Privatization fund names 2nd round qualifiers for tenders

HRADF pre-qualifies interested parties for the next phase of the tenders of Alexandroupolis and Kavala ports, the UGS “South Kavala” and the lease of smelting plant, mines and relevant mining rights owned by the Hellenic Republic

The Board of Directors of the Hellenic Republic Asset Development Fund (HRADF) convened today and pre-qualified the interested parties that meet the eligibility criteria to participate in Phase B (Binding Offers Phase) of the following tender processes:

  • Alexandroupolis Port Authority

The HRADF’s BoD decided that four interested parties meet the criteria to participate in Phase B for the acquisition of a majority stake of at least 67% of the “Alexandroupolis Port Authority” (in alphabetical order):

  1. Consortium composed of the companies CAMERON S.A.- GOLDAIR CARGO S.A.- BOLLORE AFRICA LOGISTICS
  2. Consortium INTERNATIONAL PORT INVESTMENTS ALEXANDROUPOLIS, composed of the companies BLACK SUMMIT FINANCIAL GROUP – EUROPORTS-EFA GROUP and GEK TERNA
  3. QUINTANA INFRASTRUCTURE &DEVELOPMENT
  4. THESSALONIKI PORT AUTHORITY S.A.

 “Philippos II” port, operated by Kavala Port Authority

For the tender of the sub-concession of the right to use, maintain, operate and exploit a multi-purpose terminal within “Philippos II” port (currently operated by Kavala Port Authority S.A. – O.L.K. S.A.), the Fund’s BoD pre-qualified the following Interested Parties (in alphabetical order):

  1. Consortium composed of the companies IMERYS GREECE S.A. – GOLDAIR CARGO S.A. – I.M.G. S.A.
  2. Consortium INTERNATIONAL PORT INVESTMENTS KAVALA, composed of the companies BLACK SUMMIT FINANCIAL GROUP – EFA GROUP and GEK TERNA
  3. QUINTANA INFRASTRUCTURE & DEVELOPMENT
  4. THESSALONIKI PORT AUTHORITY S.A. 
  • UGS “South Kavala”

The Fund’s BoD pre-qualified two interested parties to participate in Phase B (Binding Offers Phase) of the tender for the concession of the use, development and operation of an underground natural gas storage facility (UGS) in the almost depleted natural gas field of “South Kavala”.

The pre-qualified interested parties are (in alphabetical order):

  1. DESFA-GEK TERNA
  2. ENERGEAN OIL & G.A.S. 
  • Smelting plant, mines and relevant mining rights owned by the Hellenic Republic

For the lease of the Larymna smelting plant, the Larymna and Loutsi mines and relevant mining rights and other assets owned by the Hellenic Republic and currently leased to “LARCO General Metallurgical & Mining Company S.A.” (LARCO), in Phase B of the tender will participate the following interested parties (in alphabetical order):

  1. COMMODITY & MINING INSIGHT IRELAND LIMITED
  2. GEK TERNA S.A. – AD HOLDINGS AG
  3. MYTILINEOS S.A.
  4. SOLWAY INVESTMENT GROUP LIMITED
  5. THARISA PLC
  6. TRAFIGURA GROUP Pte Ltd.

Following the signing of the relevant confidentiality agreement, the pre-qualified investment schemes for each tender will receive the documents of phase B’ (submission of Binding Offers) and will grant access to the virtual data room (VDR), where data and information related to the assets and the tenders will be uploaded.

Appraisal of initial bids for Larymna assets lease contract by April

Privatization fund TAIPED and a supporting body are expected to complete, by early April, their appraisal of non-binding expressions of interest submitted to a tender by six investors for the lease of the Larymna smelting plant, Larymna and Loutsi mines, and relevant mining rights and other assets, all belonging to the Greek State and currently leased to troubled nickel producer Larco.

Expressions of Interest were submitted by the following Interested Parties (in alphabetical order):

  1. COMMODITY & MINING INSIGHT IRELAND LIMITED
  2. GEK TERNA S.A. – AD HOLDINGS AG
  3. MYTILINEOS S.A.
  4. SOLWAY INVESTMENT GROUP LIMITED
  5. THARISA PLC
  6. TRAFIGURA GROUP Pte Ltd

The six bids are currently being examined by the country’s foreign and defense ministries for any possible national security issues, sources closely monitoring the overall procedure have informed.

Once past this stage, the supporting documents accompanying the six non-binding offers will be examined by TAIPED and its supporting body.

Qualifiers making the tender’s second round will be given access to a video data room containing technical and financial data on Larco.

Industrial officials enraged by PPC energy-negotiation demands

Industrial producers are reacting against terms and demands tabled by power utility PPC in ongoing negotiations for new high-voltage tariffs and agreements that take into account new market conditions ushered in by the target model.

Energy-intensive producers, not appeased by PPC’s recent decision to extend its negotiating period by three months – thereby extending the validity of existing agreements with industrial customers until June – claim the power utility is not making any effort to achieve compromise solutions.

The industrial sector is already in crisis, and, furthermore, the recent disruption of operations at steel producer Halyvourgiki and state-controlled nickel producer Larco, leaving PPC with enormous unpaid electricity bills, illustrates the power utility is not adopting government policies for a strategic recovery of the country’s industrial sector, officials at energy-intensive industrial enterprises have complained.

Although industrial energy costs are already too high, PPC is proposing high-voltage tariff increases in the range of 40 to 50 percent, industrial firm officials have noted.

Despite their obvious feelings of discontent, officials at energy-intensive consumers appear willing to keep negotiating with PPC in search of solutions that can enhance the competitiveness of industries.

However, some industrial sub-sectors, such as heavy industry, appear to be far less tolerant. Officials at iron, copper, cement and steel industries believe their proposals are not being considered at PPC.

They want balancing cost and take-or-pay clauses removed from any new agreements. Heavy industry cannot assume such risks and, at the same time, remain productive and competitive, officials stressed.

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.

Ailing Larco one of new energy minister’s tougher tasks

Newly appointed energy minister Costis Hatzidakis will need to take on the tough task of resolving matters at Larco, the troubled state-controlled nickel producer currently ranked as the power utility PPC’s biggest debtor.

The country’s recently elected conservative New Democracy government is well aware of the magnitude of the issues plaguing Larco – stuck in a loss-incurring rut and owing an increasing amount of unpaid receivables to PPC – and appears most likely to tackle the matter further down the road.

Even so, the state-run producer’s new administration could be announced within the next few days.

“The choice of officials to be seated on Larco’s electric chairs will signal the government’s determination to also tackle this problem in the state utilities sector,” one legal official noted.

The financial condition at the nickel producer appears incurable  despite efforts made by the country’s previous Syriza administration.

Larco has not issued a balance sheet in four years. The producer has also been ordered to return state aid worth 135.8 million euros, according to a European Court verdict.

Its debt to PPC for electricity supply now exceeds 310 million euros. Larco recently defaulted on a installment-based payback agreement with the power utility. This has increased the likelihood of a power supply cut to the producer.

The producer’s acute condition has virtually eliminated any chance of a privatization procedure, making compulsory liquidation the most probable outcome.

Larco stops PPC payments, power cut threat reemerges

Power utility PPC appears set to cut its electricity supply to troubled Larco as the state-controlled nickel producer, PPC’s biggest debtor, has stopped making payments to the utility for quite some time now, breaching terms agreed to in February as a condition for sustained power supply.

The terms imposed on Larco by PPC had been approved by the nickel producer’s board at a meeting just four months ago.

PPC, also state-controlled, is expected to take action within the next few days that would result in a power cut for Larco if the producer stays put, power utility officials have indicated.

Though PPC would need to notify power grid operator IPTO, the supply cut could be implemented in a day, according to the agreement reached between PPC and Larco in February.

Other terms listed in the PPC-Larco agreement include a commitment for monthly cash payments of 2.5 million euros; Larco’s retreat from demand response mechanism (interruptability) rights; monthly supply of 24,000 tons of lignite from the Kozani area in northern Greece; as well as credit guarantees should Larco exceed specific consumption levels.

Larco’s debt to PPC was registered as having reached 309.8 million euros last December.

 

PPC terms for Larco to guide new tariff talks with other industrial producers

Two basic terms included in the main power utility PPC’s power supply agreement with troubled nickel producer Larco promise to guide new tariff negotiations between the power utility and other industrial producers, beginning next week.

Larco, for one of these two terms, has been offered a fixed high-voltage 2 tariff and, furthermore, a volume-based discount of 18 percent for consumption of up to 75 GWh per month, or 900 GWh annually. Fixed high-voltage 2 tariffs (YT2) are reserved for a small number of industrial enterprises.

PPC’s agreement with the ailing nickel producer offers temporary protection to the power utility against any new credit misadventures by Larco, owing over 300 million euros to PPC. Both companies are state-controlled.

PPC’s main concern is to ensure Larco’s ability to cover all its electricity consumption costs from now on, and, looking ahead, reduce its existing debt amount owed to PPC if market conditions, or nickel price levels, allow.

Demands faced by Larco, in its agreement with PPC, include the need to drastically reduce output, cover – on time – the full cost of electricity consumed on a monthly basis, provide letters of guarantee, and also supply PPC 24,000 tons of lignite extracted from its mines in Kozani, northern Greece, to cover power utility fuel needs at its Kardia and Amynteo power plants.

PPC-Larco agreement offers 24% discount, conditions strict

Troubled nickel producer Larco’s new power supply agreement with the main power utility PPC, approved yesterday by the utility’s board, offers the producer a 24 percent discount and sets stric terms and conditions.

Larco will need to drastically reduce its production, cover – on time – the full cost of electricity consumed on a monthly basis, provide letters of guaranteem and also supply PPC 24,000 tons of lignite extracted from its mines in Kozani, northern Greece, to cover power utility fuel needs at its Kardia and Amynteo power plants.

Should Larco fail to fully cover its monthly electricity costs, PPC will have the right to disrupt electricity supply to the producer without any further action or notice, according to the agreement.

Also, Larco will need to reduce its annual energy consumption to a level of 900 GWh, or 75 GWh per month, a level the producer believes it can cover. If this upper limit is exceeded by up to 10 percent, then Larco will need to provide PPC a letter of guarantee worth 600,000 euros if the latter is to continue supplying electricity.

It remains to be seen how firmly the agreement will be enforced. PPC and Larco are both state-controlled enterprises. Larco’s debt to PPC exceeds 300 million euros. Pundits view the agreement as yet another life extension ahead of elections, due later this year.

 

 

PPC in new payback agreement with ailing ELFE, owing €29m

An agreement reached between ELFE, the beleaguered Hellenic Fertilizers and Chemicals company, and the main power utility PPC, specifying payback terms for the former’s PPC-related debt – just disclosed at 28.6 million euros – and setting conditions for continued electricity supply, was approved by the power utility’s board just days ago, chief executive Manolis Panagiotakis has told Greek parliament.

ELFE is owned by the Lavrentis corporate group, headed by Lavrentis Lavrentiadis, a failed businessman who acquired the industrial enterprisse in 2009.

In the lead-up to the debt agreement reached by the two sides, PPC was empowered by a favorable court decision enabling it to disrupt its electricity supply to ELFE, which drew the fertilizer and chemicals producer to the negotiating table with proposals.

PPC initially rejected proposals forwarded by the Lavrentiadis team before its counter-proposals led to an agreement.

The PPC-ELFE agreement is expected to end an unusual payback arrangement enforced on PPC by a Kavala court in August, 2017. The verdict issued by the court in northern Greece required PPC to keep supplying electricity to ELFE and receive payments through Lipasmata Neas Karvalis (Nea Karvali Fertlizers), one of a number of associated enterprises established by ELFE’s owner.

Meanwhile, PPC is set to sign a new payback agreement with state-controlled nickel producer Larco that promises to keep the loss-incurring company afloat – for the time being, at least. Larco owes PPC over 300 million euros in total.

 

PWC industrial tariffs plan for PPC echoes minister’s rejected proposal

A PWC consulting firm study requested by the country’s privatization fund on main power utility PPC industrial tariffs proposes a two-year extension of a volume-based and punctuality discount, while the prospect of a 10 percent industrial tariff increase remains possible.

This plan echoes a similar-minded proposal presented by the alternate minister of economy and development Stergios Pitsiorlas last November, which was rejected by industrial consumers. Subsequently, it remains unclear if industrial consumers will accept the new PWC-shaped proposal.

Less than a fortnight ago, PPC’s chief executive Manolis Panagiotakis suggested a 10 percent tariff increase would be accompanied by a “small gift”, without elaborating further.

These matters will be presented for approval at a PPC shareholders’ meeting expected to take place late in February.

The terms of a new electricity agreement reached between the troubled state-controlled nickel producer Larco, owing PPC over 300 million euros, and the power utility, also state-controlled, will also be presented for approval at this meeting. Industrial producers will be watching closely.

Larco has accepted a production cutback of approximately 20 percent as a means of lowering its monthly electricity costs. According to sources, Larco has been offered an 18 percent volume-based discount and , as was the case in the past, no discount for punctuality of electricity bill payments. The two sides are expected to sign their agreement by no later than January 31.

In the lead-up to the PPC shareholders’ meeting, the PPC board will need to summon high-voltage industrial electricity consumers to negotiations, during which the power utility will present specific proposals based on the PWC study.

 

PPC, troubled Larco reach deal, ministry to balk closure threat

Troubled nickel producer Larco has accepted terms set by the main power utility PPC including a production cutback of approximately 20 percent as a means of lowering its monthly electricity costs from a current level of 5.5 million euros to 4.1 million euros, regarded as manageable by the industrial producer.

The two sides, both state-controlled, are expected to sign their new electricity agreement within the next few days, no later than January 31. Requiring the approval of shareholders at both companies, the new agreement will enable Larco to continue being a recipient of electricity at favorable industrial tariffs.

Larco, which owes PPC over 300 million euros, has also committed itself to a 4.1 million-euro payment to be covered by customer-related cash inflow.

If the plan to limit Larco’s monthly electricity cost to 4.1 million euros fails as a result of extraordinary cost increases, such as a sharp rise in CO2 emission right costs, then the nickel producer will need to provide letters of guarantee, updated monthly, according to the new PPC-Larco agreement.

On a negative note, Greece, as of yesterday, faces a new state aid challenge that threatens to take the country to the European Court if Larco does not return 135.8 million euros to the state within two months, by late March or early April. The amount is currently unavailable. Greece will need to return this amount to the EU or face hefty fines and financial sanctions.

Continuing to favor a state-controlled version of Larco, the government and energy ministry can be expected to try and buy as much time as possible for the return of the 135.8 million-euro amount and extend the matter to May, at least, with the objective of keeping the debt-laden nickel producer afloat ahead of national elections, due later in the year.

The government wants to avoid any political fallout of a company closure that would lead to 1,200 or so job losses.

 

 

PPC set to issue Halyvourgiki €32m payment order

The main power utility PPC, on the front foot for solutions concerning its major-scale debtors, is preparing to issue a payment order to Halyvourgiki for a debt amount of 32 million euros after having already condemned the steel producer for breaching its agreement with the electricity corporation.

State-controlled PPC has ceased representing Halyvourgiki as an electricity supplier and, just weeks ago, criticized the industrial enterprise for having continued to benefit from lower-cost tariffs reserved for steel producers despite not having produced steel and related products since 2015.

PPC claims the Halyvourgiki company owner, the Aggelopoulos family, has, for years, leased the enterprise’s steel production plant, in Elefsina, west of Athens, to a third party for gas liquefaction purposes.

On another major debt front, PPC is believed to be close to reaching a payback program agreement with ELFE (Hellenic Fertilizers and Chemicals) for a debt amount of around 15 million euros.

In the lead-up, PPC was reinforced by a favorable court decision enabling the power utility to disrupt its electricity supply to ELFE, which drew the fertilizer and chemicals producer to the negotiating table with proposals.

A PPC-ELFE agreement would end an unusual payback method enforced on PPC by a Kavala court in August, 2017. The verdict issued by the court in northern Greece required PPC to keep supplying electricity to troubled ELFE and receive payments through one of a number of associated enterprises established by ELFE’s owner, the Lavrentis corporate group, headed by Lavrentis Lavrentiadis, a failed businessman who acquired ELFE in 2009.

Elsewhere, a debt agreement between PPC and state-controlled nickel producer Larco, a huge problem for the power utility, has yet to be found. A new payback program for a Larco debt amount of approximately 90 million euros accumulated since the most recent – yet ultimately unsuccessful – payback program established between the two sides is pending. Larco now owes PPC over 300 million euros in total.

Larco recently agreed to cut output by 20 percent. PPC holds an 11.45 percent stake in Larco, TAIPED, the state privatization fund, controls 55.19 percent, and the National Bank of Greece has a 33.36 percent stake.

Besides clamping down on major debtors, PPC is working on an industrial tariffs study demanded by the country’s privatization fund. It will aim to both maintain discounts and also introduce certain hikes, PPC’s chief executive informed yesterday without elaborating.

PPC attack on Halyvourgiki also a message for troubled Larco

Time is running out for the troubled state-controlled nickel producer Larco to resolve its debt issues with the power utility PPC, which has set a January 1 deadline for its electricity supply to the industrial producer.

Larco now owes PPC over 300 million euros. Officials are scrambling for a solution, still not found until yesterday, to avoid an electricity supply cut, sources informed.

Undoubtedly also serving as an indirect warning for Larco, PPC yesterday lashed out at another beleaguered industrial firm, the steel producer Halyvourgiki, which owes the power utility more than 30 million euros.

In a company announcement yesterday, PPC criticized Halyvourgiki for breaching the terms of their agreement, adding it has already taken appropriate action to compensate for damages and determine if trickery has been at play.

PPC claims Halyvourgiki has continued being supplied electricity at favorable tariffs, reserved for the utility’s industrial consumers, despite not having produced steel and related products since 2015.

PPC to take legal action against Halyvourgiki steel producer over debt

The main power utility PPC plans to take legal action against troubled steel producer Halyvourgiki over unpaid electricity bills totaling more than 30 million euros, the power utility’s chief executive Manolis Panagiotakis informed a general shareholders’ meeting held today.

Panagiotakis stressed PPC is not pulling the plug on the steel producer as it may continue being supplied energy from the grid. He also described a Halyvourgiki offer concerning a partial payment worth half a million euros as unsatisfactory. Halyvourgiki, Greece’s oldest steel producer, is believed to owe PPC a total of 31.4 million euros.

The government had imposed a December 4 deadline on Halyvourgiki but it appears to have failed to produce results.

Besides the plan for legal action, PPC may decide to interrupt its supply to Halyvourgiki either today or tomorrow.  Power grid operator IPTO has been informed of the intention.

On another front, PPC is currently pursuing a debt agreement with another troubled industrial firm, the nickel producer Larco, owing the power utility an amount in excess of 280 million euros.

The two sides have formed a joint committee to facilitate negotiations. PPC is demanding full payments for all new Larco electricity consumption, implementation of a payback program for older amounts and provisions offering solid guarantees. PPC threatens to stop representing Larco as the firm’s electricity supplier if these terms are not met.

 

PPC probed for lower prices to Larco, Aluminium of Greece

A public prosecutor at a Court of First Instance is investigating the main power utility PPC over suspicions that it could be selling electricity at unfair, below-cost prices to its two biggest energy-intensive industrial consumers, the troubled state-controlled nickel producer Larco and Aluminium of Greece, cross-examined information has indicated.

It is believed PPC has been asked to present a series of financial details in a letter forwarded by a financial police authority, which notes, in the letter, that a preliminary investigation is being held based on a Court of First Instance order.

Documents demanded by the financial police authority include financial statements such as balance sheets and financial results from 2013 to 2017, invoices concerning transactions with energy-intensive customers from 2013 to the present, as well as price and supply agreements signed by PPC with Larco and Aluminium of Greece from 2013 to now.

The letter received by PPC does not explain what prompted the investigation, nor does it clarify its purpose, but it is firmly believed PPC’s electricity supply prices offered to Larco and Aluminium of Greece are the concern.

EVIKEN, the Association of Industrial Energy Consumers, recently contended PPC’s electricity supply pricing policy for Larco and Aluminium of Greece and the duration of these agreements are favorable, adding other industrial consumers need to counter demands such as higher CO2 emission right price, end of discount offers, and brief one-year supply agreements.

The association’s claims were made following the launch of the public prosecutor’s investigation.

New industrial power supply deals discussed at PPC meeting

The board at the main power utility PPC discussed the progress of electricity supply agreement renewal negotiations with high-voltage industries, among other matters, at a meeting last week, the power utility has announced.

The talks did not include seven different types of discounts offered to high-voltage industries, based on a decision reached in December, 2015.

PPC has begun negotiations with a selection of high-voltage customers for supply agreements that expired at the end of 2017. Talks with major-scale customers eligible for additional discounts are expected to commence soon, possibly early next month.

The troubled state-controlled general mining and nickel producer Larco, facing a rising debt level and unable to meet a series of payback arrangements offered by PPC, represents one of the most difficult high-voltage customer cases for the power utility. Just days ago, PPC’s chief executive warned that the power utility will interrupt its electricity supply to the industrial enterprise. At present, TAIPED, the state privatization fund, controls 55.2 percent of Larco, the National Bank of Greece holds a further 33.4 percent and PPC 11.4 percent.

Larco is PPC’s biggest debtor, by far, among industrial enterprises. Many other major-scale electricity consumers also owe significant amounts to the power utility. Others are managing to service current electricity bills but have not established payback arrangements with PPC for unpaid electricity bills concerning past consumption.

PPC, facing EC pressure, set to cut power supply to Larco

The main power utility PPC looks set to cut its electricity supply to the troubled state-controlled general mining and nickel producer Larco, whose unpaid electricity bill amount is continuing to rise, energypress sources have informed.

Besides falling further behind on unsettled electricity bills of the past, the industrial enterprise is unable to cover the cost of its current power consumption, which has led to an overall bill of nearly 250 million euros.

The Larco case was emphatically tabled by European Commission officials during the most recent round of bailout negotiations in Athens, sources noted, adding that the Greek government was asked to stage a tender for the industrial firm that would offer its sustainable divisions.

Subsequently, state-controlled PPC appears to have no other choice than to pull the plug on Larco. If the power utility remains tolerant, it risks being scrutinized for protecting shareholder interests and Greece will face the prospect of needing to return state aid worth 135.8 million euros, provided between 2008 and 2011, which has been ruled as illegal by the European Court. PPC holds an 11.4 percent stake in Larco.

The state aid case against Greece has remained pending since 2014, when the European Commission informed Greece of the verdict and requested an immediate return of the amount. The Greek government at the time had reached an agreement with the country’s lenders to break up and sell Larco as a number of units.

This plan did not proceed. The country’s succeeding administration, the Syriza-Anel coalition, still in power, opted to hold on to Larco as a state-controlled enterprise and spoke of plans to restructure the firm, which has not occurred.

Last November, the European Court ruled that the Greek State has not taken action, and, therefore, has not complied with its obligations.

At present, TAIPED, the state privatization fund, controls 55.2 percent of Larco, the National Bank of Greece holds a further 33.4 percent and PPC 11.4 percent.

In the past, Larco’s administration told a related parliamentary committee that it had managed to reduce its nickel production costs to 12,500 dollars per ton from 14,500 dollars per ton. At the time, international prices ranged between 9,000 and 10,000 dollars. The price of nickel has since risen to levels of about 13,250 dollars per ton.

 

 

Larco facing sale, for state aid wipeout, or bankruptcy

Larco, Greece’s state-controlled general mining and nickel producer, will need to either be sold and have state aid claims – estimated at 135 million euros – wiped out, or go bankrupt, it has become apparent to the government following a ruling against Greece at a European court yesterday.

The prospect of selling the troubled industrial producer as a condition for the elimination,  by the European Commission’s Directorate-General for Competition, of state aid obligations, or amounts the Greek State would need to retrieve, is based on a formula applied for Trainose, the Greek railway company. Trainose’s sale to Italy’s FSI (Ferrovie dello Stato Italiane Group) was completed in September.

Greece’s new privatization superfund – to which Larco will be transferred from TAIPED, the current state privatization fund – will also be involved in the decision to be taken on the nickel producer.

Last January, a European court heard a case filed by Larco against the European Commission. The case was prompted by a European Commission demand, in 2014, for the Greek State to reclaim 135 million euros from the industrial firm, as the amount was deemed as constituting illegal state aid. A verdict on this case is expected by the end of the year.

If Larco’s legal challenge proves to be unsuccessful, then the Greek State will need to comply, within reasonable time, with yesterday’s European court decision. If the government opts to take no action, then the European Commission is expected to file an additional case at the European court whose outcome would take immediate effect. In this case, Brussels would impose a daily fine on Greece, to be automatically deducted from structural fund amounts received by the country through the bailout agreement.

The succession of Greek governments has taken no action following the European Commission decision in 2014 requesting the return of state aid. This was decisive in yesterday’s European Court decision against Larco.

A loss-incurring enterprise producing nickel at prices that exceed market price levels by 40 percent, Larco has managed to remain afloat for years as it is supplied electricity by the main power utility PPC, despite being owed over 200 million euros by the industrial firm. At present, Larco is incurring losses of 200,000 euros per day.

The energy ministry, seeking to buy time, has argued Larco’s legal case against the European Commission state aid decision in 2014 remains pending.

 

Big decisions for Larco this fall, Glencore seems reinterested

Swiss-based multinational Glencore, a commodity trading and mining powerhouse with corporate interests around the world, appears to be reexamining the prospect of buying into Larco, Greece’s state-controlled general mining and nickel producer, recent reports have suggested.

Glencore’s alleged reinvigorated interest in Larco, a troubled enterprise, has been primarily attributed to rebounding nickel prices, internationally, and forecasts of their maintainenance at higher levels.

Over just a few weeks, Nickel prices rose sharply from 9,600 dollars per ton, an eight-year low, to 10,300 dollars per ton for immediate delivery and over 10,800 dollars per ton for December futures contracts.

Larco has been placed on Greece’s privatizations list. The company’s shares have been transferred to TAIPED, the state privatization fund. The recent rise in nickel prices may help the troubled Greek nickel company improve its difficult financial position, analysts believe. This prospect has drawn the attention of Glencore.

Offering insight into the multinational’s investment plans, Gllencore CEO Ivan Glasenberg, speaking at a recent industry conference, recently declared that a potential large-scale rise of electric cars and development of energy storage systems will significantly boost demand for minerals, including copper, cobalt, zinc and nickel, in the coming decades.

Almost all car-makers are increasing investment in electric vehicles as governments adopt tighter emissions targets, he added.

Electric vehicles require more copper wiring than standard internal combustion engines. For example, the battery in an electric car contains about 38kg of copper, 11kg of cobalt and 11kg of nickel, according to Glencore. These materials, along with manganese, stand to benefit from more demand for electric cars, Glasenberg said.

Demand is growing for battery-powered vehicles. European sales of alternative-fuel models, which include fully electric cars as well as hybrid vehicles, jumped 36% in the first quarter to 235,438 units, according to the European Automobile Manufacturers’ Association.

Glencore appears to be maneuvering to acquire Larco as a reshaped unit without burdens. If this is to be achieved, the mining and nickel producer would need to be shut down and its assets auctioned off.

A loss-incurring enterprise that stands as the country’s second-biggest electricity consumer, Larco currently owes the main power utility PPC an amount estimated at 210 million euros.

Big decisions will certainly need to be taken on Larco’s future this comng autumn, as was recently pointed out by energy minister Giorgos Stathakis to Greek Parliament’s Production and Trade Committee.

To date, the government has gone no further than to make note of the need for a short-term plan aiming to resolve Larco’s cashflow problem as well as a long-term strategy to bolster the company’s standing in the future. It remains to be seen what all this actually means.

 

 

Amynteo damage ‘absorbable, smaller than initially thought’

The damage caused to main power utility PPC’s Amynteo coal mine, close to Florina, northern Greece, by a landslide on Saturday is severe but manageable, while the development was prompted by the activation of a second tectonic fault not detected by the utility’s technical team, the utility chief Manolis Panagiotakis clarified today.

“We were shocked by the incident but will absorb it,” noted Panagiotakis, who was speaking at an extraordinary shareholders’ meeting staged at Larco, the troubled state-controlled general mining and nickel producer.

The extent of the damage at the Amynteo coal mine would be known in about two weeks and should be smaller than claims made by local media immediately following the incident.

PPC will cover half the cost of the necessary relocation of the nearby village Anargyroi, while contractors involved in the project’s mining activity are already providing emergency needs for locals, according to Panagiotakis.

The cost of the damage caused by the landslide will greatly depend on whether any exisiting mining equipment can be salvaged as well as by PPC’s ability to continue mining at part of the lignite deposit, the utility chief noted.

Panagiotakis explained that a sufficient part of the mine’s lignite deposit was not affected, meaning that the Amynteo telethermal facilities could continued operating next winter.

Prior to the landslide’s devastation, the Amynteo lignite-fired power stations were estimated to have 17,000 hours of life remaining.

Panagiotakis said PPC’s team of 600 employees working at the mine would be transfered to other projects.

As for the Larco meeting, shareholders endorsed a new electricity supply tariff agreement reached with PPC. As was pointed out by Panagiotakis, Larco has continued to struggle covering its electricity bills, but added that the new agreement should help.

Larco, a loss-incurring enterprise that stands as the country’s second-biggest electricity consumer, currently owes PPC an amount estimated at 210 million euros. As part of thew new agreement, Larco will need to cover 37 million euros by late-2019 or early 2020.

PPC has demanded a business plan from Larco, which will be used to design the payback schedule for the remainder of the debt owed by the nickel producer to the utility.

 

Troubled Larco’s delayed tariff discount likely this month

A cash shortage problem at troubled state-controlled general mining and nickel producer Larco has contributed to the delayed implementation of an electricity tariff discount agreement reached with the main power utility PPC in January.

Latest reports have indicated the agreement, a conditional offer expecting punctual payments by Larco to PPC, is likely to be implemented within the current month.

The boards at PPC and Larco have both endorsed the tariff discount agreement but the power utility is still waiting for a pledge from Larco ensuring that the industrial firm will hand over to the utility payments expected from certain major clients. Once this pending issue has been settled, PPC and Larco are expected to sign a finalized agreement actvating the electricity tariff discount offer.

Larco, a loss-incurring enterprise that stands as the country’s second-biggest electricity consumer, currently owes PPC an amount estimated at 210 million euros.

The terms of the provisional agreement reached between Larco and PPC offer the mining and nickel producer include a 21 percent discount for high-voltage electricity.

To be applied retroactively as of January 1, 2016, the agreement will be valid for five years, until December 31, 2020.

Larco has been offered an average tariff level of 37 euros per MWh through the agreement, but the industrial producer will need to remain punctual with its payments to PPC if this rate is to be maintained.

The electricity tariff discount offered to Larco is part of a wider business plan orchestrated by the government with the aim of rescuing the mining and nickel producer and steering it towards sustainability. The plan includes wage cuts estimated to be worth 16 million euros, according to union representatives.

Even so, certain pundits support that the involvement of a private-sector investor appears to the only viable solution for Larco’s survival.

 

 

Larco tariff set for approval, private investment required

The main power utility PPC will hold an extraordinary shareholders meeting today to approve a new electricity supply tariff for the troubled state-controlled general mining and nickel producer Larco, the country’s second-biggest electricity consumer. However, the revision will not release the producer from its loss-incurring situation and the involvement of a private-sector investor appears to the only viable solution for Larco’s survival.

According to announcements made yesterday, Larco’s revised tariff level, following profile-based discounts, will be set at 37 euros per MWh. Factoring in demand response mechanism benefits, the price should fall to around 35 euros per MWh.

This mechanism enables major industrial enterprises to benefit from electricity cost savings in exchange for shifting energy usage to off-peak hours whenever required by the operator.

Though PPC’s revised tariff level promises to reduce the nickel producer’s production costs by 1,500 euro per metric ton of production, it keeps Larco in a loss-incurring position. The cost of nickel is currently priced below 10,000 dollars per per metric ton, while the industrial enterprise’s cost of production exceeds 15,000 dollars per metric ton.

During tariff-level negotiations with PPC, Larco officials presented a specific business plan that also included other cost reductions that would bring the industrial enterprise’s overall production costs to 12,000 dollars per metric ton.

This business plan is intended to draw a private-sector investor who will proceed with required investments that could transform the nickel producer into a sustainable industrial enterprise.

 

Immediate solutions needed at loss-incurring nickel producer Larco

The country’s two biggest energy consumers, restructured Aluminium of Greece, a member of the Mytilineos corporate group since 2005, and Larco, the state-controlled general mining and nickel producer, stand on completely different ground in terms of profit performance.

Spared of financial burdens of the past and now pushing ahead with an aggressive cost-cutting policy, investments and more efficient production management, Aluminium of Greece is already registering record production levels that are expected to generate record profit figures in 2017.

Meanwhile, Larco, unable to rebound as a result of high production costs amid low market prices, continues to incur losses and sink deeper into debt, which is negatively impacting electricity supplier PPC, the main power utility. Larco is having serious problems covering its electricity bills owed to PPC, despite a series of payback program revisions.

In 2013, when nickel prices averaged 15,000 dollars per metric ton, Larco’s turnover figure reached 207 million euros for a loss of 76 million euros. This year, the price of nickel slid to 8,000 dollars per metric ton before slightly rebounding to 11,600 dollars per metric ton.

 

Decision on troubled Larco needed now, TAIPED warns

TAIPED, the State Privatization Fund, has sounded the alarm over an approaching European Commission deadline for a government decision on Larco, the troubled state-controlled general mining and nickel producer.

The European Commission had given the Greek government two weeks to decide on whether to implement an agreement reached in 2014 by the country’s previous Antonis Samaras-led conservative administration and sell the industrial enterprise or table an alternative proposal. This period is set to expire.

TAIPED officials who have kept a close watch on the developments at Larco for years told energypress that, other than the 2014 sale plan, no other proposals exist at present. Any alternative action would need to be examined and endorsed by the European Commission’s Directorate-General (DG) for Competition.

The time required to examine any alternative solution will only put Larco deeper in the red and further weaken the industrial enterprise’s market worth as well as the Greek government’s bargaining power. According to latest estimates provided by sources, the industry is believed to be incurring losses of roughly five million euros per month, while its debt owed to PPC, the main power utility, has reached 200 million euros. Larco’s financial woes have been made worse by the drop in commodity prices.

The 2014 plan involved two choices. One entailed a return – by the Greek government to the European Commission – of 136 million euros, plus interest, of state aid provided to Larco. The Greek government was also offered a second choice to sell Larco through an international tender procedure and avoid paying the aforementioned sum. In this case, the company would also go into liquidation.

This latter plan would entail two separate tenders, staged almost concurrently, one by the Greek state for the company’s production plant in Larymna, in the Fthiotida province, slightly northwest of Athens, and another by Larco for its mines.

On a recent visit to Athens, Gert Koopman, the European Commission’s Deputy Director-General for State Aid, stressed that Greece’s return of the aforementioned sum would not be demanded only if the second plan for Larco, involving the tenders, is carried out.

 

Gov’t opts to not sell Larco, facing illegal state aid claim

The government plans to legally dispute illegal state aid claims made by the European Commission for funds provided in the past to Larco, the troubled state-controlled general mining and nickel producer, and not launch procedures to sell the enterprise, but, instead, present a business plan which the country’s administration believes will ensure the industrial unit’s sustainability. This plan will include an agreement with main power utility PPC for overdue amounts owed by the industry, one of Greece’s largest power consuming facilities.

The Greek side’s latest strategy aiming to counter the various problems at Larco was decided on at an interministerial meeting held yesterday at the finance ministry. Energy minister Panos Skourletis and Larco’s top officials took part in the meeting.

Meanwhile, Larco and the Greek government face a three-week ultimatum issued by the European Commission just days ago for the immediate return of 136 million euros, plus interest, for a total amount of 160 million euros. The amount concerns state aid provided to the industry between 2008 and 2010, which the EU executive body views as illegal.

Larco’s financial woes have been made worse by the drop in commodity prices. The industry is believed to be incurring losses of roughly eight million euros per month.

The mining and nickel producer’s employees have already reacted to the board’s intention to restructure the industry by cutting salaries and jobs.

Larco also needs to reach a new electricity tariff agreement with PPC. The industry owes PPC over 200 million euros, while the amount is increasing at a rate of five million euros per month.