EPA Thessaloniki-Thessaly

Natural gas bill payments down 30% in last two months

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Natural gas bill payments have plunged by 30 percent over the past two-month period following a milder single-digit decline a month earlier, latest market data has shown.

Consumers have resorted to installment-based payback plans in far greater numbers during this two-month period of deterioration.

Suppliers, fearing a rise in unpaid receivables, are not hesitating to cut gas supply to customers who were already battling against energy debt prior to the pandemic and are now in deeper trouble. However, this supply-cut threat concerns a small percentage of customers.

Gas suppliers have yet to turn to the government for support measures, as was the case in the electricity sector. However, they may end up needing help in the form of low-interest loans, support mechanisms and other financial tools if the country’s tourism industry suffers a major setback this coming summer, as is feared.

Zenith and EPA Attiki (Fysiko Aerio) hold an 85.39 percent overall share of the country’s retail gas markets equipped with distribution networks – wider Athens area, Thessaloniki and Thessaly – data processed by energypress showed. Zenith leads with 46.14 percent and EPA Attiki follows with 39.25 percent.

EPA Thess, a former monopoly covering Thessaloniki and Thessaly, has lost approximately 15 percent of its market share to newly emerged rivals, the data showed. KEN, the biggest gainer, has captured 5.25 percent and is followed by Protergia (3.1%), Elpedison (1.91%), NRG (1.35%), Heron (1.05%), Watt+Volt (0.75%) and EFA (0.76%).

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

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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.

 

 

DEPA board unanimously OKs Shell local takeover agreement

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The board at DEPA, the public gas corporation, yesterday unanimously approved an agreement reached with Shell just days ago following prolonged negotiations for the 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.

This development had been preceded by DEPA’s finalized agreement with Italy’s Eni for the latter’s full acquisition of the EPA Thessaloniki-Thessaly gas supply company, commercially dubbed Zenith. This agreement is now being examined by the competition committee. A final decision is expected by the end of this month.

Returning to DEPA’s agreement with Shell, the gas utility’s shareholders – TAIPED, the state privatization fund, controls 65 percent and ELPE, Hellenic Petroleum, the other 35 percent – are expected to decide within the next fortnight before this agreement is forwarded to the competition committee for approval. A finalized decision by the committee is anticipated by August.

The agreement between DEPA and Shell was reached for 150 million euros – approximately 40 million euros for the EPA gas supply company and 110 million euros for the EDA distribution company. The total amount is within DEPA’s evaluation range – close to the lower end.

DEPA stands to collect 52 million euros for the sale of its 51 percent in the Zenith gas supply company in the north to Eni, plus five million euros for dividends. This amount is also within the gas utility’s evaluation range, towards the higher end, according to data provided by the utility’s financial advisers.

DEPA’s three agreements, heralded as a major achievement by the government, given the bailout’s prior action restrictions and deadlines, represent the completion of the first stage of the gas utility’s transformation following its withdrawal from the retail gas market in Greece’s north and bolstered position in the wider Athens market.  These agreements now clear the way for the commencement of DEPA’s privatization.

The gas utility realized, from early on, that it would need to reinforce its standing in infrastructure and realign itself in the retail gas market to remain competitive amid the newly liberalized, competitive market, pundits told energypress.

DEPA also needed to find solutions to meet bailout obligations, their objective more or less being to break the gas utility’s local dominance, which is why the company worked closely with the energy ministry on many position papers, negotiations with the lenders and board decisions.

 

 

DEPA strikes takeover deal with Shell, guarantees included

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DEPA, the public gas corporation, and Shell concluded long-running negotiations over the weekend for 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.

The two sides needed to stretch a June 6 deadline agreed to by the government and country’s lenders before striking a deal. It is expected to be approved by the DEPA board tomorrow while an extraordinary shareholders’ meeting is expected to immediately follow for final approval. TAIPED, the state privatization fund, now control’s DEPA’s 65 percent and ELPE (Hellenic Petroleum) holds the other 35 percent.

The agreement between DEPA and Shell was reached for 150 million euros, as had become widely known long before the weekend’s deal.

Following much resistance, the Dutch firm ended up providing long-term guarantees covering any pending tax issues that may arise in the future, including tax matters or accidents resulting from faulty infrastructure development. Also, Shell has committed to terms that would block any future market reentry attempt by the Dutch firm, including indirectly, as a member of an investment scheme, or via any special purpose vehicle (SPV).

Shell was represented in its EPA Attiki joint venture with DEPA, the majority partner with a 51 percent stake, through a special purpose vehicle (SPV).

Once finalized, the DEPA-Shell deal will need to be endorsed by the European Commission’s Directorate General for Competition. The same goes for DEPA’s agreement already reached with Italy’s ENI for the latter’s acquisition of the Greek gas utility’s 51 percent in the EPA Thessaloniki-Thessaly gas supply company. ENI initially went into this joint venture holding a 49 percent stake and now stands to gain full control of the gas supply firm for 57 million euros. However, DEPA will maintain its 51 percent stake in the EDA distribution company covering the Thessaloniki-Thessaly area.

The completion of all these matters will enable the DEPA privatization plan, to offer investors two separate subsidiraries representing the utility’s trading and infrastructure divisions, to go ahead. According to energy ministry sources, DEPA’s considerable cash deposits for 2017, totaling 250 million euros, will be divided between the two prospective subsidiaries.

The Greek State intends to sell a 50.1 percent stake of DEPA’s trading subsidiary, which is expected to draw major investor interest, and retain a 14.9 percent for veto rights concerning matters of strategic importance, especially international gas supply agreements. Two major Greek players, Mytilineos and ELPE, as well as European firms have already expressed interest.

As for DEPA’s infrastructure subsidiary, the Greek State will initially maintain its current stake of 65 percent and, depending on decisions to be taken at ELPE for its 35 percent stake in the gas utility, could sell a 14 percent stake to keep 51 percent.

Recent competition committee action taken by Motor Oil to protested  DEPA’s EPA Attiki takeover plan, promising to give the gas utility control of the wholesale and supply markets in the wider Athens area, could prove to be an obstacle.

Speaking on the sidelines of an Economist conference in Athens last week, energy ministry officials appeared unperturbed. They pointed out that DEPA’s presence is being reduced to one supply firm from two, while adding this development will be followed by the sale of a majority stake in DEPA’s prospective subsidiary representing the trading division.

 

 

 

 

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

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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.

 

 

 

Eni set to sign deal with DEPA for EPA Thessaloniki-Thessaly

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DEPA, the public gas corporation, and Italy’s Eni have finalized an agreement for the latter’s full acquisition of the EPA Thessaloniki-Thessaly gas supply company, commercially dubbed Zenith, energypress sources have informed.

Until now, DEPA was the majority shareholder of this venture with a 51 percent stake and Eni held the other 49 percent.

The same sources noted that the DEPA board intends to endorse the agreement at a meeting tomorrow ahead of its signing next week – either Tuesday or Wednesday.

Next week’s anticipated signing ceremony will coincide with a visit to Athens by troika officials for negotiations with the Greek government on pending bailout issues, including energy sector matters.

No changes will 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.

DEPA is also negotiating with Shell to acquire the latter’s 49 percent share in their EPA Attiki gas supply company covering the wider Athens area. DEPA currently holds a 51 percent stake in this enterprise.

According to sources, certain details remain unresolved but an EPA Attiki agreement is expected to be inked by the two sides just days after the EPA Thessaloniki-Thessaly deal has been signed.

The shareholders of all companies involved will need to approve these agreements. The competition committee must also endorse them.

The completion of the EPA Thessaloniki-Thessaly and EPA Attiki agreements, satisfying natural gas market supply and distribution demands set by the country’s lenders, will enable the bailout-required DEPA privatization to proceed.

Energy minister Giorgos Stathakis has already announced that he will present, next week, to the lender representatives, a DEPA holding company plan to serve as an umbrella for three new subsidiaries respectively covering commercial, distribution and international projects divisions. The plan entails listing the holding company on the bourse while the possible involvement of a strategic investor in the subsidiary covering commercial matters will be examined.

It remains to be been how the troika will react to the energy minister’s proposal.

 

 

 

 

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

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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.

 

 

 

TAIPED pushing ahead with DEPA sale, much work needed

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TAIPED, the state privatization fund, is keen to push ahead with the privatization of gas utility DEPA, but the sale’s timely launch, expected in March, according to the latest bailout terms, will not only depend on the fund’s intentions.

In essence, this privatization’s punctual progress is dependent on Shell and DEPA, currently engaged in advanced talks for the Dutch firm’s sale of its 49 percent stake in retail gas supplier EPA Attiki. DEPA holds a 51 percent stake in this venture and wants to increase its hold.

The DEPA privatization, to offer 65 percent stake of the gas utility, cannot proceed unless the Shell and DEPA dealings over EPA Attiki have been finalized. Also, the European Directorate for Competition will need to endorse any EPA Attiki changes.

A well informed source has informed that Shell and DEPA are close to agreeing on a price for EPA Attiki’s 49 percent. The price gap is believed to have narrowed significantly. For quite some time now, it has been rumoured that Shell has requested a sum of around 150 million euros.

Rothschild, acting as DEPA’s consultant, and Lazard, representing Shell, are expected to appoint a common evaluator for an official price estimate. The evaluation process is expected to take at least one month to complete. Then, the two sides will still need to agree on a price before competition authorities in Athens and Brussels decide whether DEPA’s continued presence in the retail gas market raises any obstacles.

Given all these requirements, the DEPA privatization’s launch date, scheduled for March, should prove to be an extremely difficult target date.

The Greek government is eagerly anticipating a finalized deal between Shell and DEPA as a reinforced retail and distribution role for DEPA through EPA Attiki would undoubtedly heighten the interest of investors once the gas utility’s privatization is launched.

The government and country’s lenders appear to have reached a compromise deal on DEPA’s reinforced role in EPA Attiki in exchange for DEPA’s sale of its 51 percent stake in EPA Thessaloniki-Thessaly to Eni.

If so, DEPA will remain a powerful enterprise commanding three major fronts. Besides gaining a retail and distribution monopoly in the wider Athens market, the utility will also stand as a key gas importer and control gas distribution in all parts of Greece not covered by the EPA firms, through DEDA.

If the European Directorate for Competition does not endorse DEPA’s anticipated new role, then TAIPED, the privatization fund, will need to reexamine the utility’s privatization or postpone it.

The lenders are pressuring by excluding the possibility of any futher extensions.

TAIPED announced a tender yesterday for a legal consultant to work on the DEPA privatization. Interested parties face a February 26 deadline.

It remains unclear whether ELPE (Hellenic Petroleum) will offer its 35 percent stake of DEPA along with the Greek State’s 65 percent. ELPE has repeatedly expressed an interest in the natural gas market.

 

 

DEPA, Shell seen picking common EPA Attiki evaluator

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DEPA, the Public Gas Corporation, and Shell, partners in the retail natural gas supplier EPA Attiki covering the wider Athens area, appear headed towards selecting a common evaluator for the appraisal of the Dutch firm’s 49 percent stake.

DEPA holds a majority 51 percent share of this venture and is seeking to increase its stake. Shell has made clear it wants to withdraw from Greece’s retail natural gas market.

Rothschild and Lazard, the financial consultants representing DEPA and Shell, respectively, are meeting daily for negotiations believed to be constructive, energypress sources informed. At this stage, it appears that the two sides are nearing an agreement. There has been no news of a sale price for Shell’s 49 percent, but developments on this front can be expected once an evaluator has been commissioned.

Shell wants the cost of the premature end to EPA Attiki’s market monopoly, a bailout requirement, factored into the agreement. The Dutch firm had entered EPA Attiki on terms guaranteeing the venture exclusive supply rights for the wider Athens region until 2030. Shell has set a price of 150 million euros for this premature monopoly loss but DEPA has questioned the figure.

A tight schedule needs to be maintained and final decisions must be taken by March. Any delay would impede the planned DEPA privatization, another bailout reqirement, to offer a 65 percent stake of the Greek gas utility. According to the revised bailout, this privatization has been timed to begin in late March, presumably seen as a time when DEPA and Shell will have reached a deal.

It remains unclear whether ELPE (Hellenic Petroleum) will offer its 35 percent stake of DEPA along with the Greek State’s 65 percent. ELPE has repeatedly expressed an interest in the natural gas market.

DEPA’s future role in EPA Attiki, as well as EPA Thessaly-Thessaloniki, a venture in which the utility also holds a 51 percent stake, will need to be cleared up before the DEPA privatization procedure can begin.

The Greek government supports DEPA’s intention to remain in EPA Attiki and withdraw from EPA Thessaly-Thessaloniki. The country’s lenders want DEPA’s dominant market role diminished.

 

 

 

 

DEPA, Shell reps for EPA Attiki seen meeting next week

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DEPA, the public gas corporation, appears to be just days away from finalizing a deal with financial advising group Rothschild & Co, joined by Alpha Bank, to represent the Greek utility in its negotiations with Shell for the acquisition of the Dutch company’s 49 percent stake in gas supplier EPA Attiki, covering the wider Athens area. DEPA currently holds a 51 percent stake in this joint venture.

It is anticipated that the establishment of an agreement will be followed by an initial meeting next week, barring unexpected developments, between Rothschild-Alpha Bank and Lazard, representing Shell.

The price tag to be placed on the stake being sold by Shell is expected to stand as a key subject in these talks. Shell has made clear it wants a compensation amount for the premature loss of EPA Attiki’s regional monopoly, originally agreed to until 2030, factored into the price. Shell’s estimate of this compensation sum is 150 million euros.

A decision for Shell’s desired withdrawal from EPA Attiki needs to be reached by March as any delay would affect DEPA’s bailout-required privatization plan, to offer the Greek State’s 65 percent share of the gas utility. This privatization effort is scheduled to commence in March, according to the revised Greek bailout terms.

It remains unknown whether ELPE (Hellenic Petroleum), which holds DEPA’s remaining 35 percent, will be willing to offer its stake. ELPE has repeatedly declared it is interested in the natural gas market.

This privatization effort cannot begin unless DEPA’s role in EPA Attiki, as well as EPA Thessaloniki-Thessaly, a venture in which the utility also holds 51 percent, is cleared up. Italy’s ENI holds a 49 percent share of the EPA Thessaloniki-Thessaly gas supply firm.

The Greek government is seeking DEPA’s withdrawal from EPA Thessaloniki-Thessaly and a continued presence in EPA Attiki.

 

Major battle seen for liberalized gas market in 2018

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The natural gas retail market’s liberalization, a new reality in Greece that has arrived along with the New Year as a follow-up to the wholesale gas market’s opening, promises to lead to major changes.

Combined electricity-and-gas packages are already being offered by retailers in a local energy market whose natural gas sales have grown from 2.9 billion cubic metres in 2015 to 5 billion cubic meters in 2017.

The natural gas market is expected to gain further impetus as a result of the electricity market’s liberalization. Numerous gas market retailers, besides EPA Attiki, covering wider Athens, and Zenith, covering Thessaloniki and Thessaly, are examining the prospect of offering combined electricity-and-gas packages.

The main power utility PPC has hired a consultant to help prepare its entry into the natural gas market, while major independent electricity suppliers have already launched campaigns for gas supply. Also, DEPA, the public gas corporation, is considering entering the electricity market, either alone or along with a partner.

As of 2018, independent gas suppliers will seek to further bolster their presence in a market traditionally dominated by DEPA.

The degree of DEPA’s future retail presence in the EPA supply companies serving wider Athens, Thessaloniki and Thessaly, to be determined by ongoing negotiations between the shareholders involved in these ventures, remains to be seen.

The government appears to favor DEPA’s withdrawal from EPA Thessaly-Thessaloniki and continued presence in EPA Attiki. DEPA currently holds 51 percent stakes in these ventures. Shell holds a 49 percent stake in EPA Attiki and ENI a 49 percent stake in EPA Thessaly-Thessaloniki. Shell appears to want to withdraw.

EPA Attiki and Zenith, covering Thessaloniki and Thessaly, have both expressed an interest to broaden their geographic reach.

According to data released for 2015, the retail natural gas market in wider Athens, Thessaly and Thessaloniki exceeded 293 million euros. EPA Thessaly-Thessaloniki posted a pretax profit of 45 million euros and EPA Attiki a pretax profit of 30.1 million euros, according to this data.

As for Greece’s wholesale natural gas market, DEPA, until recently, has stood as the undisputed dominant player owing to its overwhelming control of imports. In 2016, DEPA’s natural gas imports reached 42.7 million MWh, from 44.5 million MWh in total, a 96 percent share.

However, this picture began changing in 2017, beginning with Prometheus Gas, a joint venture of the Copelouzos Group and Gazprom Export, whose imports for the year reached one billion cubic meters, or 20 percent of the 5 billion cubic meter total. These amounts were imported from the gas pipeline at Sidirokastro, via Bulgaria.

According to sources, Prometheus Gas has already signed contracts for a greater amount in 2018. Clients include PPC, which has placed orders for its natural gas-fueled power plants.

M&M, a joint venture involving Motor Oil Hellas and the Mytilineos Group, has also made imports.

In recent comments to Reuters, Evangelos Mytilineos, chief executive of the Mytilineos Group, noted that the corporate group ranks as the country’s biggest natural gas consumer with a level of 1.5 billion cubic meters, adding that M&M Gas could soon start trading annual amounts of natural gas measuring around one billion cubic meters.

Despite the emergence of new players in Greece’s wholesale gas market, DEPA managed to increase its volume-based sales increase of 9 percent for 2017’s nine-month period, while its operating profit (EBITDA) rose by 32 percent to 223 million euros.

 

Competition Committee to decide on DEPA retail market role

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The Competition Committee will decide whether DEPA, the public gas corporation, can maintain its presence in Greece’s retail natural gas market, according to additional terms included in the bailout agreement.

The terms specify that an assessment by RAE, the Regulatory Authority for Energy, and the Competition Committee, in association with the European Commission, to judge whether competition in the retail natural gas market remains restricted, will be made once the ownership make-ups of the existing EPA gas supply companies have been reshuffled. This assessment will need to be made prior to the bailout-required sale of a 65 percent sale of DEPA.

DEPA currently holds 51 percent stakes in EPA Attiki and EPA Thessaly-Thessaloniki, in respective partnerships with Shell and ENI.

If the Competition Committee decides that prospective line-up changes at the EPA companies continue to limit competition in the gas market, which needs to be fully liberalized by January 1, then the new corporate models will face reexamination.

At this stage, ENI appears interested in acquiring DEPA’s 51 percent in EPA Thessaly-Thessaloniki, while Shell seems interested in selling its 49 percent share of EPA Attiki to DEPA.

According to energypress sources, the country’s lenders are determined to prevent the formation of a state-controlled monopoly in Greece’s retail natural gas market. The lenders may allow DEPA to increase its stake in EPA Attiki, serving the wider Athens area, but they will not allow a full takeover, the sources informed.

Shell’s intended withdrawal from EPA Attiki is made complicated by the need for an evaluation of the premature loss of this venture’s monopoly, originally promised to last until 2030, but cut short by Greece’s bailout-required gas market reforms. The value of this lost monopoly will be factored into the sale price. For some time now, Shell has valued its monopoly loss at 150 million euros.

The negotiations, part of the road map established for the gas market, need to be completed by March, 2018, when, according to additional bailout terms, the tender for the sale of DEPA’s 65 percent needs to be announced. Any delays in the negotiations between DEPA, Shell and ENI promise to delay the planned DEPA sale.

 

Shell to leave EPA Attiki, proposal for DEPA exit in north

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Energy minister Giorgos Stathakis is expected to present the country’s lender representatives a gas-sector proposal entailing the full withdrawal by DEPA, the Public Gas Corporation, from EPA Thessaly-Thessaloniki through the sale of its current 51 percent stake to ENI, the current holder of a 49 percent in this retail venture, as well as a full takeover of EPA Attiki through the acquisition of Shell’s 49 percent in this retail gas firm supplying the wider Athens area, energypress sources have informed.

Both ENI and Shell both appear to agree to these EPA changes. According to sources, Shell has decided to withdraw from Greece’s natural gas market. The company hired a consultant to steer it through this process, it recently became known.

The energy minister is scheduled to meet with the lender representatives today and on Thursday to finalize energy sector measures needed for the bailout’s third review.

An agreement has already been reached with the European Commission, one of the country’s lender institutions, on main power utility PPC’s bailout-required lignite unit sale package, but the prospective changes in the natural gas sector remain unclear. The lenders are generally pushing for a diminished role by DEPA, currently dominant at both wholesale and retail levels.

DEPA appears willing to fully withdraw from EPA Thessaly-Thessaloniki. Last week’s leadership changes at the gas company are expected to facilitate this withdrawal.

The lenders had rejected a previous Greek offer entailing DEPA’s reduced presence in EPA Thessaly-Thessaloniki with a stake of at least 20 percent, as well as a management takeover at EPA Attiki and, possibly, the acquisition of Shell’s current 49 percent stake in this venture. Shell also failed to react positively to this proposal.

A counterproposal by the lenders called for DEPA’s reduced presence in both EPA ventures as a minor partner devoid of management rights.

It remains to be seen whether Greece’s latest proposal will be embraced by the lenders this week as part of the effort to conclude the bailout’s third review.

 

DEPA in robust financial condition amid Shell, ENI talks

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Various alternatives are being examined for the future look of Greece’s natural gas market, especially the role to be played by DEPA, the Public Gas Corporation. Decisions on the direction to be taken are expected by the end of this month, officials have informed.

The gas utility, which has maintained a dominant, vertically integrated presence in the market, is currently engaged in negotiations with local retail gas business partners Shell and ENI – holders of respective 49 percent stakes in the EPA Attiki and EPA Thessaly-Thessaloniki ventures – while the government is representing the utility in the ongoing third bailout review talks with the country’s lenders.

DEPA, a financially robust enterprise whose cash reserves are expected to have reached approximately 300 million euros by the end of the year, is strongly positioned in these talks. The gas utility has the ability to finance any decisions taken for its future market position, sources have noted.

The government is pursuing a plan that would maintain DEPA’s majority role in EPA Attiki, supplying the wider Athens area, in exchange for a minority role in EPA Thessaly-Thessaloniki.

According to sources, DEPA is close to striking a deal with ENI for their EPA Thessaly-Thessaloniki venture. A drastically reduced stake for DEPA, to a level well under 49 pecent, is regarded as a possible outcome.

As for EPA Attiki, the current arrangement, through which DEPA holds 51 percent of the venture and Shell 49 percent, could be left untouched.

A gas market reforms road map needs to be delivered by the end of the year, according to a term included in the revised bailout following a request by the lenders, its aim being to remove factors not promoting competition. Though this condition’s description has remained vague, it can be interpreted as representing pressure from the lenders for an end to DEPA’s omnipresence.

Major DEPA retail role, through EPA Attiki, supported locally

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The leadership at the environment and energy ministry is insisting on a dominant role for DEPA, the Public Gas Corporation, in the retail gas firm EPA Attiki, serving the wider Athens area, and would settle for the gas utility taking on a minority role in EPA Thessaly-Thessaloniki, according to sources.

This position was apparently stressed during a meeting at the energy ministry yesterday. Officials representing DEPA, TAIPED, the state privatization fund, and ELPE, Hellenic Petroleum, which holds 35 percent stakes in DEPA and DESFA, the natural gas grid operator, all took part in the session.

Greece needs to deliver a gas market reforms road map by the end of the year, according to a term included in the revised bailout, following a request by the lenders, its aim being to remove factors not promoting competition. The future role of DEPA, currently omnipresent, is a key part of the road map.

The lenders have called for DEPA’s full withdrawal from Greece’s retail gas market but, as was indicated at yesterday’s meeting, the government is determined to maintain a commanding role for the gas utility through one of the two EPA companies. DEPA currently holds 51 percent shares in EPA Attiki and EPA Thessaly-Thessaloniki, while Shell and ENI are partners with respective stakes of 49 percent.

DEPA needs to reach agreements with its two EPA partners. According to sources, the gas utility is close to reaching a deal with ENI that would provide the Italian company with part of DEPA’s 51 percent in EPA Thessaly-Thessaloniki. The sources added that DEPA appears prepared to accept being a minor shareholder in EPA Thessaly-Thessaloniki with a stake well under 49 percent.

As for EPA Attiki, the ownership could remain as is, with DEPA maintaining 51 percent and Shell 49 percent, the same sources informed.

Given these indications, the government, in its negotiations with the lenders, appears to be sticking to the positions adopted at a DEPA shareholders’ meeting in the summer and by the board. Ultimately, the views of the lenders will be crucial.

It has become somewhat of a common secret that the lenders have persisted for DEPA to adopt a more passive role in the retail gas market with EPA stakes of no more than 49 percent. Shell and ENI have both expressed a clear interest to acquire majority stakes in these respective ventures.

A clearer picture on the gas market’s new look should emerge within the next fortnight. Time is running out for the road map’s delivery by the end of the year, as was highlighted at yesterday’s meeting.

Besides DEPA’s role in the gas market, Shell and ENI are also seeking compensations for the premature ends to their regional monopolies in the EPA Attiki and EPA Thessaly-Thessaloniki ventures established with DEPA. An agreement had been reached for these monopolies to last until 2030.

Shell has valued the loss of the regional monopoly granted to EPA Attiki, serving the wider Athens area, at approximately 100 million euros. This amount would be split with DEPA, its partner in the venture. It is unclear to what extent Shell’s evaluation has been discussed by Greek officials.

Gas players moving into electricity promise to reshape the market

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The upcoming retail electricity market entry by gas suppliers, especially EPA Attiki and EPA Thessaloniki-Thessaly, both now also holders of electricity supply licenses, promises to reshape the country’s energy market.

The two EPA companies preparing to penetrate the electricity market already possess considerable clientele lists, both household and commercial, for gas supply in their respective regions.

Both prospective entries have the capacity to make unprecedented impact on the country’s electricity market, still dominated by the main power utility PPC, through combined electricity and gas packages for customers, pundits have forecast in comments to energypress.

From the other end, certain electricity market suppliers are seeking to enter the gas market. However, the profit margins offered by Greece’s gas market are far narrower than those being shaped in the electricity market.

Intensified competition is expected amid the toughening market conditions for the country’s electricity suppliers.