aluminium Industry) and the Viohalco group, who usually avoids public events, as well as other prominent entrepreneurs, among them Evangelos Mytilineos, chief exectutive at the Mytilineos corporate group, participated.

Political stability and Greek State consistency are essential factors for improved conditions that can once again attract capital and investments, it was reiterated.

Mytilineos pointed out that the ruling Syriza leftist-led coalition and main opposition conservative New Democracy party’s shared pro-EU outlook and support for reforms offers stability and a predictable business environment, necessary traits for long-term investments.

Industrialist Spyros Theodoropoulos, head of Chipita, underlined that the managerial ability, versatility, decisiveness, and strength displayed by Greek enterprises that managed to establish themselves internationally amid the crisis stands as their greatest asset.

A number of entrepreneurs appear ready to invest, conditions permitting. The Mytilineos group, for example, is preparing to invest 110 million euros in renewable energy (RES) projects within the next two months as long as economic and political stability prevails with the completion of the first review of Greece’s third bailout package. Elval, too, seems set to proceed with a major investment, backed by EU funding support, that will double the aluminium industry’s production capacity.

Certain macroeconomic factors, the most noteable being the handling of Greece’s debt issue, a constant threat for the economy’s sustainability, will need to be addressed if the country’s investment climate is to improve, it was pointed out at the conference.

At a practical level, entrepreneurs are waiting to see positive impact from last night’s agreement at the Euro Working Group, in the form of a further fall in Greek bond interest rates from the current levels of 7.5 percent to about 5 percent. This will help reduce the extraordinarily high cost of capital for Greek enterprises, compared to levels enjoyed by competitors abroad.

Lenders retable VAT hike for power bills, from 13% to 23%

The country’s creditor representatives have, in negotiations over the past few days, once again proposed increasing the VAT imposed on electricity bills to 23 percent from 13 percent as a measure to help cover the fiscal gap, according to sources.

The idea had also been tabled last June as a way to swiftly boost tax revenues, but had been rejected by the Greek side.

Last time they had proposed a VAT hike on electricity bills, the lenders reasoned that an additional sum of 570 million euros could be quickly raised, considering the main power utility’s revenues. At the time, the state was collecting 730 million euros in tax revenues from a 13 percent VAT charge on electricity bills, which, the lenders calculated, would be increased to 1.3 billion euros if the VAT rate was increased to 23 percent.

However, the proposal had prompted local concerns over the wider detrimental impact on Greece’s electricity market. This concern remains.

The energy ministry is currently looking for ways to lower electricity tariffs in the second half of the year. A VAT hike from 13 percent to 23 percent would certainly undermine this effort.

The ministry is believed to be pushing for a five percent reduction of electricity costs, whereas the suggested VAT hike would ultimately increase bills by nearly nine percent. This could prove devastating for the electricity market, overall, considering PPC’s current level of unpaid overdue electricity bills owed by consumers, estimated at 2.2 billion euros by the utility.

PPC revenues help support the Greek energy market, including its RES sector and localized power generation at non-interconnected islands, funded by a Public Service Compensation surcharge on power bills.

A VAT increase on electricity would also apply inflationary pressure on a chain of products and services and threaten to flatten consumption and trading activity even more. The level of competitiveness of export-oriented companies would also be affected.

For ordinary households, a 10 percent VAT increase to 23 percent would, for example, increase the VAT amount added to an electricity bill using 1,200 KWh of power over a four-month billing period by 17 euros – from 22 euros to 39 euros. This electricity bill’s total sum would subsequently increase from 192 euros to 209 euros.

Energy ministry officials contacted yesterday by energypress denied knowing anything about a VAT hike proposal on electricity.

The finance ministry is ultimately responsible for the effort being made to cover Greece’s fiscal gap.

 

PPC, DEPA to be placed in new privatization fund subsidiary

A prospective Greek privatization fund being prepared will include a subsidiary firm to take on board the country’s public utilities, from energy to water companies, as an intermediate step ahead of their future standings, Greek officials and lenders appear to have agreed.

The subsidiary firm, to include PPC, the main power utility, DEPA, the Public Gas Corporation, and other enterprises offering public services, such as EYDAP, the Athens Water Supply and Sewage Company, EYATH, the Thessaloniki Water Company, and ELTA, Hellenic Post, was discussed at a meeting yesterday between Greece’s finance minister Euclid Tsakalotos, economy minister George Stathakis and the creditor representatives.

Agreements seem to have been reached on the basics, such as the parties to be authorized to make decisions, and the number of subsidiary firms to be established. A supervisory board will control these subsidiaries, while a management board will act as a subordinate.

According to the plan, the supervisory board, to be comprised of five members, will be ultimately responsible for the utilization of Greek assets. Three of these members will be appointed by the Greek government and the other two, including the chairman’s position, will be appointed by the country’s lending institutions. A qualified majority system will be adopted for the supervisory board, meaning that decisions will require the backing of four of the five members in order to proceed.

Proposals on which Greek assets will be utilized and when will be determined by the finance minister serving at the the time following exchange with both the supervisory and management boards.

Government sources informed that the management board will be made up of Greek officials. However, the establishment of a supervisory board as the top decision maker on the utilization of Greek assets has led many to believe that lenders will have the upper hand in the next generation of Greek privatizations.

The new privatization fund will need to be established and ready to operate within the second half of this year. It is still not entirely clear which Greek assets will be included in the fund and when these could be utilized.

Last summer’s third bailout agreement set a long-term privatization plan over a thirty-year period, to be pursued when economic conditions permit and the timing is right. This condition applies for all Greek assets, including PPC and DEPA.

Considering the depreciated values of Greek assets amid the recession, the current year will certainly not be chosen as the right time to privatize. If the Greek economy shows some signs of recovery next year, then 2017 may well be the year when authorities begin examining the prospect of utilizing Greek state enterprises and property.

Athens bourse slump affecting energy sector developments

The Athens stock exchange’s sunken general index, now at the low level struck in 2012, when Grexit fears prompted a mass sell-off and investor withdrawals from the Greek market, is also a major concern for developments in the local energy sector.

The key problem has to do with the Greek market’s main player, the power utility PPC, currently burdened by unpaid overdue electricity bills owed by consumers, worth over two billion euros. This has resulted from the inability of consumers to service their bills as well as the poor results of the utility’s collection effort, despite a more aggressive policy.

The issue has been widely pointed out by analysts and rating agencies. Over the years, such pundits have steadily linked their appraisals of PPC with the overall prospects and dangers of the Greek economy.

If reports claiming that the sell-off at the Greek bourse has been spurred by major international investment funds are confirmed, then, obviously, the situation is precarious at best. These investment funds had entered the Athens stock exchange based on their forecasts of a Greek economic recovery.

The negative climate and re-emerged doubts concerning the Greek economy’s prospects create serious problems for PPC’s immediate plans, such as the future of its subsidiary firm IPTO, the power grid operator. The government’s plan for IPTO’s privatization and sale of an equity share to a strategic investor through a parallel placement is not a feasible option under the current subdued conditions at the Athens bourse.

Highlighting the problem, PPC’s total value, based on its current share price at the Athens bourse, has fallen to less than 650 million euros. To put this figure into context, the utility’s investment plan for a new power station in the Ptolemaida area, northern Greece, has a budget of 1.4 billion euros. A new PPC power station in Megalopoli, southwest Peloponnese, cost over 800 million euros to develop.

Quite clearly, PPC’s interest in establishing joint ventures with private-sector partners for various projects, a plan promoted by the utility’s administration, is not made any easier by these negative developments. PPC is pushing for joint ventures as a milder solution concerning the break-up of its lignite and hydropower source monopolies, while, at the same time, seeking private-sector funds for new investments.

 

GEK Terna chief urges local enterprises to repatriate capital

Giorgos Peristeris, CEO at the GEK Terna Group, has urged Greek enterprises, primarily, as well as individuals, to repatriate capital and savings to Greek banks. The corporate group’s head official made the plea during the presentation of the GEK Terna Group’s first half results.

While commenting on the Greek banking system’s problems, such as the capital controls imposed this summer, and overall lack of liqudity, Peristeris highlighted: “Throughout the crisis, we have continuously chosen to keep the total amount of our deposits at Greek banks. I don’t think many Greek enterprises acted likewise.”

The CEO also stated that the Greek crisis is affecting the GEK Terna Group’s operations abroad, where the company, like other Greek enterprises, does battle to take on projects on unequal terms as Greece currently lacks a strong and stable domestic banking system.

“From the very first moment [of the crisis] we made a difficult but correct decision to actively support Greek banks and the Greek economy, contrary to the trends and advice we were given. We have persisted with this decision of ours throughout the crisis – even during the most extreme stages – have invested over 1.5 billion euros amid the recession, and kept all our money at Greek banks,” Peristeris noted. “We believe that all Greek enterprises ought to have done the same. In any case, even now, Greek companies and individuals must mass-repatriate their funds. Serious Greek entrepreneurship cannot exist without immediate support for the Greek banking system.”

Peristeris added that Greek enterprises would have achieved very little abroad, such as the Balkan region, if they had not received support from Greek banks.

“If there is no immediate support for Greek banks, it will be extremely difficult to maintain the extroverted orientation of Greek firms,” he said.

Besides Greece, the GEK Terna Group, active in fields such as renewable energy, mining, construction, waste management, and real estate, maintains considerable business interests abroad, including in the USA, Poland, and Bulgaria.

 

 

 

Local economic slowdown drastically affecting industrial activity

Greece’s heavy industry is bracing for further setbacks as consumer demand continues to weaken. The worrying trend, forecast just weeks ago by major industrial groups for the second half of this year, is already being confirmed. According to industry estimates, sales are expected to fall by more than 50 percent in the second half of this year.

The steel and cement industries are expected to be hardest hit and, needless to say, employment levels will be affected. Just yesterday, the Volos-based steel company Sovel, operating one of Greece’s biggest industrial units, announced that workers will be given compulsory three-week breaks.

Greece’s heavy industry has been trapped in the doldrums for five years amid the deep recession. Some signs of a possible recovery emerged in 2014 and early this year, when work at stalled road-development projects had resumed for a short while. However, the Greek state has, since April, stopped making payments to companies contracted for major projects, prompting them to halt work.

The steel and cement industries had placed high hopes on the progress of road projects as a means towards recovery. But, based on the latest developments, they once again find themselves in troubling positions.

The country’s steel industry is now believed to be at a standstill. The cement industry is not much better off either as domestic demand has virtually fallen to zero levels.

Industries are relying on exports, but at high production costs as a result of pending energy-sector issues.

Highlighting the extent of the problem, even industry sector officials who normally remain reserved with their views are now describing the overall situation as bleak.

If the progress at major infrastructure works remains stagnant, then permanent job losses at industrial companies will be inevitable.

 

Hydrocarbon earnings, state firms included in sell-off fund

The basis for Greece’s latest bailout agreement, the third in five years, includes the establishment of a super-fund for long-term sales of state assets, possibly energy companies as well, its objective being to service the national debt, recapitalize banks, and finance investments.

At this stage it appears the fund will be established through the sale of bank subsidiaries and shares, state-owned property, state companies, as well as prospective earnings of tenders offering hydrocarbon exploration and exploitation rights for offshore and onshore blocks.

The fund’s aim, as revealed yesterday by Austrian chancellor Werner Faymann, will be to raise 50 billion euros through privatizations over a 30-year period. Of this total amount, 25 billion euros will be used to service European Stability Mechanism (ESM) costs for the recapitalization of Greek banks. The plan for the fund also entails evenly splitting the other 25 billion euros to service national debt (12.5 bn euros) and finance investments (12.5bn euros). The fund will be based in Athens and controlled by the Greek government under strict European Commission supervision.

Faymann explained that the privatizations will take place over a long-term period to avoid selling at depreciated costs amid the crisis.

Although details concerning the fund’s asset make-up remain unknown at this stage, it is expected, based on current estimates, to be supported by three key pillars.

The first will include bank assets, such as property and bank subsidiaries, both in Greece and abroad, according to comments offered yesterday by German chancellor Angela Merkel. Emphasis will be placed on the network of Greek bank subsidiaries in southeast Europe, including the National Bank of Greece’s Financbank in Turkey.

The existing TAIPED State Privatization Fund and its hundreds of small and large-sized properties, stakes in state-run companies, as well as infrastructure such as ports, airports, amd marinas, will, based on current plans, serve as the new super fund’s second main component. It remains unknown whether energy companies such as the main power utility PPC and DEPA, the Public Gas Corporation, will be included here, though this is not out of the question.

The fund’s third main component, according to reports, will consist of future earnings to be raised by hydrocarbon exploration and exploitation rights offered for offshore and onshore blocks.

The coalition’s main party, Syriza, had announced a plan to establish a fund for hydrocarbon-related revenues several months ago. Like previous Greek governments, the coalition envisaged fashioning a fund based on the Norwegian model, which supports social welfare policies through oil and gas revenues. However, the latest plan is entirely different and entails using hydrocarbon earnings to directly service national debt, recapitalize banks, and finance investments.

 

 

Swift deal, bank normality needed following referendum

The strong victory for the “No” vote in yesterday’s Greek referendum, endorsing the leftist Syriza-led coalition’s stance for less austerity, has already sparked political developments. Late last night, Antonis Samaras, the fomer prime minister and leader of the main opposition New Democaracy conservatives, stepped down as party leader after five-and-a-half years at its helm, while the commanding “No” vote, which scored 61.3 percent, well above predictions that had forecast a close battle, provides Prime Minister Alexis Tsipras with political dominance, both at a national level and within his party, one of mixed leftist strands, from radical to mild.

Following last night’s referendum outcome, Tsipras clearly noted the result does not represent a mandate for him to break ties with the EU. The prime minister has already called for a meeting of party leaders today, to be chaired by the country’s president. This is a positive initiative as Greece finds itself closer than even before to being ousted from the eurozone.

In spite of all this, the situation that will need to be confronted over the next few days by the government and whatever Greek negotiating team may emerge will not only be difficult but also extremely perilous. The fact that a Eurogroup meeting of eurozone finance ministers has been called for tomorrow, ahead of an EU summit meeting on the same day, suggests that Greece’s EU partners are not likely to change course on the Greek ordeal. This can also be presumed based on comments made by leaders of EU member states in response to the referendum’s result.

The pressure on Greece can be expected to be relentless, especially if the European Central Bank (ECB) does not increase liquidity levels through the emergency liquidity assistance (ELA) mechanism. The country is already at the mercy of the IMF and the European Financial Stability Facility (EFSF) as to whether it will be declared bankrupt following Greece’s failure to make an IMF payment last week. Greek banks have now remained closed for a week. People cueing up at ATMs for limited withdrawals are highly concerned over the possibility of deposit losses, a fear that is being intensified by conflicting comments emerging from government officials.

Greece also faces another imminent creditor deadline, on July 20, when it must pay about three billion euros to the ECM for maturing bonds.

The real economy is being battered to the ground as all this goes on. Market activity has literally halted and many enterprises, whose liquidity levels have dried up amid capital controls, are neither able to place orders nor pay employees. Many employees are being forced to take time off.

Therefore, achieving a swift agreement with lenders and EU partners, which could normalize the country’s banking system, is an urgent priority right now. Ousting the government’s controversial Finance Minister Yannis Varoufakis from his post would increase the prospect of a deal.

It remains unknown whether any agreement that may be reached would be better or worse than the one rejected by the government and the people. Whatever deal may emerge, it will certainly be harsh as there is no easy way out of the crisis. Under the current conditions, the Greek economy is loosing blood fast, every single day, as needs intensify.

In the lead-up to the referendum, the prime minister not only promised a deal with creditors but went a step further by clearly stating it would be improved. Based on the referendum result, he convinced the majority of citizens. His promise last night of being “fully aware that the mandate you have given me is not an order to break away from Europe” stands as the measure against which developments will be judged.

These will also determine how long the Greek dancing that broke out among “No” voters last night at Syntagma Square will last.

 

 

Country on the edge amid the chaos of capital controls

The country arguably finds itself in its worst position ever in modern history, or since the fall of the military dictatorship in 1974, following last night’s failure by Greece to make an IMF payment that makes the country eligible for bankruptcy if the fund’s officials refuse to offer any leniency.

The capital controls imposed a day earlier, on Monday, have, in very little time, generated a whirlwind of devastating developments, stunning the government, which appears blatantly unprepared to handle the rapidly snowballing crisis.

Late maneuverings by the Greek side, as the IMF payment deadline approached last night, cannot be expected to yield any real results for as long as the government’s call for a referendum this Sunday – which has sharply intensified the drama and led to futher uncertainty – remains on the cards. The country’s lenders appear determined to wait for Sunday’s referendum to take place before entering any further bailout talks with Greek officials.

The drastic surge of consequences prompted by capital controls has fully exposed citizens to an alarming level of insecurity as they scramble, forming queues for cash at ATMs, within capital controls limits, fuel, even food.

The country is now at the mercy of the IMF as to whether it will be officially declared bankrupt. The ESM (European Stability Mechanism) support for Greece has prematurely ended, affecting liquidity supply from the European Central Bank, and also depriving the country of a further 12.7 billion euros from the mechanism.

The devastation felt and experienced by citizens appears to have persuaded masses to vote “Yes” in the referendum, expressing endorsement of the bailout procedures that were disrupted by the government last week, when it called a referendum on the issue, citing it could not accept the conditions of a bailout deal offered by lenders. In fact, the alarming developments over the last few days have reportedly prompted the government to either consider cancelling the referendum or go against its initial standing and support the “Yes” campaign. A series of emergency meetings will take place today, both at a local and European level.

With banks closed and uncertainty at a peak, market activity has frozen. As a result of the lack of liquidity, many firms are currently unable to make orders and pay employees, who, in a number of cases, are being forced to take time off, at best. A new wave of unemployment may strike if no solution is swiftly found. The current course towards an exit from the eurozone will also damage tax revenue collections.

Like all else in the country, the energy sector is feeling the effects of the wider mayhem.

As for the tourism industry, a pivotal part of the local economy, bookings for flights to Greece dropped by 40 percent over the past week, according to sector officials, while hotels are experiencing a first round of cancellations.

Highlighting the widespread unease, panick-stricken citizens have rushed to stock up on survival basics such as beans and lentils. For the time being, supermarkets are able to continue offering supplies, but the credit controls imposed are making transactions and imports more challenging. Following panick-driven purchases by consumers on Saturday and Monday, some sense of calm returned yesterday, but, amid the volatile overall situation, consumer behavior is changing by the hour.

Capital controls already devastating market activity

Imposed just yesterday, capital controls are already making widespread negative impact on the Greek market. The effects are being felt by locally based energy-sector companies, big and small, all trapped amid the overall uncertainty and prospect of a possible Greek default and exit from the eurozone.

Both local and multinational enterprises operating here have presently frozen all activity. Investment plans, orders, and all types of transactions, including tax obligations and payments to suppliers and staff, have stopped. It is all swiftly developing into a major shock for the market.

Although enterprises are making an effort to remain composed, the underlying panic cannot be hidden. Both local firms and multinational subsidiaries are preparing to activate emergency plans.

Trading ties between local and foreign companies have been devastated as a result of the sharp increase of distrust from abroad. Any exisiting favorable credit terms offered are vanishing. Officials at locally based companies of all sizes are already reporting that foreign suppliers are demanding full advance payments for all orders before providing products and services. Under the current stifling conditions brought about by capital controls, this is simply impossible.

Responding to the alarming and intensifying negative market developments, entrepreneurial representative groups – SEV (industrialists), ESEE (merchants), SETE (hoteliers), and GSEBEE (small and medium-sized businesses) – joined forces yesterday to seek an emergency meeting with Prime Minister Alexis Tsipras. A meeting was initially scheduled for today but later postponed as a result of the Prime Minister’s overloaded schedule of other urgent matters.

It has already become perfectly clear that companies without funds abroad will encounter serious operational problems in Greece amid the current conditions. Enterprises that have transferred their headquarters and funds abroad, as well as multinationals supporting local subsidiaries, will be favorably positioned.

Tougher days lie ahead, GEK Terna CEO warns

The newly emerged market conditions created by the capital controls imposed in Greece mean that “today will be easier than the difficult days [that lie ahead],” Giorgos Peristeris, the CEO at the GEK Terna Group, whose activities include energy and construction, warned at a general shareholder’s meeting today, without going into great detail.

However, he did note that the Greek state, which owes GEK Terna a total of 400 million euros for work completed, has stopped making payments to all companies for public-sector projects.

Commenting on Ptolemaida 5, a prospective PPC power station planned for Ptolemaida, northern Greece, to involve the group, Peristeris noted that a construction permit is expected to be issued this week, based on information received until last Friday.

The corporate group’s chief official also noted that a deal between Greece and lenders, which had been hoped for until last Friday, would have ensured the provision of funds from the European Investment Bank, offering respite to local companies. These amounts would have partially covered amounts expected from the Greek state for projects being developed, he noted.

Asked to comment on whether work on various road projects would once again be halted as a result of the latest developments, Peristeris replied that banks were totally in charge on this front.

“The bank closures and capital controls will create extremely difficult conditions for companies and impact the transaction activities of citizens,” Peristeris noted. “We cannot imagine the prospect of a return to the drachma.”

No deal without PPC break-up and sale of IPTO, lenders say

The country’s lenders are insisting that the part-privatization of PPC and sale of IPTO, the power grid operator, be included in the final agreement leading to a new bailout agreement for Greece.

The inclusion of these two energy-sector sales as additional measures being demanded by the lenders was confirmed yesterday by a Greek official involved in the negotiations.

The official noted that “we continue to not be willing to discuss either matter”, adding further obstacles to the effort for an agreement. At the other end, the European Commission refused to offer any comments.

The dispute over these energy-sector matters adds to the widely publicized stand-off on VAT issues and pensions.

Among the lenders, the European Commission is at the helm of the energy-related demands, making clear that PPC’s part-privatization and sale of IPTO would open up the country’s electricity market in deeds and not just words, while also signifying Greek compliance with EU regulations and energy unification plans.

Countering the lender demands, Greek officials believe the Greek electricity market is free and operating under market competition conditions.

Sources in Brussels noted that both sides are adamant in their positions concerning the energy-sector matters, as is also the case with the VAT rate and pension issues, making any predictions impossible at this stage. The only sure thing at present is that lenders are not satisfied with Greece’s energy package of proposals.

This boils down to meaning that no bailout deal can be reached between Greece and its lenders without formal commitment for an end to the prevailing monopoly in the electricity market, through PPC’s part-privatization, and the natural gas market’s liberalization.

Greece, along with Bulgaria, is considered Europe’s last bastion insisting with monopolies in the energy sector.

Judging by the latest developments, a warning expressed several months ago by the EU’s competition commissioner Margrethe Vestager for Athens to adjust to EU regulations by reducing the dominance of enterprises enjoying monopolies was foreboding to say the least, regardless of whether many officials here paid no attention, or made out as if they had not paid any attention.

 

 

Energy-sector firms anxiously awaiting bailout developments

Energy-sector authorities contacted by energypress have all expressed deep concern over today’s crucial bailout talk developments as the possibility of a break in ties between Greece and its lenders has not yet been ruled out, while certain members of the leftist Syriza led coalition, including from its junior partner Independent Greeks, appear to want a rift.

The concern is not only linked to the concerns of the business sector – certain entrepreneurs, as a result of the nature of their particular fields, believe a Greek exit from the eurozone would benefit their operations – but, more crucially, the social, political, and economic upheaval that would be prompted by a breakdown in today’s negotiations.

Last week’s enormous outflow of deposits from Greek banks was countered with capital injections from the European Central Bank (ECB). If the negotiating sides fail to reach a deal, the ECB will stop providing liquidity, which would prompt a collapse of the local banking sector and leave banks unable to cover deposits. Implementation of capital control measures would be necessary, placing in danger social composure, the state’s smooth functioning, services, the economy, production, even national security. In addition, in the event of an unfavorable deal for the government, it would be forced to head for elections.

Certain energy sector officials told energypress that a temporary deal between Greece and its lenders would avert the danger of immediate collapse, but, essentially, the country and economy would fall further behind on commitments for the remainder of this year, increasing the difficulty of any prospective restructuring.

Both the Greek government and all creditor representatives need to act based on mature political insight for a wide-reaching and sustainable agreement. Only such a deal could restore faith in the economy and unlock investment as a preliminary step towards the economy’s revival.

The series of energy-sector demands set by the country’s creditor representatives include part-privatization of PPC, the main power utlity; privatization of IPTO, the power grid operator; gas market reforms; PPC tariff revisions based on production costs, which would lead to increases and decreases, depending on category; adoption of NOME-type auctions for lower-cost electricity; CAT revisions; energy tax revisions; and preparation of a legal framework supporting the renewable energy source (RES) sector.

 

 

Tsipras meets with Gazprom head, BRICS bank officials

Energy issues, including Greek Stream – the local segment of Turkish Stream, Russia’s latest pipeline proposal for natural gas supply to Europe via the south, from the Greek-Turkish border area – were discussed at a meeting in St Petersburg late yesterday between Prime Minister Alexis Tsipras and Gazprom chief Alexey Miller. The Greek head of state was accompanied by Production Reconstruction, Environment and Energy Minister Panagiotis Lafazanis.

The two Greek officials also met with board members of the BRICS Development Bank, now officially known as the New Development Bank (NBD), set up as an alternative to the US-dominated World Bank and IMF.

In St Petersburg to attend yesterday’s International Economic Forum (SPIEF – 2015), hosted by the Russian city, BRICS officials, representing the five-member association of emerging economies – Brazil, Russia, India, China, and South Africa – expressed interest to Tsipras for Greek cooperation with the NBD bank.

Tsipras and Lafazanis, the energy minister, were accompanied by the heads of Greece’s state energy apparatus – the main power utility PPC’s CEO Manolis Panagiotakis; DEPA, the Public Gas Corporation’s boss Spyros Paleogiannis; and ELPE Hellenic Petroleum chief Grigoris Stergioulis – on this trip, presumably to explore the possibility of doing business with BRICS members.

Tsipras is expected to sign an agreement at a meeting today with Russian president Vladimir Putin, formalizing Greece’s interest in the Greek Stream project.

Top energy officials join PM, minister for Russia mission

The top officials of the state’s energy apparatus have joined Prime Minister Alexis Tsipras and the Production Reconstruction, Environment and Energy Minister Panagiotis Lafazanis for an official visit to St Petersburg, during which the duo will meet with Russia’s President Vladimir Putin tomorrow and is expected to make official Greece’s interest in developing “Greek Stream”, the local segment of “Turkish Stream”, Russia’s latest natural gas pipeline proposal for supply to the EU via the south, from the Greek-Turkish border area.

The inclusion to the Greek delegation of the energy-sector company chiefs – main power utility PPC’s Manolis Panagiotakis; DEPA, the Public Gas Corporation’s Spyros Paleogiannis; and ELPE Hellenic Petroleum’s Grigoris Stergioulis – has obviously prompted curiosity over the purpose of their participation. It is believed they have joined the mission to develop ties leading to cooperation with members of the BRICS association of emerging economies – Brazil, Russia, India, China, and South Africa.

The Greek energy officials are expected to engage in talks with BRICS representatives on the sidelines of the St Petersburg International Economic Forum (SPIEF – 2015), to be held today.

As for the Greek government’s ambitious bilateral maneuverings with Russia, certain pundits have already limited their expectations of any meaningful and significant results. Such ties cannot be forged in minimal time for results of substance, and, most crucially, the European Commission has already expressed its disapproval of Greece’s effort to develop closer ties with Russia, the skeptical pundits contend.

Essentially speaking, the series of talks by Greek officials in St Petersburg, to culminate with that of tomorrow’s meeting between Tsipras and Putin, amount to no more than a game of diplomatic poker. The key message being conveyed is that Tsipras is in Russia to sign bilateral energy agreements of cooperation with the Russians at a time when Greece’s debt and bailout issues are the focus of attention in Brussels and Berlin.

Besides the Greek Stream pipeline project, it seems that the Greek government is also seeking to include various other issues as part of a wider energy agreement, such as LNG, crude oil supply, the expiring hydrocarbons tender for offshore blocks in the Ionian Sea and south of Crete, as well as the electricity market. The five-member BRICS association includes three petrol-producing countries, Brazil, Russia, and South Africa.

Russia’s Turkish Stream proposal seems to have already run into trouble. Turkey, the Former Yugoslav Republic of Macedonia (Fyrom), and Serbia, countries through which the pipeline would cross, appear doubtful, to add to the European Commission’s reserved stance, despite the fact that nobody doubts the pipeline would be a useful addition to EU energy supply.