Brussels considering PPC compensation for lignite units

Certain European Commission officials are believed to be considering a compensation request made by power utility PPC for its three-year phase-out, between 2021 and 2023, of all existing lignite-fired power stations, severely burdened by elevated CO2 emission right costs.

Brussels officials had flatly rejected a compensation request made by PPC nearly a year ago. However, a shift by Brussels has become apparent in recognition of the Greek decarbonization effort’s progress.

The European Commission has offered compensation elsewhere for lignite units withdrawals. Last May, Brussels made available compensation worth 52.5 million euros for the Netherlands as a result of the country’s premature closure of its Hemweg coal-fired facilities.

At the time, the European Commissioner for Competition Margrethe Vestager had declared EU member states may need to compensate companies for their efforts to end their coal reliance, adding that the Dutch compensation amount does not threaten to cause market distortions at a European level.

PPC officials expect European Commission developments on the issue during the final quarter of this year.

Taking into account Brussels’ handling of such issues in the past, PPC officials also believe an antitrust case concerning the Greek power utility’s lignite monopoly and the corporation’s compensation request could be resolved simultaneously.

Ministry proposal seen ending PPC lignite monopoly case

Independent electricity retailers would be entitled to lignite-generated electricity supply from power utility PPC at a predetermined price, definitely not below cost for the utility, in quantities constituting 40 percent of each lignite-fired power station’s production, to be distributed to suppliers in proportion to their respective retail electricity market shares, until 2023, when  lignite-fired units are expected to have been phased out as part of the country’s decarbonization plan, according to a finalized proposal forwarded by the energy ministry to the European Commission’s Directorate-General for Competition a fortnight ago in an effort to resolve a long-running antitrust case.

Energy ministry officials are confident this formula will end the antitrust dispute, now a decade long, concerning’s PPC’s lignite sector monopoly.

Back in 2010, lignite dominated Greece’s energy mix but there is now much less at stake as lignite-fired power stations are being phased out over the next three years.

PPC’s lignite-fired electricity generation dropped 47.8 percent in the first half, diving 70 percent in the second quarter, the utility announced just days ago when presenting its first-half results.

PPC’s lignite-based output totaled 3,000 GWh in the first half and just 756 GWh in the second quarter.

Energy ministry officials believe the Directorate-General for Competition will not resist accepting the Athens proposal as a rejection would take the dispute back to European Court, meaning a case would not be heard any sooner than late-2021. By then, PPC’s lignite-fired power stations Kardia III and IV and Megalopoli III will have all been withdrawn, according to the latest schedule announced by energy minister Costis Hatzidakis earlier this week.

 

Flexibility surcharge improper, suppliers complain to Brussels

A CAT surcharge imposed on electricity suppliers to support the flexibility mechanism was adopted without proper consultation via a procedure that was not fully substantiated, ESEPIE, the Hellenic Association of Electricity Trading and Supply Companies, has charged in a letter forwarded to the European Commission’s Directorate-General for Competition and Directorate-General for Energy.

Consultation on the matter lacked a detailed study by power grid operator IPTO on current flexibility needs, the association protested in the letter, forwarded to the Brussels authorities just weeks ahead of the launch of target model markets in Greece.

The flexibility mechanism’s details are based on a study conducted years ago but current flexibility needs concerning production and demand have since changed drastically, the association noted.

A transitional mechanism is not needed given the current conditions in Greece’s energy market, especially if the pandemic-related drop in electricity demand is taken into consideration, ESEPIE noted. State aid or any other form of support for energy producers offering flexibility is unnecessary, the association stressed.

Suppliers have been asked to cover flexibility-related surcharges, beginning August 15, at a rate of approximately 3 euros per MWh. This is burdening their finances, especially in the mid-voltage market, where heightened competition has severely narrowed profit margins.

Flexibility CATs, it should be noted, do not impact independent, vertically integrated suppliers as the corporate groups they belong to collect the flexibility surcharge payments for their production.

Energy companies actually benefit from the surcharge if their retail electricity market shares are smaller than their shares of production. This is not the case for PPC, whose retail market share is considerably bigger than its share of electricity generation.

 

Alexandroupoli FSRU investment decision later in ’20

Investors behind the Alexandroupoli FSRU are expected to make final decisions on the project’s development in the final quarter of this year.

Two pending issues, the completion of a regulatory framework for the project, as well as approval by the European Commission’s Directorate-General for Competition of the project and funding via the National Strategic Reference Framework (2014-2020), are expected to be resolved by the final quarter.

Also, RAE, the Regulatory Authority for Energy, is soon expected to reach a preliminary decision exempting the FSRU from compulsory access to third parties as well as tariff adjustments every three to four years. This decision, needed for the project’s regulatory framework, is expected by late October or early November, when the European Commission’s approval is anticipated.

The Directorate-General for Competition will also need to give the green light for NSRF funding.

Once these pending issues are all resolved, investors will be able to decide on the project’s development, expected to require two years to construct. Investors envision a launch in 2023.

Yesterday’s anticipated entry of Bulgartransgaz, for a 20 percent stake, highlights the project’s regional prospects. This regional dimension will be highlighted even further if ongoing Romanian interest is materialized.  Talks that have been going on for some time were disrupted by the pandemic.

For the time being, Greek gas utility DEPA, Gaslog and Bulgartransgaz each have 20 percent stakes, while the Copelouzos group holds a 40 percent share. The entry into the project of Gastrade, as a fifth partner, remains pending.

Most crucial for the project’s prospects, a market test completed in March showed that the Alexandroupoli FSRU is sustainable. The test prompted a big response from Greek and international gas traders, who placed capacity reservation bids for a total of 2.6 billion cubic meters per year.

US interest for LNG supply via the Alexandroupoli FSRU is strong. Last year, Cheniere sold a big shipment to Greek gas utility DEPA, while a further ten American shipments have been made so far this year.

Ministry awaiting Brussels nod for demand response, TFRM

The energy ministry, anticipating the European Commission’s approval of Greek government proposals for a demand response mechanism and a transitory flexibility remuneration mechanism (TFRM), has decided to sign related ministerial decisions, possibly even today, so that the mechanisms can be immediately implemented once Brussels has given the green light.

Though the two sides have come closer on the mechanisms, it still remains unclear when the European Commission will go ahead with its approval.

Over the past few days, government officials have needed to respond to a series of questions from Brussels, seeking explanations and clarification on details concerning both mechanism plans.

The European Commission’s Directorate-General for Competition is treating both mechanism proposals as one package.

Domestic energy-intensive industries are urgently awaiting the package’s approval in the hope that Greek power grid operator IPTO can stage a demand response auction before July is out.

Under terms agreed to so far, IPTO will be permitted to offer up to 800 MW through demand response auctions, down from 1,030 MW allowed through the preceding plan.

Also, the demand response mechanism will be made accessible to a greater number of companies, including smaller players, through a reduction of a consumption lower limit.

In addition, the demand response mechanism is expected to be valid for a one-year period, not two years, as was requested by EVIKEN, the Association of Industrial Energy Consumers.

The TFRM is expected to be divided into two stages, the first running until the launch of target model markets, scheduled for September 17, under the same terms that applied for a mechanism that expired in March, 2019.

The TFRM’s second stage is seen running from the launch of the target model until a permanent flexibility mechanism is introduced. Its capacity is expected to be drastically reduced to 750 MW from 4,500 MW. Remuneration levels are also expected to drop.

 

Ministry preparing for Brussels demand response, TFRM approvals

Anticipating the European Commission’s approval of government proposals for a demand response mechanism and a transitory flexibility remuneration mechanism (TFRM), the energy ministry is preparing ministerial decisions for immediate signing once Brussels has given the green light.

These decisions will need to be signed by Greek officials before the two mechanisms can be implemented. The ministry is preparing the ground to have both mechanisms launched as soon as possible.

Brussels and Athens have reached an agreement on the mechanisms, prompting the energy ministry to deliver a finalized version of the demand response plan to the European Commission’s Directorate-General for Competition, ahead of this mechanism’s reintroduction.

The energy ministry expects power grid operator IPTO to be able to stage its first auction for demand-response capacities in July.

According to the agreement reached with Brussels, IPTO will be permitted to auction demand response capacities of up to 800 MW, below the previous limit of 1,030 MW.

Also, a greater number of participants will be eligible as enterprises with capacities of at least 2 MW will be able to take part, down from 3 MW in the previous mechanism. Troubled nickel producer Larco will not be excluded.

In addition, the new mechanism will run until September 30, 2021, not for two years as had been requested by EVIKEN, the Association of Industrial Energy Consumers.

As for the TFRM, it will remain valid until the implementation of a permanent CAT mechanism, which the energy ministry expects to launch in March, 2021.

The TFRM will be divided into two stages, the first running until the launch of target model markets, scheduled for September 17, under the same terms that applied for a mechanism that expired in March, 2019.

The TFRM’s second stage will run from the launch of the target model until a permanent flexibility mechanism is introduced. Its capacity is expected to be drastically reduced to 750 MW from 4,500 MW. Remuneration levels are also expected to drop.

Gov’t examining pandemic’s impact on Prinos oil field

The pandemic’s financial impact on offshore Prinos, Greece’s only producing oil field, south of Kavala, is being closely examined by government officials and specialized advisors, energypress sources have informed.

Conclusions have yet to be reached on the extent of the financial damage to the Prinos oil field, licensed to Energean Oil & Gas, but it appears the government will seek financial support for this venture through the European Commission’s Directorate-General for Competition.

Though it is still considered too early for any decisions, the government has apparently already recognized the damage inflicted on Prinos by the pandemic and subsequent drop in demand and oil prices.

The Greek government has pledged production continuity and job protection for Prinos, as was recently highlighted by deputy energy minister Gerassimos Thomas.

Limits have been exhausted to keep Prinos operating, Energean Oil & Gas officials have pointed out, stressing the cost burden on the company.

 

Mixed RES auctions extension sought, ‘vital for grid stability’

The energy ministry is preparing to seek approval from the European Commission’s Directorate-General for Competition for an extension of at least two years for current RES auction regulations enabling separate auctions for wind and solar unit installations, as well as mixed sessions.

The current format is valid until the end of this year. If the DG-Comp rejects the ministry’s bid, then Greece will only be permitted to stage mixed RES auctions, until 2024.

Officials at the energy ministry and RAE, the Regulatory Authority for Energy, agree that RES auctions for separate technologies have been particularly effective and fruitful and should be given more time.

Energy ministry officials are currently preparing Greece’s application with supporting arguments.

In its extension bid, the ministry will stress that both major-scale wind and solar energy installations are necessary for grid stability.

It will also note that the characteristics of Greece’s landscape offer solar projects a competitive advantage, meaning that staging mixed RES auctions, only, would result in solar-project dominance and little capacity for wind energy tariffs.

Also, the ministry, in its quest, will insist that grid stability requires the development of smaller RES units at various network points and close to consumption centers. This, it will contend, cannot be achieved through mixed auctions, typically dominated by large-scale projects.

 

Suppliers also given lignite access by DG-Comp agreement

The Greek government and European Commission’s Directorate-General for Competition appear close to reaching an agreement that would give the country’s independent electricity suppliers access to state-controlled power utility PPC’s lignite-based production through a transitional mechanism running until 2023, when most of the utility’s lignite units are expected to cease operating.

This prospect comes hot on the heels of an agreement between Athens and Brussels enabling extensions of Greece’s demand response mechanism and transitory flexibility remuneration mechanism (TFRM).

PPC has monopolized Greece’s lignite sources and generation, but an agreement offering lignite access for all would open the door for independent suppliers as well as industry.

For quite some time, the DG-Comp has criticized PPC for not complying with a European Court decision requiring lignite access to third parties.

Settlement of the lignite dispute would leave just one pending energy-sector matter, the target model’s implementation.

Talks between Athens and Brussels on Greece’s energy sector matters have dragged on for at least seven months.

Athens and Brussels also appear to have drawn closer for an agreement on how lignite-based electricity will be priced.

COVID-19 crisis creates new base for energy negotiations

The European Commission’s pause on tough fiscal rules, officially announced yesterday as a result of the coronavirus impact on economies, sets a new negotiating base for a range of unresolved matters, including energy issues.

Though Brussels’ temporary suspension of the Stability and Growth Pact purely concerns budgetary discipline, it is estimated that this decision will temporarily increase the EU’s tolerance of member-state demands on schedules and other issues such as energy.

Even if the DG Comp’s hardliners insist that a loosening of fiscal rules does not change member state obligations to individual funds, it is still estimated that the new landscape offers space for Greek officials to explore new possibilities.

The government, if it is deemed feasible, could seek greater flexibility on proposals that have been flatly rejected until now by the Directorate-General for Competition, including ideas tabled for power utility PPC’s lignite monopoly, which Brussels wants ended.

Brussels has insisted that Greece has not complied with a European Court decision ordering lignite access for third parties. Brussels has directly linked this demand to PPC’s binding target for an electricity market share contraction to less than 50 percent in 2020.

Brussels is not convinced the Greek government will manage to swiftly decarbonize, as the administration has announced. This lack of faith, combined with the government’s recent unilateral decision to abandon NOME auctions and the previous administration’s failed sale effort of lignite units has led to a call, by Brussels, for alternative restructuring measures between now and 2023.

A team of energy ministry officials is scheduled to be in Brussels this Thursday for an official presentation of a recent proposal entailing the participation of electricity suppliers in PPC’s lignite production.

Work still needed for demand response, flexibility approvals

European Commission officials of the Directorate-General for Competition have questioned various aspects of a Greek proposal seeking a two-year extension of the country’s existing demand response mechanism, a key energy-saving tool, as well as a proposal for a transitional mechanism rewarding flexibility.

Despite the hesitation, a series of meetings held Wednesday between the energy and environment ministry’s secretary-general Alexandra Sdoukou and DG Comp officials have been described as constructive.

Brussels officials appear to be gradually overcoming reservations stemming from Greece’s failure to meet previous commitments.

The energy ministry plans to address the DG Comp’s concerns on the demand response and flexibility mechanisms in a response to be forwarded today.

Sdoukou is scheduled to travel to Brussels in about two weeks for further talks.

Industry experts believe Greece’s demand response mechanism proposal stands a solid chance of being approved as it is based on a power grid operator IPTO study determining that a real need exists for the mechanism.

However, any chance of an approval by February 6, the expiry date of the existing demand response mechanism, has been ruled out. The industrial sector will be left without a demand response mechanism for a period of at least two months, it is estimated.

European Commission approval of the flexibility mechanism is seen as a less likely prospect as units offering flexibility to the grid face less of a financial strain and, moreover, flexibility will soon be rewarded within the framework of the target model.

Negotiations on PPC lignite monopoly at crucial stage

Energy ministry officials and European Commission technocrats from the Directorate-General for Competition are negotiating for an agreement on a transitional mechanism to limit power utility PPC’s monopoly in lignite-fired electricity generation until its coal generators are gradually withdrawn from Greece’s energy system.

The transitional mechanism would operate until 2023, when the government plans to have withdrawn all of PPC’s existing lignite units, offering third parties access to lower-cost lignite-fired electricity.

In other words, PPC will need to sell lignite-fired electricity. However, the negotiating sides are at odds as to who will be able to buy. The Greek proposal limits the purchasing eligibility of lignite-fired electricity – through a mechanism, or an SPV – to energy-intensive industrial producers. Brussels also wants independent power  suppliers included.

Negotiations began soon after the festive season. The Brussels technocrats may also meet with Greek energy minister Costis Hatzidakis this week, possibly on January 23.

The European Commission technocrats are not yet convinced of the Greek  decarbonization plan’s adequacy. Greek officials are attributing the tough Brussels stance to the previous government’s failed sale effort of lignite units. An attempt is now being made to restore credibility, energy ministry officials noted.

Brussels pressuring for wider access to PPC lignite power

The European Commission’s Directorate-General for Competition has proposed wider participation in a Special Purpose Vehicle plan tabled by the energy ministry that would effectively also take on board independent electricity suppliers, not just energy-intensive industrial enterprises, for purchases of lower-cost lignite-generated electricity produced by power utility PPC.

Energy ministry officials began talks aiming for further electricity market liberalization in Greece in the lead-up to the Christmas break. These are expected to continue following the festive season and end by mid-January.

The energy ministry officials went into the talks having proposed the establishment of an SPV that would exclusively facilitate lignite-generated electricity purchases made by energy-intensive industrial enterprises.

This is seen as a plan that could contribute to the power utility’s market share contraction in the high-voltage category and also support emission cost savings.

Greece’s pledge for a thorough plan promising to fully liberalize the electricity market and break PPC’s ongoing dominance has been under the spotlight during these talks.

Going into the negotiations, Brussels made note of Greece’s non-compliance with a European Court ruling on PPC’s lignite monopoly.

The European Commission has remained relentless in its demand for corrective anti-monopoly measures on lignite, including, according to sources, the establishment of auctions along the lines of the NOME auctions recently abolished by the Greek government.

Brussels insists the SPV would need to be supplied electricity by PPC through auctions. Greek officials have sought to avoid discussing such a prospect given the government’s recent decision to end NOME auctions, arguing these have cost PPC plenty without delivering results in terms of market share contraction at the utility.

A proposal entailing hydropower sourced electricity supply to the SPV, in addition to lignite-generated electricity, has also been tabled at these talks. This would help limit emission costs if suppliers also enter the SPV.

The European Commission may have applauded the government’s recent decision for a swifter decarbonization process, but it has remained adamant on the necessity for third-party access to lignite – until 2023, when all of PPC’s existing lignite units are planned to have been withdrawn – as well as hydropower  if full market liberalization is to be achieved.

 

Ministry officials questioned by DG Comp on electricity market

The European Commission’s Directorate-General for Competition has expressed satisfaction over Greece’s pledge for decarbonization by 2028 as well as a privatization plan for distribution network operator DEDDIE/HEDNO, but the Brussels authority is demanding clarification on both procedures as details of an upcoming draft bill for power utility PPC concerning its planned coal generator withdrawals.

An energy ministry team headed by secretary-general Alexandra Sdoukou was summoned by the DG Comp for a meeting in Brussels yesterday. The DG Comp is looking for a clear picture of Greece’s new-look electricity market, still in the making.

An older case taking state-controlled PPC to European Court over the non-access of third parties to Greece’s lignite sources, monopolized by PPC, remains open following July’s derailing of an effort by PPC to sell lignite-fired power stations.

Brussels remains apprehensive and wants full details on the lignite sector as PPC will continue to control it for nearly a decade, until 2028, when every single coal generator in Greece is expected to have ceased operating, according to the decarbonization plan, announced recently by Prime Minister Kyriakos Mitsotakis.

It is feared that a new aggressive pricing policy expected to be announced by PPC early in 2020 could end up increasing the power utility’s retail electricity market share, reported at 71.77 percent in September.

DG Comp summons ministry officials over PPC dominance

A team of energy ministry officials has been summoned by the DG Comp for a meeting in Brussels this week to be dominated by power utility PPC’s ongoing electricity market dominance as well as the state-controlled corporation’s intended position in the new-look electricity market being shaped as part of the target model.

PPC’s role remains a concern in Brussels following last July’s collapse of a sale effort that had been intended to offer investors lignite-fired power stations belonging to the utility.

Greece’s next Enhanced Surveillance Report is expected late in November.

In Brussels, the energy ministry officials will be looking to ease a PPC retail electricity market share contraction target of 50 percent, included in the country’s third bailout agreement, to 65 percent, seen as feasible.

The DG Comp is expected to remain firm on the original target unless the Greek officials table an offsetting measure of equivalent worth.

Brussels officials also want further information on the forward market, including the duration and technical details of contracts, planned to be launched in February, 2020.

The energy ministry is seeking to convince concerned independent electricity suppliers that the forward market will compensate for a planned termination of NOME auctions.

The DG Comp’s position on the country’s hydropower market is also eagerly anticipated. Early in 2017, Brussels officials had raided the headquarters of PPC and power grid operator IPTO as part of an alleged market-abuse investigation. Findings have yet to be reported.

 

 

DG Comp lists Greek electricity market issues needing action

Greece has been handed a list of pending electricity market issues, old and recent, requiring urgent government action at a meeting between the country’s finance minister Hristos Staikouras and European Commissioner for Competition Margrethe Vestager in Athens just over a week ago, sources informed.

The delay of a market coupling plan for the Greek and Bulgarian electricity markets, as well as uncertainty surrounding Greece’s operating schedule for lignite-fired power stations this coming winter and, by extension, its impact on natural gas-fueled units and the market’s liberalization, are among the urgent matters listed by Vestager.

The Danish politician will continue to head the DG Comp following last May’s European Parliament election.

In February, 2017, DG Comp officials had ambushed the Athens headquarters of power utility PPC and power grid operator IPTO to collect data for a market abuse investigation.

Brussels officials are continuing their probe with further questioning, it is believed. No findings have been released, but these will undoubtedly be published once Brussels deems the time is right.

The DG Comp moves methodically when dealing with such matters. In France, for example, the authority last week ordered Paris to open up the country’s hydropower production to competition after launching an investigation into French energy utility EDF’s market dominance back in 2015.

 

New government indicates swift, radical measures for PPC

The newly elected center-right New Democracy government plans to take swift and radical action that will aim to remedy the financially pressured power utility PPC and ensure its sustainability and prospects, it became apparent following a meeting yesterday between Prime Minister-elect Kyriakos Mitsotakis and his energy minister Costis Hatzidakis.

The meeting, held to discuss matters at PPC, was Mitsotakis’ first with any of his cabinet members at his Prime Minister’s office, which highlights the emphasis he intends to place on the troubled power utility.

The rescue plan for PPC will benefit consumers as well as workers and offer new potential for the company, Hatzidakis, the new energy minister, stressed at the ministry’s handover ceremony.

The ND government will need to update the PPC rescue plan it had shaped as the main opposition party as the power utility’s condition appears to have deteriorated further in recent times.

An attempt to lure a strategic investor to PPC can only begin as a second stage   once the utility’s financial ambiguities and weaknesses have been improved.

PPC’s situation is complicated and does not only concern the government. The European Commission and its Directorate-General for Competition are also involved, while the privatization fund holds the power to appoint its administration.

Early measures to be taken by the new government will need to focus on improving the power utility’s ability to function.

 

EU’s new CAT rules launched, no sign of aid for Ptolemaida V

A new European Commission regulation concerning CATs came into effect a few days ago, on July 4, without any sign of support for the main power utility PPC’s prospective Ptolemaida V power station, now being developed but in danger of an unsustainable future.

The outgoing Syriza government’s energy ministry recently ratified a related bill believing this could ensure CAT eligibility for Ptolemaida V. But Brussels did not endorse the Greek CAT plan by the crucial July 4 date, and even more importantly, has not delivered any comfort letter that could be seen as notification for eventual approval.

According to the European Commission’s clean energy package, EU support mechanism subsidies are reserved for units whose CO2 emissions do not exceed 550 grams per KWh. Units beginning their commercial operations any time after the July 4 date and which exceed this upper limit are not entitled to CAT mechanism remuneration, according to the EU regulation.

In a recent letter to Margrethe Vestager, the European Commissioner for Competition, PPC’s chief executive Manolis Panagiotakis stressed that CAT eligibility is crucial for the sustainability of Ptolemaida V, a 1.4 billion-euro investment. Otherwise, PPC would face catastrophic consequences with a knock-on effect for the Greek energy market and national economy, given the role and size of the corporation, he added.

 

‘No chance’ of Brussels approving CAT plan by July 4

Greece’s CAT remuneration mechanism proposal stands no chance of being granted European Commission approval by July 4, when new European regulations on the matter come into effect, nor should the country expect any comfort letter by this date on the proposal’s near-term prospects, well-informed sources have told energypress.

Speaking yesterday, power utility PPC’s chief executive Manolis Panagiotakis stressed this would be a crucial week for Greece’s CAT prospects at the European Commission’s Directorate-General for Competition.

However, there has been no indication of any extraordinary meeting this week between energy ministry and Brussels officials, the sources informed.

In a letter to Margrethe Vestager, the European Commissioner for Competition, the PPC boss has stressed that the sustainability of PPC’s Ptolemaida V power station, a 1.4 billion-euro investment now being developed and expected to be launched in 2022, will depend on CAT eligibility.

Panagiotakis yesterday expressed serious doubts as to whether a recent legislative revision endorsing Greece’s CAT plan in Parliament would suffice without EU approval.

 

Relaunched PPC lignite sale planned for completion May 5-8

The main power utility PPC’s follow-up sale attempt offering lignite units, planned to move ahead swiftly with the aim of producing a preferred bidder between May 5 and 8, ahead of European Parliament and local elections, is being relaunched today with investor-friendly terms intact following the initial sale’s failure to excite candidates.

Besides three bidding teams that took part in the first sale attempt, the relaunched sale is expected to include new entries.

PPC’s chief executive Manolis Panagiotakis has returned from a brief trip to China having secured the participation of two Chinese entries, China Energy and CMEC, while two more firms, Russian and American, have also decided to bid for the PPC units, according to the PPC boss.

Last-minute revisions were needed following intervention by the European Commission’s Directorate-General for Competition. Panagiotakis is scheduled to visit Brussels next week for further talks.

According to the revised terms, PPC holds the right to commission a new evaluation of the assets included in the disinvestment, a bailout requirement.

The previous evaluation, projecting an IRR figure of 10.7% and lignite costs at 28.5 euros per ton, was not to blame for the initial sale effort’s failure, the PPC chief has insisted.

Extremely unfavorable market conditions at the time of the sale, including investor insecurity over CO2 emission right costs, as well as serious pending issues such as the need for an improved lignite supply agreement with the operator of the Ahlada mine feeding the Meliti power station, one of the units up for sale, were key reasons behind the failure, Panagiotakis has supported.

A voluntary exit plan for employee reductions at units included in the sale package, Brussels pre-notification for CAT remuneration eligibility of units, and the result of ongoing negotiations with the Ahlada mine’s operator all offer improved potential for a successful sale procedure, the PPC boss has highlighted.

Interested bidders will need to express interest by the end of next week. The re-registration procedure for bidders who took part in the initial sale attempt will be limited to an official statement noting that no changes have been made.

Consultation for the sale and purchase agreement (SPA) will be held over a period of 20 days to one month. Its finalized terms will be announced a week later. Contenders will then have one week to submit their binding offers before a preferred bidder is declared between May 5 and 8. An extraordinary PPC shareholders’ meeting and a parliamentary session will follow to approve the transfer of units to new owners.

 

 

 

Swift procedure planned for renewed PPC lignite sale effort

The revised framework for a follow-up sale attempt of main power utility PPC lignite units, included in an energy ministry draft bill to be submitted to parliament today, is expected to be driven by a fast-moving schedule aiming for the procedure’s completion by early May.

Sources have not ruled out a relaunch of the bailout-required sale midway through next week, offers ahead of Orthodox Easter (April 28), and an endorsement of the result at a PPC shareholders’ meeting on May 8.

Besides the procedure’s short time span, which could end up subduing investor offers, revised terms agreed to by the energy ministry and the European Commission’s Directorate-General for Competition for the renewed sale attempt include a profit-and-loss sharing arrangement between PPC and investors for two years.

The Megalopoli and Meliti lignite-fired facilities included in the sale package are believed to have been loss-incurring in the lead-up to the sale.

Evaluation procedures have also been revised for the new sale attempt, sources noted.

Ministry, DG Comp talks on PPC sale terms not over yet

Negotiations between the energy ministry and the European Commission’s Directorate-General for Competition for an agreement on the revised terms of the main power utility PPC’s follow-up effort to sell lignite units will continue this week but are not expected to exceed it as a crucial Eurogroup meeting of eurozone finance ministers is scheduled for next Monday, March 11.

PPC’s lignite disinvestment is a pending bailout requirement. It is one of the key commitments for the release, by the country’s lenders, of a one-billion euro tranche.

Throughout the previous week, the talks between the energy ministry and the DG Comp were said to be nearing a deal. The fundamentals of the new sale’s revised terms, to feature improved conditions for investors following the initial effort’s failure, have been set but participation details concerning new entrants still need to be clarified, sources explained.

“The main objective of the two sides is to resolve whatever pending issues remain in a way that will maximize the sale’s chances of success this time around,” one source informed.

PPC is also making a committed effort for a successful follow-up sale. Last week, the utility’s chief executive Manolis Panagiotakis provided the European Commission with a letter listing a series of factors he sees as crucial to the disinvestment’s success.

Panagiotakis drew attention to an EU law limiting investment activity of non-EU investors, which he views as an obstacle for the sale. Russian, Chinese and American players of repute are interested in the PPC sale, according to the PPC boss, currently in Beijing for talks with Chinese firms.

PPC chief informs Brussels of crucial factors in lignite units sale

The main power utility PPC’s chief executive Manolis Panagiotakis has provided the European Commission with a series of a factors he sees as crucial to the success of the utility’s follow-up sale attempt of lignite units following a failed initial effort.

EU law limiting investment activity of non-EU investors is indirectly yet quite clearly presented as an obstacle that should not restrict the PPC sale, the utility’s chief official pointed out in his letter, forwarded to Brussels competition and energy authorities.

According to Panagiotakis, Russian, Chinese and American players of repute have obtained the sale’s necessary data and are considering participating in the sale. The relaunch of the sale, a bailout requirement, is expected to feature improved terms for investors.

The PPC boss also lists CAT remuneration eligibility for the lignite-fired power stations included in the sale package as pivotal.

Staff reductions at the Megalopoli and Meliti power stations, both believed to be loss-incurring, are also crucial for the sale, according to the PPC chief. A voluntary exit plan offered by PPC is currently in progress and leading to payroll cost reductions, he informed. Savings at the Megalopoli plant are expected to reach approximately 25 million euros a year, Panagiotakis noted in his letter.

An existing lignite supply agreement between PPC and the license holder of Ahlada, a mine feeding PPC’s nearby Meliti lignite-fired power station in northern Greece, remains a problem as it does not secure price and quantity stability, the utility boss also pointed out, adding that legal pressure is being applied on the license holder.

The lack of a clear-cut national energy plan, or, more specifically, the ambiguity surrounding the future of the country’s lignite-fired power stations, is another issue that troubled investors in the previous sale effort, Panagiotakis noted.

Greek energy planning studies indicate the need for lignite-related output in the medium term, but at levels clearly below current levels, the PPC boss supported.

 

 

PPC share price up on news of nearing lignite unit sale terms

A sharp 10.22 percent increase of the main power utility PPC’s share price yesterday, which lifted the share to 1.51 euros, over the 1.50-euro level for the first time since September, 2018, has been attributed to abounding reports of a nearing deal between the energy ministry and the European Commission’s Directorate-General for Competition on the new and more investor-friendly terms to apply for the power utility’s follow-up sale of lignite units. A relaunch is needed as the first sale attempt failed to excite investors.

Besides the reports of a PPC lignite units sale deal in the making between Athens and Brussels, the deescalation of CO2 emission right costs over the past few days, to levels below 19 euros per ton, well under the levels of more than 25 euros at the end of January, has also been cited as a key factor behind the rise in value of PPC’s share.

Certain pundits contend that more could be at play than the two aforementioned factors. An energy ministry approval of the state-controlled power utility’s request for a reduction of its 15 percent discount offered to consumers paying their electricity bills on time, which would boost PPC’s revenues, has been cited as another possible factor behind the higher share price.

Minister, DG Comp close to deal on new PPC lignite terms

The energy ministry and the European Commission’s Directorate-General for Competition appear to be just days away from  finalizing terms of the main power utility PPC’s new sale of lignite units, to feature improved conditions for investors, following the initial effort’s failure.

A profit-and-loss sharing mechanism, which had been requested by a bidding team comprised of Seven Energy and Gek Terna, will most likely be included in the disinvestment’s revised sales and purchase agreement and given a two-year duration.

It is believed the matter was discussed by energy minister Giorgos Stathakis in a high-level teleconference early yesterday with Margrethe Vestager, the European Commissioner for Competition, which highlights the energy ministry’s urgency for a finalized PPC sale plan ahead of an imminent Eurogroup meeting of eurozone finance ministers, scheduled for March 11.

A follow-up session between the two officials would have taken place in the evening had the energy minister not rushed off for Crete on an emergency visit following extensive weather-related damages on the island.

PPC’s lignite disinvestment is a pending bailout requirement. It is one of the key commitments if the country’s lenders are to release a one-billion euro tranche for Greece.

The Directorate-General for Competition has yet to present a position on whether the PPC lignite units up for sale will be eligible for CAT remuneration.

 

PPC units sale to be relaunched with profit-loss sharing system

The main power utility PPC’s recently failed bailout-required sale of lignite units will be relaunched rather than extended to enable entries of new candidates, while a temporary profit-and-loss sharing mechanism concerning the buyers and seller will be introduced.

Ongoing negotiations between the energy ministry and the European Commission’s Directorate-General for Competition for the sale’s new terms and conditions are now well in progress.

The profit-and-loss sharing mechanism had been requested by some of the prospective buyers who emerged for the sale’s initial effort but its finalized version was rejected by Brussels after a series of revisions were made. This mechanism’s duration and details, such as limits, still remain unclear.

CAT remuneration eligibility for the lignite units included in PPC’s sale package is another crucial factor for the effort’s outcome. Brussels has yet to offer its approval for CAT eligibility.

The energy ministry is striving for a finalized sale plan ahead of an imminent Eurogroup meeting of eurozone finance ministers, scheduled for March 11.

 

Ministry, PPC, fearing changes, want fast lignite sale relaunch

The energy ministry and state-controlled PPC are keen to relaunch the power utility’s failed bailout-required disinvestment of lignite units as soon as possible hoping this swiftness will prevent demands for major changes to the overall offering, the worst fear being the inclusion of hydropower units into an upgraded sale package.

The energy ministry is expected to forward, early today, an update to the European Commission’s Directorate-General for Competition informing of the lignite unit sale package’s failure to produce a result last week, when the deadline for binding bids expired. Brussels should offer its initial response just as swiftly, possibly within the day, it is anticipated. Decisions are not expected at this stage. Instead, Brussels, as a first step, will seek to identify the causes of the sale’s debacle.

The DG Comp terms for PPC’s sale of lignite units, ratified as law, stipulate that the scope of action is currently restricted to lignite, the aim being to reduce imbalances between PPC and its competitors caused by the power utility’s exclusive access to the country’s lignite resources, which it utilizes for electricity production. Hydropower units are not mentioned in the existing sale terms. This explains the eagerness of PPC and the energy ministry to push ahead with a renewed sale attempt.

PPC has declared it will be ready for a sale relaunch by May. Earlier reports claiming fast-track procedures would lead to a March relaunch have remained unconfirmed.

 

Brussels questions PPC over market manipulation suspicions

The main power utility PPC, suspected by the European Commission’s Directorate-General for Competition of abusing its dominant position and manipulating Greece’s energy market through its hydropower units, has been asked to provide thorough responses to a list of questions forwarded by Brussels, investigating the utility’s practices.

The DG-Comp, which has delivered an initial report, began investigating the Greek power utility two years ago after invading its headquarters in Athens, as well as those of the power grid operator IPTO in February, 2017, for information concerning the probe. Brussels officials already possessed some PPC-related information prior to their walk-in and also accumulated further details following the invasion.

The probe has been an underlying threat for PPC ever since the DG-Comp invasion. The effort’s initial report has emerged at a bad time for the power utility, hot on the heels of its failed attempt to sell lignite units, a bailout requirement.

Speculation has already begun as to what the follow-up demands on PPC could be. The energy ministry, doing its utmost to keep intact as much of the state-controlled power utility’s corporate make-up as possible, fears Brussels may start applying pressure for the inclusion of PPC’s hydropower plants into an upgraded sale package.

The set of questions forwarded by the DG-Comp, a procedure required once initial reports have been completed, could represent the first step in a process leading to EU law infringement charges against PPC and Greece.

Though not confirmed, the data collected by the Brussels officials from the PPC and IPTO Athens offices is believed to include details suggesting wholesale price manipulation by the power utility through overstated capacities concerning its hydropower units, as well as overstated unit capacities of other PPC units not actually available at the time, the objective being to sideline facilities operated by rival electricity producers.

On a recent visit to Greece, as part of a post-bailout review, lender representatives, hinting at what the DG-Comp had in store, adamantly questioned whether market- abuse restrictive measures have been enforced.

 

 

 

 

 

Government, PPC, Brussels examining lignite sale options if effort fails

The main power utility PPC’s ongoing effort to sell its Megalopoli and Meliti power stations as part of a bailout-required disinvestment of lignite units seems headed for failure, as suggested by the lack of interest of investors in a teleconference staged by the utility last Friday.

Possible buyers either did not take part or emerged expressing disappointment following the session, held just days ahead of this week’s extended February 6 deadline for binding bids.

Only a further deadline extension, seen as highly unlikely, could save or delay the sale effort from a seemingly inevitable debacle.

The government, state-controlled PPC and the European Commission are believed to be working on alternatives given the subdued mood of participants.

In Athens, officials are making an effort to avoid any undesirable developments such as a new call from Brussels for the inclusion of hydropower units into the sale.

Government officials are also seeking to gain as much time as possible in the hope that the forthcoming European Parliamentary elections, to be held May 23-26, will intervene.

PPC’s sale of lignite units was agreed to with the European Commission following a European Court decision setting measures aimed at ending the power utility’s exclusive access to the country’s lignite deposits.

The government is clearly banking on the presumption that it will not be held accountable for a disinterest or obstruction of the PPC disinvestment package, should the current procedure fail. In this case, new talks for new plans will be needed.

Not to be neglected, the European Commission’s Directorate-General for Competition is currently conducting a study examining Greece’s utilization of hydropower reserves and units. DG Comp officials invaded PPC and power grid operator IPTO offices in Athens over a year ago.

 

Energy ministry, DG Comp discussing new incentives for PPC units sale

Energy ministry officials and the European Commission’s Directorate-General for Competition are negotiating a new incentive plan for investors considering the main power utility PPC’s sale of its Meliti and Megalopoli power stations, part of a bailout-required disinvestment of lignite units, energypress sources have informed.

The two sides are distancing themselves from a previous Greek proposal offering prospective buyers a profit-and-loss sharing arrangement for the units and focusing on a new incentive model, the sources added.

The Meliti and Megalopoli power stations are loss-incurring, possible buyers have determined through due diligence.

Officials closely monitoring the negotiations informed the new model’s objective is to restrict expenses and increase revenues.

It is believed negotiations could conclude tomorrow, if all goes well, otherwise talks will continue into next week.

PPC is scheduled to stage a board meeting on December 20 to endorse the corporate group’s nine-month results and the sale and purchase agreement (SPA) terms, including incentives.

Binding offers by investors for the Meliti and Megalopoli units are scheduled to be submitted on January 7. If improved bids are requested, these will need to be submitted on January 10. Offers are planned to be appraised by PPC’s board a day later and, on January 15, the energy ministry will inform the European Commission’s Directorate-General for Competition on the disinvestment procedure’s results.

This is the official schedule. It remains to be seen if the plan will be adhered to. All will depend on whether investors will embrace the incentives now being discussed.