DEPA Infrastructure sale’s July 15 deadline confirmed, 2-3 bids expected

Privatization fund TAIPED has decided to keep unchanged a July 15 deadline for binding bids concerning the 100 percent sale of gas company DEPA Infrastructure, meaning this privatization procedure, now 17 months long, has hit the final stretch.

The Greek State is selling its 65 percent stake in DEPA Infrastructure and Hellenic Petroleum (ELPE) the other 35 percent.

The deadline date was reconfirmed following the energy ministry’s settlement of pending issues.

Just days ago, a legislative revision was ratified to grant 30-year license extensions to the EDA distribution companies, DEPA subsidiaries.

Also, a rule enabling the removal of geographical areas from the control of EDA companies if delays in their development of distribution networks in these areas have reached 18 months will not be applied if the EDA companies are found to not be responsible for these delays.

Moreover, the legislative revision has introduced a new mechanism enabling required revenue recovery underperformance by one of the country’s three EDA distribution company to be covered by the other EDA companies, through revenue offsetting procedures concerning equivalent periods.

If this procedure fails to resolve required revenue recovery underperformances, then any discrepancy will be covered through price adjustments at all three EDA companies.

A total of six participants have qualified for the final round of the DEPA Infrastructure sale. According to sources, two or three suitors are seen submitting binding bids in just over a week, but this remains to be confirmed.

The six qualifiers are:

  • FIRST STATE INVESTMENTS (European Diversified Infrastructure Fund II)
  • KKR (KKR Global Infrastructure Investors III L.P.)


DEPA Infrastructure revisions, for clarity, in Parliament, sale deadline nearing

A legislative revision prepared by the energy ministry for DEPA Infrastructure, containing measures that aim to offer greater clarity to bidders in the ongoing sale of the gas company, has been submitted to Parliament.

DEPA Infrastructure suitors face a July 15 second-round deadline for binding bids.

The legislative revision includes provisions for 30-year extensions of gas distribution licenses as well as the creation of a new mechanism enabling required revenue recovery underperformance by one of the country’s three EDA distribution company to be covered by the other EDA companies, through revenue offsetting procedures concerning equivalent periods.

If this procedure fails to resolve required revenue recovery underperformances, then any discrepancy will be covered through  price adjustments at all three EDA companies.


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.

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.

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.



Taxation, personnel transfer details delaying DEPA split plan

Taxation details concerning a gas utility DEPA split plan ahead of its privatization are believed to be keeping energy ministry officials from reaching a final decision on the split’s formation, or whether the development will entail a full or partial split of utility networks for transfers of resulting stakes into a new DEPA subsidiary.

DEPA wholly owns gas distributor EDA Attiki and DEDA and also maintains a 51 percent stake in EDA Thessaloniki.

The split has been incorporated into a double-fronted privatization procedure of state-controlled DEPA’s infrastructure and commercial interests. The government is pursuing a course to maintain the Greek State’s control of DEPA infrastructure.

The shareholder make-up of the new subsidiary will be pivotal to the decision. It has yet to be decided if DEPA or its current shareholders, ELPE-Hellenic Petroleum (35%) and the Greek State (65%), will own this new subsidiary. The energy ministry is currently calculating which option could be preferable in terms of taxation.

Payroll matters concerning personnel transfers are also holding up the energy ministry. Employees at the gas utility’s EPA and EDA Attiki supply and distribution ventures have been on payrolls regulated by private-sector rules as a result of Shell’s 49 percent stake. Shell has agreed to sell this stake to DEPA.

The Competition Committee has rescheduled a meeting on the matter for tomorrow, three days sooner than originally planned.


DEPA, Shell agree on road map for EPA, EDA Attiki transfers

DEPA, the public gas corporation, and Shell have set out a road map for the former’s acquisition of the latter’s 49 percent stake in their joint venture EPA Attiki, the gas supplier covering the wider Athens area, as well as a formula resolving any financial differences between the two, should a disagreement emerge.

The two enterprises, which have commissioned the same evaluator, have agreed on an evaluation process, energypress sources have confirmed.

DEPA and Shell have spent months negotiating the Greek gas utility’s interest to bolster its retail presence in the wider Athens area through an acquisition of Shell’s 49 percent share of EPA Attiki, for supply, as well as a corresponding stake in EDA Attiki, for distribution.

The European Commission has accepted DEPA’s interest to maintain its retail market presence in the wider Athens area.

As for the retail gas market in Greece’s north, an agreement has been reached for DEPA’s retreat, through the gas utility’s full or partial sale of its 51 percent stake in EPA Thessaloniki-Thessaly to Italy’s Eni, currently holding a 49 percent share of this venture.

All the aforementioned matters need to be finalized by the end of March, but evalution details must be settled well in advance.

Energy Minister Giorgos Stathakis has noted that the bailout’s third review agreement offers leeway for alternatives.

In a recent interview, the minister informed that negotiations concerning the energy sector’s privatizations have not concluded. Each case is being treated separately, he noted, adding that proposals for alternatives forwarded by consultants are currently being examined.

Energy sector privatizations are pivotal to the agenda at TAIPED, the state privatization fund. Some of these energy sector sales represent a key part of this year’s privatizations target, aiming for revenues of two billion euros.




Creditors discontent with Greek gas market reforms plan

A team of creditor representatives appears to have already rejected the country’s proposal regarding the role and participation of DEPA, the Public Gas Corporation, in the natural gas market’s wholesale, retail and distribution domains.

The latest round of discussions on Greece’s bailout-required energy sector reforms commenced in Athens last week, focused on the gas sector. Talks on main power utility PPC’s sale package of lignite units have yet to begin but officials are expected to begin dealing with this front in Brussels today.

A demand by the creditors for the delivery of a completed road map concerning natural gas market reforms by the end of this year has been added to the latest revised bailout agreement. One of the intentions is to eliminate conditions that do not incite competition.

Though the gas market demands made by the creditors have remained vague, the underlying motive is to break DEPA’s omnipresence. At present, DEPA is active at wholesale and retail levels and holds stakes in the EPA and EDA supply and distribution companies.

Shell and ENI, strategic partners in the EPA and EDA companies for wider Athens and Thessaly-Thessaloniki, respectively, are also pushing to restrict DEPA’s widespread market presence, as expressed in letters to energy minister Giorgos Stathakis.

The Greek recommendation, which, for the time being, appears to have been deemed inappropriate by the creditors, proposes maintaining DEPA’s presence in the EPA Attiki and EDA Attiki companies with the existing 51 percent stake.

Greek officials also recommend DEPA’s full withdrawal from EPA Thessaly-Thessaloniki or a drastic reduction of the corporation’s stake in this venture in exchange for an equivalent increase in its share of EDA Thessaly-Thessaloniki.

Greek officials have also proposed abandoning the idea of DEPA’s entry into the retail gas market as an independent corporate unit. DEPA has already revised its corporate charter to cover retail gas and electricity market activities.

Besides the needed gas market reforms, also unsettled are compensation claims made by Shell and ENI for the premature losses of their regional monopolies. Shell, which, as a 49 percent parner in EPA Attiki, had signed an exclusive supply agreement for wider Athens until 2030, has valued the financial cost of the premature end of this agreement at approximately 100 million euros. The amount would be shared with DEPA, holding a 51 percent stake in the venture.

DEPA to launch distribution company covering new urban markets

DEPA, the Public Gas Corporation, has been given the green light by company shareholders to establish a new gas distribution company that will cover supply to new urban gas networks, whenever these are developed, in provincial cities where such infrastructure currently does not exist.

The list of provincial cities where new gas networks are envisaged includes Halkida, Lamia, Thiva and Livadia.

Though EDA (Gas Distribution Company for the rest of Greece), the new company to distribute to all these prospective markets, is being established as a wholly owned DEPA subsidiary, the parent company will not have a say in its administrative matters.

The DEPA decision to establish a new subsidiary firm was approved at an extraordinary shareholders meeting that needed to be rescheduled after a late-November date was missed due to bureaucratic delays.