Balanced growth of Athens gas distribution network, PPC notes

Power utility PPC, participating in public consultation for Athens gas distributor EDA Attiki’s five-year development plan, has called for an expansion of the gas distribution network in the Athens area that is both sustainable and balanced – socially and geographically – for maximum gas network penetration and fair cost distribution.

Prospective interest in less populated parts of the wider Athens area will grow and, as a result, could lead to a greater number of gas connections, higher consumption levels, and further retail gas market growth in these areas, PPC noted.

As a result, greater attention needs to be given to lower-priority areas in Athens possessing growth potential, the power utility pointed out.

PPC also called on gas grid operator DESFA to examine co-financing possibilities for projects covering gas network connection needs at social service points such as schools and other public buildings.

 

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

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

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

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

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

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

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

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

RAE set to permit gas link fee discounts after initial hesitation

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

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

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

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

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

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

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

 

RAE issues undermining DEPA Infrastructure privatization

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

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

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

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

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

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

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

Gas distributors want surcharge rebate decision cancelled

Gas distributors DEDA, EDA Thess and EDA Attiki will seek the nullification of a decision by RAE, the Regulatory Authority for Energy, requiring them to gradually reimburse industrial enterprises for increased network surcharges  between August 14, 2015 and December 1, 2016.

The RAE ruling was delivered following a complaint by EVIKEN, the Association of Industrial Energy Consumers.

The amount that needs to be returned by the three distributors to energy-intensive industries is estimated to be between 2.5 and three million euros.

As a first step, DEDA, EDA Thess and EDA Attiki will apply for the RAE decision to be nullified and, if unsuccessful, will then resort to legal action, including at the Council of State, Greece’s Supreme Administrative Court.

A bill ratified in 2015 enabled the gas distributors to impose a temporary network surcharge of 4 euros per MWh, prompting a reaction from energy-intensive industries.

EVIKEN argued that the increase in distribution charges did not reflect the costs of each distributor, was a disproportionate burden for certain categories of network users, while adding that distribution charges should be set by RAE, not through legislation.

According to the RAE decision, the gas distributors will need to introduce measures reimbursing industrial consumers for higher network surcharge payments over the aforementioned 16-month period. Payment of the reimbursements, to be determined by a specific formula, will be possible through installments over a period of as long as five years, according to the RAE decision.

Clearer framework needed for new gas distribution networks

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

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

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

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

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

 

 

 

RAE’s WACC reduction for operators ultimately neutralized

A recent decision by RAE, the Regulatory Authority for Energy, reducing the WACC rate amid a fixed four-year period for energy market operators, as a result of the government’s corporate tax reduction from 29 to 24 percent, is ultimately expected to be neutralized as the authority has asked operators to submit updated data based on latest market conditions, including borrowing costs, all factors applied by the authority to its WACC formula.

Gas grid operator DESFA, power grid operator IPTO, as well as the country’s gas distributors EDA Attiki, EDA Thess and DEDA, initially reacted against RAE’s intention to reduce the WACC rate, determining earnings, within the preset four-year period. It is supposed to be adjusted every four years.

However, RAE’s latest call for updated data from operators and distributors, effectively promising to offset any WACC rate adjustment, has been well received.

 

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

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

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

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

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

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

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

 

DEPA Trade sale’s PPC-Motor Oil union, Shell return surprise

The privatization of DEPA Trade – a new entity established by gas utility DEPA – offering the Greek State’s 65 percent stake in a procedure whose deadline for first-round offers expired yesterday, produced two surprises. Firstly, Shell reemerged in the country’s gas market following a withdrawal less than two years ago. Secondly, in an unanticipated move, power utility PPC teamed up with Motor Oil for a joint bid.

Shell departed from the Greek natural gas market in July, 2018 by selling its 49 percent stakes in gas supplier EPA Attiki and gas distributor EDA Attiki, both covering the wider Athens region, to DEPA.

Shell received a total of 150 million euros, 39 million for its 49 percent stake in EPA Attiki and 111 million euros for its 49 percent stake in EDA Attiki.

The company’s reemergence can be primarily attributed to an interest in DEPA’s long-term contracts with Gazprom, Sonatrach and Botas, with an eye on the wider Balkan and southeast European regions, sources said.

PPC and Motor Oil decided to join forces for the DEPA Trade sale as a result of the failure of both to secure slots for 2020 at gas grid operator DESFA’s LNG terminal on the islet Revythoussa, just off Athens. PPC holds a 30 percent stake in its partnership with Motor Oil, sources informed.

Following its Revythoussa failure, PPC has been more aggressive in a market test for the Alexandroupoli FSRU, expiring today. PPC wants to secure a capacity at this prospective unit in the country’s northeast as the company is determined to have LNG access. A successful bid in the DEPA Trade sale would bolster this position.

Hellenic Petroleum (ELPE) and Edison did not submit a joint bid for DEPA Trade through Elpedison, their joint venture for Greece’s retail energy market, as had been speculated. Instead, they are believed to have made separate bids. The two had not shaped a common action plan in the event of a successful DEPA Trade bid, sources said. However, the establishment of a new joint venture by the two firms at a latter stage, specifically for DEPA Trade, cannot be ruled out.

The country’s planned privatizations, including DEPA Trade, face likely delays as a result of the coronavirus pandemic’s repercussions. The progress of these sales will depend on the course of the pandemic.

DEPA Trade’s first-round bidders forwarded their offers on-line and must follow up with deliveries of official documents by April 24. The evaluation of first-round offers is not expected to begin any sooner than April 25.

Energy firms react against RAE plan for WACC reduction

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

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

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

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

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

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

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

DEPA Infrastructure yield, 8.2% + 1.5%, a drawcard for bidders

Though not yet officially announced, a new annual regulated yield for distribution network operators, now set, represents one of the strongest drawcards for the sale of DEPA Infrastructure, a new entity established by gas utility DEPA for privatization.

Prospective bidders engaged in preliminary contact with authorities linked to the DEPA Infrastructure sale ahead of a February 14 deadline for non-binding expression of interest have been told the WACC figure has been set at 8.2 percent plus a 1.5 percent premium if certain investment objectives are achieved.

These objectives include swift network development in areas covered by gas distributor EDA, achievement of pipeline addition goals, specified in kilometers, as well as the development of projects not included in DEPA Infrastructure’s initial development plan.

Prospective participants, including funds, will enter this privatization procedure knowing their investment’s potential yield can reach 9.7 percent, far higher than WACC performances enjoyed by network operators in central Europe.

This higher yield offering has generated all-round optimism for a solid turnout by participants Friday week.

Potential bidders, so far, are believed to include Greek gas grid operator DESFA, France’s Engie, Italy’s Italgas and Germany’s Eon.

Besides European operators, the privatization is also expected to attract a number of funds, seen partnering with operators for the sale’s second round of binding bids.

DEPA Infrastructure has taken under its wings DEPA’s interests in the distribution networks of wider Athens (EDA Attiki), Thessaloniki and Thessalia (EDA Thess) and the rest of Greece (DEDA).

 

ND, if elected, wants 65% DEPA sale, not split and sale

The main opposition New Democracy party, if victorious in the July 7 snap elections, intends to privatize gas utility DEPA as one corporate entity, through the sale of a 65 percent stake, rather than through a split-and-sale procedure offering separate trading and infrastructure entities, as has been promoted by the ruling Syriza government, currently well behind in polls.

The role of Hellenic Petroleum (ELPE), holding a 35 percent share of DEPA, will be influential when the time comes to make decisions.

Up until now, ELPE has indicated it would be interested in acquiring a 65 percent stake of DEPA Trade – one of the two DEPA entities envisioned by the government for the utility’s split and sale – either alone or with Italy’s Edison, ELPE’s strategic partner.

However, ELPE’s main shareholder, the Latsis group’s Paneuropean Oil, holding a 45.5 percent share, could revise its stance if DEPA’s new sale procedure is redrafted from scratch, as would most probably be the case with a conservative ND election victory.

During a parliamentary debate in March, ND party representatives clearly opposed Syriza’s plan for a DEPA split, describing it as an unnecessary, excessive and complicated approach that would ultimately suppress DEPA’s market value.

The DEPA split, forged by the energy ministry, is not listed as a bailout term, but the country did commit itself to a reduced retail gas market presence for DEPA. This demand was met some time ago when DEPA withdrew from gas supply firm EPA Thessaloniki-Thessaly and acquired Shell’s stakes in EPA Attiki and EDA Attiki, respective supply and distribution firms covering the wider Athens area.

 

 

RAE decisions on network fees, industrial sector hike in June

RAE, the Regulatory Authority for Energy, is expected to decide on the levels of regulated charges for gas distribution networks in the wider Athens area, Thessaloniki and the rest of Greece within June, sources have informed.

It is believed that these charges will essentially remain unchanged. A minor reduction could be made.

A decision on a 4-euro per MWh distribution charge set for the industrial sector in the summer of 2015 will be a key a factor in setting the new regulated charges. Action taken by EVIKEN, the Association of Industrial Energy Consumers, against this charge at a European Commission level was successful.

This charge increase was implemented across the board for all industrial consumers, regardless of profile.

RAE is expected to reach a decision this summer on a five-year development plan covering 2019 to 2023 for gas distribution companies. It is waiting for related data from the DEDA and EDA Attikis distributors.

Ministry’s DEPA hiring plan raises privatization concerns

An energy ministry plan to orchestrate hirings of 200 subcontracted external associates working for gas utility DEPA through a procedure that would skip bailout-related employment restrictions imposed on public sector enterprises has swiftly raised objections on a number of fronts and troubled authorities over the move’s impact on the utility’s prospective privatization.

Company shareholders fear the currently profitable utility’s market value will be diminished as a result of these hirings, seen as unnecessary additions that will bloat the payroll and reduce DEPA’s operating profit levels.

Besides the shareholders, DEPA employees on the payroll have also reacted fearing these hirings could affect their interests.

The ministry, looking to hand out favors as this is an election year, is planning to hire the 200 subcontracted workers through three subsidiaries not subject to the bailout-related employment restrictions imposed on public sector enterprises.

These are gas supplier EPA Attiki and gas distributor EDA Attiki, both covering the wider Athens area, as well as DEDA, responsible for gas network development in regions not covered by the parent company. Head officials at these subsidiaries have also expressed concerns over the repercussions of the energy ministry’s recruitment plan.

The DEPA privatization, not expected to be launched before July, may end up being loaded onto the agenda of the country’s next administration.

DEPA will be split into two new entities, DEPA Infrastructure and DEPA Trade, for the privatization, to begin with a tender offering a majority stake (50% plus one share) in DEPA Trade. A 14 percent stake of DEPA Infrastructure will also be placed for sale at a latter date.

Ministry preparing 200 hirings at privatization-bound DEPA

The energy ministry is maneuvering to clear bailout-related employment restrictions imposed on public sector enterprises and facilitate the recruitment at privatization-destined gas utility DEPA of the majority of 200 workers currently subcontracted as external associates.

The ministry’s leadership appears to have bowed to worker union pressure, ensuring the hirings will go ahead, sources informed. If so, they would bypass ASEP (Supreme Council for Civil Personnel Selection) restrictions.

As a result, 150 workers subcontracted by DEPA would be distributed to three gas utility subsidiaries: the wider Athens area gas supplier EPA Attiki; distributor EDA Attiki, also covering the wider Athens area; and DEDA, responsible for gas network development in regions not covered by the parent company. All three can hire personnel without conforming to ASEP restrictions. A further 23 workers are currently subcontracted with DEDA and between 30 and 35 with CNG refueling stations.

New employees are expected to be offered individual work agreements. The duration of these agreements remains unclear.

An energy ministry DEPA draft bill scheduled to be submitted to parliament on February 28 and designed to split the gas utility into two entities, DEPA Trade and DEPA Infrastructure, ahead of its privatization, is not expected to include extensive details on personnel matters, including the ministry’s recruitment plan.

In addition, pay cuts are also planned for DEPA’s current staff on the payroll.

 

 

Gas firm unions start strikes fearing privatization effects

Workers at the country’s state-run gas companies, especially gas utility DEPA, are gearing up for widespread strike action as union representatives remain unconvinced various labor right demands will be settled following meetings with energy minister Giorgos Stathakis.

Union members want worker right assurances ahead of DEPA’s approaching privatization plan. These include a call for official hirings, on DEPA and gas grid operator DESFA company payrolls, of numerous staff members currently either maintaining sub-contracting associations with these gas companies or paid as freelancers through invoice booklets.

The unions also want authorities to drop a plan to offer investors a majority stake of DEPA’s commercial interests as part of the privatization.

According to the DEPA sale plan, the gas utility will be split into two companies, DEPA Trade and DEPA Infrastructure. Prospective buyers will be offered a majority stake in DEPA Trade, while, at a latter stage of the sale procedure, investors will be offered a minority stake of DEPA Infrastructure.

Panhellenic Energy Organization (POE) has called a 24-hour strike for today over the futures of DEPA’s external associates, numbering 150, whom they want added to company payrolls.

Union leaders also want salary protection measures for EPA and EDA supply and distribution subsidiary employees. Their remuneration arrangements are currently based on private-sector labor market rules. DEPA has agreed to acquire a 49 percent share of its EPA Attiki supply venture shared with Shell. According to sources, the rights of these employees will be protected for a period of at least one or two years following the company’s restructuring.

 

Country’s gas distributors striving to meet terms to secure licenses

The country’s three gas distribution companies exclusively covering the Greek market are preparing dossiers including investment plans to be submitted to RAE, the Regulatory Authority for Energy, in efforts to secure operating licenses, yet to be officially granted.

The three natural gas distributors are EDA Attiki, covering the wider Athens area, EDA Thess, serving the Thessaloniki area, and DEDA, covering the rest of Greece.

The three companies, undergoing separate licencing procedures, each need to prove that they are capable of developing investment plans previously submitted.

The authority wants to avoid any overambitious – and ultimately unachievable – network planning by the three distributors to prevent obstructing other investors who could be interested in developing networks.

Distribution companies will risk losing their regional licenses if they do not develop networks as planned.

EDA Thess, sporting a reliable track record, is believed to have made the most progress of the three distributors in its preparation of a five-year plan. EDA Attiki, according to statements made by company officials, is reworking its five-year investment plan, while DEDA, operating in a far wider area, has catching up to do.

DEPA set for more ambitious Athens network growth plan

The gas utility DEPA appears determined to adopt a more ambitious development and investment plan for its Athens networks now that the local Competition Committee has approved its agreement with Shell for an acquisition of the latter’s 49 percent share in their EPA Attiki supply and EDA Attiki distribution ventures, both covering the wider Athens region. DEPA already holds majority 51 percent stakes in both.

The leadership at DEPA considers the existing EDA Attiki development plan as being too weak, sources informed. The upgraded plan is expected to feature more ambitious projects in areas already covered as well as new projects in new territory.

The current five-year plan for EDA Attiki limits the distribution network’s development to 35.5 kilometers by 2022, an average of 7.1 kilometers per year. It primarily concerns network construction in areas where networks already exist, for increased density, and neglects expansions into new areas.

Two options most probable in DEPA restructuring plan

Consultants working on Greek gas utility DEPA’s split plan, entailing a division of the firm’s commercial interests and infrastructure, have arrived at two most probable proposals, energypress sources have informed.

One of the two options being considered would split the utility’s commercial activity from DEPA, as the corporation currently stands, and incorporate it into greater Athens area gas supplier EPA Attiki, a fully operational enterprise with an existing customer base.

According to the other scenario, the company’s commercial activity would remain a part of DEPA while the utility’s networks and international projects would be split and transferred to prospective firm DEPA Infrastructure along with gas distribution venture DEDA, a wholly-owned subsidiary of DEPA, and Athens network operator EDA Attiki.

Financial criteria, taxation issues and personnel concerns will be taken into account before a finalized plan is shaped. It is believed that a limited voluntary retirement scheme is being examined.

Work on a draft bill concerning DEPA’s restructuring plan and the commitments of the resulting firms will commence as soon as the consultants, DEPA’s administration and the energy ministry have agreed on the details. According to the original plan, the draft bill was scheduled for delivery in October.

 

DEPA sale schedule now rests with Competition Committee

An on-schedule launch of the DEPA gas utility’s privatization procedure will depend on the time it will take the Competition Committee to approve a recent local takeover agreement between DEPA and Shell concerning the Greek gas utility’s acquisition of the Dutch firm’s 49 percent share of the EPA Attiki gas supply and EDA Attiki gas distribution ventures covering the wider Athens area.

DEPA went into the negotiations with Shell already holding 51 percent stakes in these joint ventures. The deal was reached for a price of 150 million euros.

If the Competition Committee approves the DEPA-Shell agreement by September, then the DEPA privatization could begin on schedule, in September or October, with the gas utility’s split into two firms, DEPA Infrastructure and DEPA Trade, as agreed to by the government and the country’s lenders for the privatization.

According to the plan, a 50.1 percent stake of the trading firm is expected to be offered to investors while 14.9 percent, including veto rights, will be maintained by the Greek State. As a second stage of the privatization, the Greek State’s offering to investors of DEPA Infrastructure will be limited to a minority stake of no less than 14 percent. The Greek State is expected to retain a 51 percent stake in DEPA Infrastructure.

The gas utility’s privatization procedure will most likely be delayed until 2019 if the Competition Committee requires an extended period to examine the DEPA-Shell agreement.

Pundits closely following the developments have not ruled out delays in the DEPA privatization procedure.

Greek petroleum group Motor Oil Hellas lodged an official complaint to the Competition Committee over the DEPA-Shell agreement while it was still in the making, noting it would enable DEPA to dominate natural gas supply in the wider Athens area. Motor Oil plans to soon enter Greece’s natural gas retail market through its subsidiary Coral (Shell).

DEPA, whose repositioning in Greece’s natural gas retail market was included as a bailout term, has also reached a deal with Italy’s Eni. DEPA agreed to withdraw from the Zenith gas supply company covering the country’s north by selling its 51 percent stake in this venture to the Italian firm, previously a minority partner with a 49 percent share.

At least three key players, Mytilineos, the Copelouzos group and ELPE, which already holds a 35 percent stake in DEPA, have expressed an unofficial interest for DEPA Trade.

These players, as well as others who have yet to disclose their interest, all see DEPA Trade as an enterprise that is ready for robust business given DEPA’s experience, existing customer base and foreign deals. More crucially, the investors also see a company that is soon expected to wholly own the EPA and EDA supply and distribution firms which, until recently, monopolized the retail gas market in the wider Athens area.

 

DEPA, Shell talks for Dutch firm’s local market exit still not over

Long-running negotiations between DEPA, the public gas corporation, and Shell concerning the former’s acquisition of the Dutch firm’s 49 percent share of the EPA Attiki gas supply and EDA Attiki gas distribution ventures covering the wider Athens area, have yet to be finalized but could be successfully completed within the next few days, DEPA sources have informed.

DEPA holds a 51 percent stake in these ventures and is negotiating to buy out Shell for a reported sum of 150 million euros.

The two sides are believed to have agreed on most matters but are still working on fine details concerning Shell’s full market withdrawal. DEPA is pushing for an agreement that would rule out any possibility of Shell’s eventual reentry into this market.

Sources explained it would be pointless for DEPA to pay 150 million euros now only to see the Dutch firm reemerge at some point in the future as part of a rival team.

Tax and environmental issues, concerning the existing DEPA-Shell ventures, that could arise in the future are also being closely examined.

An agreement between the two sides is expected no later than June 6. DEPA’s bailout-required privatization plan, to offer investors a 65 percent stake, is expected to be shaped immediately following the utility’s agreement with Shell.

DEPA is expected to be split into two enterprises – one to handle the networks and the other commercial matters – to be sold separately, energy minister Giorgos Stathakis and the country’s lenders appear to have agreed. This model, still unclear, needs to be fine tuned.

The Greek State is expected to keep a majority stake in the firm controlling the networks and a minority stake for the commercial firm, according to Stathakis. He has not elaborated on specific stakes.

This plan was tabled by TAIPED, the state privatization fund, not the energy minister, who proposed a far more elaborate model entailing the establishment of a listed holding company comprised of three subsidiaries to respectively handle the networks, commercial matters and international projects, including gas pipeline projects such as the IGB and IGI Poseidon. Investors would have been offered a minority stake for the first and a majority stake for the second, while the third would have remained under the holding company’s control.

The country’s lenders expressed doubts over this proposal’s feasibility and opted for the two-firm solution.

 

 

DEPA, Eni to sign deal today, Shell selling its stake for €150m

Months-long negotiations between DEPA, the public gas corporation, and Italy’s Eni for the latter’s full acquisition of the EPA Thessaloniki-Thessaly gas supply company, commercially dubbed Zenith, are expected to be completed today with the signing of a finalized agreement.

Until now, DEPA has held a 51 percent stake in this venture and Eni the other 49 percent. No changes are expected to be made to the EDA Thessaloniki-Thessaly gas distribution company. DEPA and Eni will retain their respective 51 and 49 percent stakes in this venture.

Not unintentionally, the timing of the deal’s anticipated completion coincides with a meeting in Athens today between energy minister Giorgos Stathakis and the country’s lender representatives. Greek officials are keen to send a signal to the troika that pending bailout issues at the energy ministry are being settled.

DEPA also appears to have been reached an agreement with Shell to acquire the latter’s 49 percent share of the EPA Attiki gas supply and EDA Attiki gas distribution companies covering the wider Athens area. DEPA currently holds 51 percent shares in these ventures. The two sides held marathon talks yesterday. Pending issues appear to have been settled while, according to sources, the agreement is worth 150 million euros.

The government and lenders still need to agree on the resulting market structure following these rearrangements before a DEPA-Shell deal can be officially announced. DEPA would fully control EPA and EDA Attiki and hold a majority stake in EDA Thessaloniki-Thessaly.

The finalization of DEPA’s future roles in all the aforementioned ventures will enable officials to begin discussing and implementing the gas utility’s privatization model. This sale is planned to offer investors a 65 percent stake.

A meeting today to involve Stathakis, the energy minister, finance minister Euclid Tsakalotos and the lenders will indicate whether a Greek proposal for the DEPA privatization stands a chance of being accepted.

An alternative DEPA privatization plan prepared by the energy minister entails the establishment of a holding company to serve as an umbrella for three new subsidiaries respectively covering commercial, distribution and international projects divisions.

A number of local officials have questioned whether this plan can raise the privatization funds expected from DEPA as the proposal, restricting investors to a minority stake of DEPA’s networks, is seen as unattractive.

A second idea has also been tabled. It entails the establishment of two subsidiaries, one representing DEPA’s networks and the other the firm’s commercial division, without a holding company. Each subsidiary would be sold separately to represent a 65 percent privatization. This proposal recognizes that the gas networks and commerce are two different markets. Some investors may focus on the networks and others on the commercial side.

Apart from the privatization model that needs to be adopted for DEPA, ELPE (Hellenic Petroleum), which holds a 35 percent stake of this gas utility, also needs to make its position clear.

ELPE officials have told energypress that retaining a minority role in DEPA is pointless for the enterprise, while suggesting ELPE would withdraw from its DEPA interests if the price is right.

ELPE is interested in the natural gas market but only as a majority shareholder with managerial control, the officials explained.

 

 

 

Record numbers of households switching to natural gas

The number of new gas supply contracts has surged to unanticipated levels amid a widening field of players looking forward to the Greek gas market’s full liberalization as of January 1.

At EDA Attiki, distributing to the wider Athens area, new household supply contracts from the beginning of the year until last week, prior to the completion of a ten-month period, exceeded 18,800, up from 17,500 for the nine-month period. The market data suggests this gas supplier’s growth rate for new household contracts is increasing at a rate of 1,000 per month, meaning EDA Attiki’s latest target of 20,000 new contracts, following an upward revision, could be exceeded.

The 18,800 new household gas supply contracts established at EDA Attiki so far this year represent more than double last year’s amount and are 57 percent higher than the initial target set for the year. Quite impressively, 8,100, or 43 percent of these new supply contracts were established during the less active summer period, from June through August.

Likewise, the growth rate for new gas supply contracts established at EDA Thes, established to serve the wider Thessaloniki and Thessaly regions, has been just as robust. This supplier’s number of contracts exceeded 9,200 by early September, 3,350 of these established during the summer.

The first-half results at EDA Thess, announced prior to these latest figures, showed that the firm’s new gas supply connections grew to 5,837, up from 3,642 last year, a 60 percent increase. The total number of contracts grew to 300,587 from 285,992 last year.

Though, until recent years, higher heating fuel prices were the main driving force behind new household gas supply contracts, a legal framework revision enabling flat owners to break away from collective apartment block heating system agreements without the majority’s consent is the key factor behind the more recent household shifts from heating fuel to natural gas.

EDA Attiki estimates that it has amassed over 10,000 new gas supply contracts as a result of this legal revision.

A decision by market authorities to lift surcharge fees previously imposed on new gas supply connections, as well as the availability of subsidy programs, have also provided impetus to the shift.

Of course, the lower cost of natural gas compared to heating fuel has remained a factor. Data for early October showed natural gas is 37.5 percent cheaper than heating fuel, while its cost can reach as much as 50 percent less for household cooking and hot water needs.

 

New law helps boost individual household gas connections

The overwhelming majority of new natural gas supply household connections – 87 percent of roughly 1,500 – are  independently maintained rather than shared between common apartment block flat owners.

Some 1,300 households opted to install individual gas connection systems, up from 900 a year earlier, a 40 percent increase.

Discount offers for new gas connections in the wider Athens region and a considerable simplification of bureaucratic procedures have served as an incentive for households to act alone.

A recently introduced law permits flat owners to proceed with installations of individual gas supply systems even if the majority of fellow apartment-block flat owners do not offer their consent.

The gas supply company EDA Attiki has set itself an objective to complete 12,000 new household gas supply connections in 2017 and, between 2017 and 2021, develop 100 kilometers of additional network infrastructure – in areas with existing low infrastructure densities as well as new regions.

The gas supply company also intends to lower connection costs for households, a decisive factor for home owners considering new gas supply connections. EDA Attiki is currently offering full exemptions from connection surcharge costs.

Beginning April 3, EDA Attiki will launch a new subsidies program offering up to 3,000 euros per apartment block and 750 euros for individual flats to help cover the cost of converting existing fuel-operated heating systems to natural gas.

Addressing the company’s strategic plans, Hristos Balaskas, managing director at EDA Attiki, noted the supplier aims to further penetrate the natural gas market for households and businesses in the wider Athens area by developing the region’s distribution network and offering cost-reducing incentives.