North Macedonia involvement in key Alexandroupoli projects

North Macedonia plans to help cover its energy needs through an involvement in two Greek-based projects, the prospective FSRU in Alexandroupoli, northeastern Greece, and, in the same region, a gas-fueled power station to run on LNG stemming from the floating LNG terminal.

Much progress has been made on the neighboring country’s interest in these two projects since a meeting in Athens last September between Greek Prime Minister Kyriakos Mitsotakis and his North Macedonian counterpart Zoran Zaev. The partnership also represents a strategic decision for the Greek government.

It is considered certain that a state-owned North Macedonian company will soon enter the Alexandroupoli FSRU project’s equity pool with a 10 percent stake, energypress sources have informed.

This project’s five current partners – Copelouzos group, Gaslog, Greek gas utility DEPA, Greek gas grid operator DESFA and Bulgartransgaz – are expected to each offer small portions of their respective 20 percent stakes to make available a 10 percent stake for the state-owned North Macedonian company in the Alexandroupoli FSRU.

The project’s development is not expected to be impacted by any equity reshuffles.

Two international tenders staged by Gastrade, a company established by the Copelouzos group for the development and operation of the Alexandroupoli FSRU, have been successfully completed. One of the two tender concerns the FSRU’s construction. The other concerns the installation of pipelines linking this facility to the national gas grid.

The Alexandroupoli FSRU consortium is expected to make a final investment decision in late February, sources informed.

On the other front, ESM, North Macedonia’s state electricity company, is expected to acquire a 25 percent stake in a gas-fueled power station to be developed by Damco Energy, a Copelouzos group subsidiary, in Alexandroupoli’s industrial zone.

The initiative will secure 200 MW of the facility’s 800-MW capacity for North Macedonia. The country currently has an electricity deficit of approximately 2 GWh.

Bulgarian state-owned electricity company NEK EAD also appears interested in acquiring a stake in the Alexandroupoli power station. Bulgaria has projected an electricity deficit a few years from now as the country must phase out major lignite-fired power stations. European Commission exemptions extending the lifespans of these units are expiring.

PPC bids for North Macedonia’s Cebren hydropower plant

Power utility PPC is among ten international bidding teams from the energy and construction domains that have submitted pre-qualification offers to a tender for North Macedonia’s prospective Cebren hydropower plant, an investment expected to require at least 500 to 600 million euros.

This preliminary stage of the tender concerns water usage licensing rights for hydropower output at the neighboring country’s Crna Reka river. Preliminary bids were opened yesterday.

A related committee to soon be assembled by the North Macedonian government will examine whether the bids submitted fully meet the tender’s requirements before qualifiers are invited to a second round for offers concerning the project’s development in a Public Private Partnership (PPP) with state-owned power producer ESM.

Besides PPC, which has teamed up with energy and construction firm Archirodon, the other nine bids were submitted by: EVN-Verbund (Austria); Gezhouba Group China (China); Power Construction Corporation of China (China); EDF (France); Eiffage-Waterlu-Andritz-Norconsult (France, Austria); Webuild SPA Italia-Salini (Italy); Cobra-Cobra Hidraulika (Spain); ENKA-COLIN (Turkey); and Ozaltin-Yapi Merkezi (Turkey).

The North Macedonian government plans to commission a consultant for preparations concerning the tender’s second round.

In previous years, more than ten tenders have been staged for the construction and operation of the Cebren hydropower plant, but all efforts have proved fruitless, for a variety of reasons.

Prime Minister Zoran Zaev’s administration has noted that a serious effort is being made for the project’s development, ascertaining the current tender will be successfully completed.

It is planned to offer an installed capacity of between 333 and 458 MW for annual electricity production of 1,000 to 1,200 GWh.

PPC, NOME, target model to preoccupy authorities in the post-bailout era

Commitments and reforms remain pending despite the completion of Greece’s third and final bailout program. A reinforced surveillance mechanism covering not only fiscal, social security and banking matters but also market reform policies, including for the energy sector, will follow the final bailout program, which was completed yesterday, according to an official announcement made by the European Stability Mechanism (ESM), designed to safeguard financial stability in the euro area.

Quarterly surveillance reports will be issued as part of the reinforced effort. These will include assessments of energy sector commitments, including a plan to phase out a RES-supporting supplier surcharge.

Three key energy sector issues will preoccupy authorities in the country’s post-bailout surveillance. The sale procedure and schedule for the main power utility PPC’s disinvestment of lignite-fired power stations and mines, representing 40 percent of the utility’s lignite capacity, will be closely watched.

The role, beyond 2020, of NOME auctions, introduced in Greece two years ago to offer third parties access to PPC’s lower-cost lignite and hydropower sources, will be examined at the end of 2019, once the results of new target-model markets have become clear. Retail electricity market shares will be assessed and a formula will be established to keep the market’s conditions competitive, as was envisioned with the NOME auctions, for the benefit of consumers.

As for the target model, aiming for market coupling, or harmonization of EU wholesale markets, Greece’s lenders have set an April 1, 2019 launch date for the Greek market’s coupling with the Italian and Bulgarian markets. A delay in the introduction of new target-model markets until the summer of 2019 or failure to achieve market coupling before 2020, as has been speculated, would be viewed negatively by the lenders.