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 By then, PPC’s lignite-fired power stations Kardia III and IV and Megalopoli III will have all been withdrawn, according to the latest schedule announced by energy minister Costis Hatzidakis earlier this week.

 

Gov’t plans 11 decarbonization investments worth €2.5bn

The government plans to facilitate the post-lignite transition of Greece’s west Macedonia and Megalopoli areas by promoting 11 big investments totaling 2.5 billion euros and also making available, through a six-year plan, national and EU support funds in excess of three billion euros.

This plan, already presented to west Macedonia working groups earlier this week, will be discussed today by a government committee before being presented to media by energy minister Costis Hatzidakis.

Besides the 11 major-scale investments, the plan, intended to reshape the production models of both regions, will also feature tax and financing incentives.

For decades, both the west Macedonia and Megolopoli areas have depended on lignite for economic growth.

The new plan will be based on five key pillars – clean energy; industry, small-scale industry, commerce; smart agricultural production; sustainable tourism; technology and education – for growth and utilization of comparative advantages.

Investment plans include the development of solar farms in west Macedonia and Megalopoli with a total capacity of 2.3 GW; a state-of-the-art gas-fueled power station in west Macedonia; as well as the establishment of electromobility industrial parks in both areas.

The government’s decarbonization plan for the two areas is expected to create 5,100 jobs, directly, and a further 6,400, indirectly.

The government expects to deploy national and EU support funds worth 3.2 billion euros for the overall effort over six years, with the majority of this total, 2 billion euros, to be made available over the first three years (2021-2023).

The plan is expected to be forwarded for public consultation in mid-September.

 

PPC broadens next voluntary exit plan, set for September

The board at power utility PPC has decided to broaden its voluntary exit program to include eligible staff from all divisions, currently estimated at between 1,700 and 1,800 employees aged over 55.

However, less than a third of these employees, some 500 in total, are believed to have accumulated pension rights, sources said.

Though this shortfall is likely to discourage employees from taking up the voluntary exit offer, PPC’s chief executive Giorgos Stassis is determined to push ahead with the plan and invite interested parties to lodge their applications between September 1 and 30.

The PPC voluntary exit package offers employees a 20,000-euro bonus payment as an addition to severance pay worth 15,000 euros.

An initial voluntary exit effort already staged by PPC attracted 602 employees from the utility’s Meliti and Megalopoli lignite-fired power stations and a further 123 employees from related subsidiaries, producing annual savings of 48 million euro for the company.

PPC had set an objective to attract some 900 employees from the lignite-fired power stations to its initial voluntary exit plan.

Stassis, PPC’s boss, has promised to soon carry out a targeted recruitment plan for staff with specialized skills, according to Pantelis Karaleftheris, the workers’ representative on the PPC board.

 

Post-lignite plan to Boston Consulting, Grant Thorton

Boston Consulting and Grant Thorton have been awarded contracts by Greece’s privatization fund to prepare a master plan for Greece’s post-lignite era, due at the end of 2020, energypress sources have informed.

The two professional services companies, awarded deals totaling 200,000 euros plus VAT, will need to deliver a draft of their master plan to a coordinating committee heading the task around early autumn, three months after contracts have been signed.

Their finalized version must be completed and delivered six months from now, or roughly at the end of the year.

The master plan will include policies to tackle job losses as a result of Greece’s decarbonization policy, as well as policies for the establishment of new businesses and jobs in Greece’s west Macedonia and Megalopoli areas, both lignite-dependent local economies that will be severely impacted by the decarbonization plan.

Boston Consulting and Grant Thorton will need to analyze all related data, including  demographics and infrastructure-related data, and identify competitive advantages offered by the two aforementioned regions.

Industrial infrastructure, farming, research and innovation, tourism, logistics, energy and the environment, as well as social policies will all be examined for sustainable growth not requiring state support following the post-lignite transition.

Most of power utility PPC’s lignite units are expected to be phased out by the end of 2023.

PPC, seeking key electric car market role, to announce MoUs

Power utility PPC is expected to soon announce two MoUs signed with private-sector companies for collaboration in the nascent electric vehicles market, a domain the utility is looking to dominate in the years ahead.

The power utility’s MoUs, believed to have been signed with Greek companies, concern recharging station installations and a range of electric vehicle services, as foreseen in a PPC business plan presented last December.

According to the plan, PPC intends to install 1,000 recharging stations around Greece over the next two to three years as well as a further 10,000 stations in the medium term.

The company is now assembling a new electric vehicles division in the lead-up to its latest business endeavor.

PPC’s wider plan could even entail collaboration with a specialized partner for production of electric vehicle parts at new plants in west Macedonia and Megalopoli, both lignite-dependent local economies in the country’s north and the Peloponnese, respectively, now being decarbonized.

A related draft bill being prepared by the government will feature incentives for the establishment of new production units at these locations.

Prime Minister Kyriakos Mitsotakis is scheduled to present the government’s ambitious plan for electric vehicle market growth this Friday. The development of a recharging network is crucial for this plan.

PPC ups Megalopoli V output to full capacity of 811 MW

Power utility PPC’s Megalopoli V power station in the Peloponnese has, for the first time,  begun operating at a full-capacity level of 811 MW following five years of production well below full potential, a restriction whose cost the utility has estimated at 200 million euros.

Power grid operator IPTO yesterday gave PPC the green light for full-scale production at Megalopoli V after an extended period of pressure applied by the power utility.

In the lead-up, PPC was forced to operate its Megalopoli V facility at 60 percent of its full capacity, 500 MW, following instructions from IPTO, noting the Peloponnese region’s existing network could not carry a greater amount.

Trial runs at Megalopoli V, a natural gas-fired combined-cycle unit, began in April, 2015 but PPC had never been given permission to boost generation at this power plant by 311 MW to reach full capacity.

Meanwhile, PPC’s Megalopoli III and IV units, both lignite-fired, were either shut or operated well below full capacity as a result of hefty CO2 emission right costs.

A swifter full-scale launch of Megalopoli V would have enabled the power utility to completely switch off the engines at loss-incurring Megalopoli III, a 250-MW unit, PPC has noted.

Electric vehicles bill to include production line incentives

A draft bill being prepared by the government to promote growth for Greece’s embryonic electric vehicle sector will not only include incentives for buyers and users but also producers, energypress has been informed.

Producers establishing production lines for electric vehicle parts, including batteries, transformers and recharging units, will be offered incentives in the form of lower tax rates and reduced social security system contributions for employees, the sources said.

However, eligibility for these incentives will be conditional and require producers to establish their production facilities in either northern Greece’s west Macedonia region or Megalopoli in the Peloponnese, both lignite-dependent local economies headed for decarbonization.

The incentives are expected to include subsidies of between 4,500 and 5,000 euros for purchases of zero or low-emission electric cars, approximately 1,000 euros for electric scooters and 800 euros for electric bicycles.

Government officials plan to submit the draft bill on electric vehicles to Parliament in June.

Besides seeking to promote industrial development in current lignite areas, the master plan will also aim to make the most of early interest expressed by foreign investors.

One of these, Tesla, has, for months now, expressed interest to the Greek government for development of a fast-recharge network at Greece’s highways, a project budgeted at 10 million euros. This project is envisioned as part of a wider plan stretching from Portugal to Spain, France, Italy, Greece and Turkey.

Decarbonization an independent business plan linked to NSRF

The decarbonization master plan for the west Macedonian region in Greece’s north and Megalopoli in the Peloponnese, both lignite dependent local economies, will be an independent business plan linked to the new National Strategic Reference Framework, running from 2021 to 2027, exclusively funded and based on four main axes, sources have informed energypress.

A draft of the master plan has already been prepared and endorsed by the development ministry, while a competitive procedure will be staged for the shaping of the finalized plan.

A special advisory committee will present its opinion to the privatization fund, involved in the process, for the hiring of a consultant and development of the decarbonization master plan.

Its four main axes will be comprised of industry, the primary sector, tourism-culture and differentiation of lignite area energy identities, the sources said.

Though specific plans have yet to be set out as to how the country’s two main lignite zones will be restored, a tendency towards industrial development is already emerging.

The decarbonization project’s progress to date, procedural matters and its four axes will be discussed by the coordinating committee of the fair development plan at its next meeting, scheduled for this Friday.

Key power line upgrade in west delayed by church resistance

One of power grid operator IPTO’s most important upgrade projects, a 400-KV power line serving as a western corridor for electricity transmission to and from the Peloponnese, still remains unfinished despite being scheduled for delivery and electrification in February.

Resistance by a major monastery located close to the route of the project, budgeted at 105 million euros, has prevented its completion.

Two to three pylons still need to be installed for the project, linking Megalopoli, central Peloponnese, with Patras, and from there, Etoloakarnania, further northwest, via a Rio-Antirio water crossing.

Church officials representing the Mega Spilaio monastery, close to Kalavryta, slightly east of Patras, have strongly objected the installation of these pylons. Meetings by energy authorities with church officials have so far failed to break this resistance.

Completion of the project would enable power utility PPC’s Megalopoli V gas-fueled power station to operate at full capacity. At present, the 800-MW facility is underperforming at a capacity level of 500 MW.

Besides impacting PPC’s finances and preventing the utility from capitalizing on lower fuel costs, this project delay is also hindering PPC’s withdrawal plan for its Amynteo lignite-fired power station in northern Greece.

Once completed, the project would also enable further RES development in the wider region.

New NSRF funds for decarbanization effort to reach at least €600m

EU funds to be made available to Greece through the new National Strategic Reference Framework (2021-2027) for the country’s decarbonization effort are estimated to reach at least 600 million euros, sources have informed.

The NSRF amount is expected to be double the 300 million euros to be received by Greece through the Just Transition Fund, also for decarbonization projects.

The national contribution, expected to range between 10 and 20 percent, or roughly 150 million euros, will take the overall decarbonization amount to about one or 1.1 billion euros.

These funds will be used to fund a smooth post-lignite transition for Greece’s west Macedonia region in the country’s north and Megalopoli in the Peloponnese, both lignite-dependent local economies.

Two or three major foreign investments are expected to also draw private capital.

A change of mentality will be needed in both regions for sufficient post-lignite project development enabling full absorption of the support funds.

NSRF absorption in the entire west Macedonia region has been limited to just 200 million euros over the past few years.

 

Lignite end’s socioeconomic hurdles stressed in EC report

Greece will face socioeconomic challenges as a result of the government’s decision to gradually shut down the country’s lignite units in the northern region of west Macedonia and Megolopoli, in the Peloponnese, for a climate-neutral economy by 2050, the European Commission has noted in a report delivered as an addition to its post-bailout report on the Greek economy.

Some 27,000 jobs could be lost in both areas, according to the report, delivered as an additional chapter intended to serve as basis for talks between Brussels and Athens on Greece’s transition towards a lignite-free era.

The two sides are already negotiating funding details from the Just Transition Fund, expected to financially support a new growth plan for west Macedonia and Megolopoli between 2021 and 2027.

Also, the Greek government has assembled an interministerial committee tasked with shaping a post-lignite plan for the west Macedonia and Megolopoli areas, both lignite-dependent local economies. The committee will deliver a plan by June, according to the energy ministry.

In its latest report, Brussels highlights the significance of lignite for the local economy and community of west Macedonia, whose population numbers 280,000, especially Kozani, representing more than half this figure with a population of 150,000.

“The [country’s] biggest mines and most lignite-fired power stations are located in this area. Lignite-based electricity generation is its most significant economic sector, representing over one-third of the area’s GDP,” the report notes.

An estimated 5,500 jobs at the lignite mines and power stations are directly threatened, while a further 20,000 jobs are indirectly threatened, the report’s authors added.

The west Macedonia region is already burdened by one of the highest unemployment rates (31% according to 2016 data) of all the EU’s lignite areas, the report notes. The region’s GDP per capita fell from 86 percent to 59 percent of the EU average between 2009 and 2017, it adds.

Over 100,000 residents are linked to telethermal systems for lignite power station-based domestic heating, the report also highlights. The replacement of lignite units in the area is one of the challenges that must be dealth with, it adds.

As for Megalopoli, the lignite sector is by far the most significant economic activity in this Peloponnesian region of 6,000 residents, the report notes. Some 1,600 jobs are at risk of being lost here, it adds, which takes the overall tally of jobs on the line, including in west Macedonia, to just over 27,000.

 

 

Coal electricity not competitive, Megalopoli facility workers told

Lignite-fired power stations are becoming a far less competitive electricity generation option by the day as a result of rising operating costs, workers at the power utility PPC’s Megalopoli III and IV units have been told by the energy ministry’s leadership.

Megalopoli, a lignite-dependent local economy in the Peloponnese, will receive some 25 million euros from a lignite withdrawal compensation fund, deputy energy minister Gerassimos Thomas told concerned Megalopoli workers.

The government has announced a plan to withdraw all existing lignite units over the next three years.

The operating time of lignite units is currently being kept to a minimum, the only justifiable reason to keep them running being the continued provision of telethermal needs, the workers were told.

Lignite-produced electricity, including CO2 emission costs, has steadily ranged between 80 and 90 euros per MWh, compared to 55-60 euros per MWh for gas-fueled power stations and a System Marginal Price (SMP), or wholesale price, of 59-60 euros per MWh, according to December figures, deputy energy minister Gerassimos Thomas told PPC’s Megalopoli workers.

In the renewable energy sector, latest auctions staged by RAE, the Regulatory Authority for Energy, produced wind energy prices from 55.8 to 58.3 euros per MWh and solar energy prices at 53.8 euros per MWh.

The Megalopoli workers were not convinced by the ministry’s arguments and, citing desulphurization investments worth 140 million euros at the power station in recent years, remained adamant on the sustainability of the Megalopoli III and IV lignite-fired units.

A special steering committee assembled to coordinate a fair national transition plan towards the post-lignite era for Megalopoli and west Macedonia, Greece’s other lignite-dependent area in the country’s north, is scheduled to hold its inaugural session later this week.

 

 

Gov’t Council being assembled for support to lignite-dependent areas

The country’s administration is assembling a government council to be tasked with preparing a Just Transition Plan for Greece’s lignite-dependent areas needing support to offset the effects of the government’s planned withdrawal of all coal generators by 2028, including all existing units by 2023.

A Council of Ministers Act enabling the establishment and operation of the government council, to be headed by energy minister Costis Hatzidakis, has just been approved.

The west Macedonia region in Greece’s north as well as the Megalopoli area in the Peloponnese, both lignite-dependent local economies, will need support while adjusting to the post-lignite era.

The government council to work on the Just Transition Plan will be comprised of top officials from a number of ministries, which, besides the environment and energy ministry, include the finance, interior, development and investments, as well as agricultural development and food ministries.

“Ending the economy’s dependence on polluting lignite fuel is a key energy policy priority,” noted energy minister Costis Hatzidakis. “However, the withdrawal of all lignite units by 2028 must be done in a coordinated and responsible manner. The government’s top priority is to make the transition to the post-lignite era a fair one for western Macedonia and Megalopoli with claims of all necessary funds from Brussels,” he added.

A comprehensive, multidimensional and forward-looking plan will be presented by the new government council in mid-2020, the minister said.

Besides national and private funding, Greece will also seek EU support funds, including from the Just Transition Fund.

 

 

Ministerial intervention enables restart at PPC’s Megalopoli IV

Power utility PPC’s Megalopoli IV coal generator in the Peloponnese has been given permission to recommence production following a revision of the unit’s environmental terms and license extension.

The energy ministry intervened to overcome a decision by the Council of State, Greece’s supreme administrative court, preventing a revision of the facility’s environmental terms, which delayed the unit’s return to production.

The power station, whose renewed license has a ten-year duration, could return to action as soon as today.

New Democracy MP Kostas Vlassis recently announced the Megalopoli power station would soon be operating again after meeting with PPC chief executive Giorgos Stassis.

PPC had submitted an application requesting a revision of the environmental terms and a license extension in January.

Settlement of PPC €100m amount for north a first post-lignite support step

A planned payment of an outstanding power utility PPC amount of 100 million euros to energy producing municipalities in the country’s north for regional development, owed since 2014, represents a first step in the west Macedonia region’s gradual transition towards a post-lignite era.

The prospective payment of this amount to the region’s municipalities will be included in a PPC draft bill being prepared by the energy ministry for presentation in October, energypress sources informed.

Local municipalities are eagerly awaiting payments in order to finance the completion of vital infrastructure projects needed to continue telethermal supply when it will no longer be offered by lignite-fired power stations.

Florina and Amynteo are among the locations whose telethermal projects are to be developed through the payment of PPC’s development funds.

The prospective settlement represents a first step in the post-lignite support plan for Greece’s west Macedonia region, where PPC’s mining and electricity generation activities account for 45 percent of the regional economy.

The local economy of Megalopoli in the Peloponnese is also greatly dependent on lignite.

Municipalities will anticipate further support for economic stability following 2028, when all lignite activity is expected to have stopped in Greece, according to a plan announced last week by Prime Minister Kyriakos Mitsotakis at the UN Climate Action Summit in New York.

Plenty of ministries will need to coordinate on numerous issues if a smooth and punctual transition to the post-lignite era, scheduled for less than a decade away, is to be achieved. Greece does not have a good track record in achieving targets of this scale.

The move towards decarbonization is a European challenge concerning many EU member states besides Greece, including Austria, the Czech Republic, Germany, Poland and Romania, all greatly exposed to lignite activity. They are hoping for generous support through Europe’s energy transition fund.

 

Ministry talks with Brussels on lignite unit closures underway

Negotiations aiming to accelerate Greece’s transition towards a post-lignite era, through the closure of old power stations, appear to have begun between the energy ministry’s leadership and the European Commission.

Measures requiring the withdrawal of old power stations as a solution for breaking power utility PPC’s dominant market position are also expected to be discussed and implemented.

A plan by the previous Greek government to sell PPC’s Meliti and Megalopoli power stations proved futile, prompting the new administration’s energy minister Costis Hatzidakis to talk of costly units negatively impacting the utility’s financial results.

European Commission officials, due to visit Athens for talks on September 16, have included on their agenda the need to discuss PPC’s disinvestment schedule.

The withdrawal of older PPC units could represent the last chance to keep alive the utility’s plan to develop Ptolemaida V, a prospective lignited-fired power station budgeted at 1.4 billion euros, sources noted.

Rising CO2 emission right costs will soon make many PPC units unsustainable, sources told energypress.

Besides Amynteo and Kardia, the withdrawal plan is expected to also include other units. Details will be discussed at the upcoming talks between Athens and Brussels officials.

In moving to withdraw lignite-fired units, the energy ministry will also aim for the cancellation of legal action taken against Greece at the European Court for PPC’s lignite monopoly. The lignite unit closures would restrict the utility’s dominance in production and, by extension, supply of this energy source.

Greek officials will also be looking to offset the inevitable negative impact of lignite unit withdrawals on local economies, including the west Macedonia region in Greece’s north, where livelihoods depend on lignite.

Energy ministry officials will also present the plan for closures as a measure seeking to limit PPC’s financial losses.

 

PPC lignite sale is over, overall market solution to be sought

The newly elected center-right New Democracy government, appearing determined for major energy sector changes, will begin new negotiations with the European Commission in search of an overall solution for the country’s electricity market and the role and place in it for the power utility PPC, currently struggling.

The long-running disinvestment effort offering investors PPC lignite units has just about collapsed. A binding-offers deadline for a package that includes PPC’s Megalopoli and Meliti units expires on July 15, following an extension. Investors have not shown any interest, while, given the flatness, an additional extension could not reinvigorate the sale.

The next NOME auction, the year’s third, scheduled for July 17 and planned to offer independent energy firms 500 MW/h of PPC’s lower-cost lignite and hydropower production, appears likely to be the last under existing terms agreed to by Greece and the country’s lenders. Changes are also expected along this front as part of the intention for an overall electricity market solution.

Initial contact between Brussels and officials of Greece’s new administration has already been made. Meetings are soon expected to become more regular once the government has set out the specifics of its rescue plan for PPC.

Any resulting solution will need to satisfy Greek bailout terms including the need for PPC to have reduced its retail electricity market share to less than 50 percent by the end of this year. The power utility’s share is currently at 73.5 percent, meaning PPC will need to surrender even greater low-cost electricity amounts to competitors through the NOME auctions.

Fair competition in the electricity market also needs to be assured. Hydropower sources, currently exclusively controlled by PPC, may be brought into the negotiating picture. The European Commission is currently conducting a related study on PPC’s management of hydropower generation. Findings have yet to be released.

 

 

Heavy 1Q losses at Meliti, Megalopoli bad news for sale

The main power utility PPC’s Meliti and Megalopoli power stations, both included in the corporation’s bailout-required disinvestment of lignite units, incurred heavy losses totaling more than 30 million euros in the first quarter, according to results uploaded into a VDR for investors considering the sale.

These losses, attributed to a sharp increase in CO2 emission right costs to levels of more than 25 euros per ton, make PPC’s disinvestment effort an even tougher mission. They also underlining the difficulties faced by the utility’s lignite-fired production facilities.

The 1Q net losses at Megalopoli, registered at 23.02 million euros, include a 4.2 million-euro cost concerning a voluntary exit plan for employees.

The losses at Meliti for the same period were 7.95 million euros, whose voluntary exit plan was valued at 0.5 million euros.

According to PPC, the company’s results could have benefited by 2.4 million euros as a result of an improved lignite supply agreement reached by PPC with the operator of the Ahlada mine supplying the Meliti power station in northern Greece. But this agreement does not come into effect until 2020 onwards.

Investors interested in PPC lignite units, challenges remain

With just 19 days remaining until the May 28 deadline for binding bids in the main power utility PPC’s bailout-required disinvestment of its Megalopoli and Meliti lignite power stations, prospective bidding teams appear interested but challenges remain for the sale, relaunched after an initial attempt failed to produce a result.

The candidates are believed to be preparing decent offers based on the current SPA terms, Greek electricity market conditions and EU climate change policies.

The Czech Republic’s Sev.En Energy, joined by GEK Terna; CHN Energy-Damco Energy (Copelouzos Group); Mytilineos; and Elvalhalkor are preparing worthy offers, sources have informed.

China’s CHN Energy and Sev.En Energy have emerged as the chief partners of their respective pairings, while their Greek associates have assumed negotiating roles with PPC.

Mytilineos and Elvalhalkor are both still looking to establish an association for the disinvestment and are also pushing for further sale term improvements.

The Greek participants are particularly keen to acquire the lignite units as a means of breaking PPC’s monopoly and avoiding any new sale attempt that would also bring hydropower units into the picture and end up attracting major European players with financial might.

Greek energy firms are looking to avoid the market entry of foreign competitors as this would lead to market share contractions and a loss of their leading domestic roles.

Despite the investor interest, the sale attempt remains challenging for all sides. The Megalopoli and Meliti lignite units, according to PPC’s financial results for 2018, incurred losses of more than 360 million euros. Also, CO2 emission right costs are continuing on their upward trajectory, while Brussels’ tough stance on carbon is  stiffening.

 

PPC’s renewed lignite units sale faces crucial three-week period

The main power utility PPC, in its financial report for 2018, has made blatantly clear the positive impact on the company of a successful sale of its Meliti and Megalopoli power stations, included in a bailout-required disinvestment of lignite assets.

Besides being rid of annual operating losses incurred by these facilities, estimated at a total of 100 million euros, PPC also stands to benefit from reduced CO2 emission right cost purchases, a lighter environmental footprint, a gain of approximately 223.8 million euros from the gradual withdrawal of NOME auctions, and less European Commission pressure for an additional disinvestment of hydropower units.

The 25-day period remaining until the sale procedure’s completion on May 28 will be crucial for the effort’s outcome. Possible buyers remain reserved.

An improved lignite supply agreement reached by PPC with the operator of the Ahlada mine feeding the Meliti power station, uploaded several days ago to the sale’s virtual data room, has not fully eased the concerns of investors. A number of issues concerning the expropriation of the village Giourouki in the area, which needs to be completed by December 31, remain unresolved. Otherwise, the new supply agreement’s terms cannot apply.

Also, investors appear to have raised wider energy mix issues and proposed other adjustments that could increase the likelihood of a successful sale, renewed after an initial effort failed to produce a result.

PPC’s board has noted it cannot guarantee the prevention of further disinvestment obligations in the future concerning its interests in lignite and other sectors as a means of meeting market share contraction targets in electricity production and supply.

 

PPC unit contenders promised 30% price return without CATs

Investors have been promised a 30 percent return of the price paid for the acquisition of the main power utility PPC’s Meliti and Megalopoli power stations, included in a bailout-required package of lignite units, if these units are not remunerated through a European Commission CAT mechanism within nine months of the acquisition’s completion, according to the sale’s revised SPA terms, endorsed by the utility’s board yesterday, energypress sources have informed.

It remains unclear if the SPA includes an improved lignite supply agreement reached between PPC and the operator of the Ahlada lignite mine supplying the Meliti power station.

Some sources contend this agreement has been incorporated into the revised SPA while others claim it concerns an arrangement for the supply of additional lignite quantities to Meliti from other producers.

PPC has relaunched its sale of lignite units after an initial effort failed to produce a result.

CAT remuneration eligibility for the Meliti and Megalopoli units, as has been called for by some of the sale’s participants, is absent from the revised SPA terms.

 

 

PPC sale participants want extension beyond May 6 date

The main power utility PPC’s finalized SPA terms for a bailout-required sale of lignite units that includes its Meliti and Megalopoli power stations will, barring unexpected developments, be presented at a board meeting today.

The power utility is aiming to set a May 6 deadline for binding bids but prospective buyers fear such a date offers little time for a thorough assessment of terms and shaping of bids and is made even tighter by the loss of working days as a result of the upcoming Greek Orthodox Easter break, sources informed. The prospective buyers will push for a few extra days to prepare their bids, the sources added.

The revised SPA terms for this sale, relaunched after an initial effort did not produce a result, do not feature any spectacular changes, sources informed. The package will not include a profit-and-loss sharing arrangement for PPC and new unit owners, as had been requested by some of the prospective buyers seeking investment protection.

Calls by investors for clarification on the CAT remuneration eligibility of units remain murky as the European Commission has yet to endorse such a plan.

However, improved lignite supply terms between the operator of the Ahlada mine feeding Meliti and this power station’s owner will be included in the revised SPA terms.

The new terms will be uploaded onto the sale’s video data room within the next few hours, sources informed.

PPC views its Meliti and Megalopoli power stations as profitable following the recent implementation of a voluntary exit plan that has reduced staff numbers. Investors will have the final say once they receive the sale’s SPA terms.

PPC defers crucial lignite units SPA meeting for next Tuesday

A main power utility PPC board meeting scheduled today for a presentation of proposed SPA terms concerning the Meliti and Megalopoli power stations included in a bailout-required sale package of lignite units, has been postponed until next week, the session’s new date being April 23, when the utility’s financial results for 2018 will be announced, sources have informed.

SPA details, pivotal for the interest of investors, have yet to be finalized. Today’s deferral suggests last-minute efforts are being made to embellish Meliti and Megalopoli as more appealing prospects for investors. PPC was recently forced to relaunched its sale of lignite units after an initial effort failed to produce a result.

Sources with inside information on the proceedings have contended that no major changes have yet to be made to previous SPA terms.

“PPC’s disinvestment effort once again finds itself at a crucial stage, given the EU’s adverse regulatory framework concerning carbon,” one source stressed, adding that the sale’s details remain murky despite efforts by the board to clarify.

An agreement reached between PPC and the operator of the Ahlada lignite mine feeding the Meliti power station, for a lignite supply price reduction to 16.5 euros per ton from 23 euros per ton, has yet to be uploaded to the sale’s virtual data room.

Whether the units up for sale will be eligible for CAT remuneration also remains unclear. The European Commission has yet to respond to a Greek request on the matter.

Amynteo silence adds to investor jitters over PPC sale

A decision by the main power utility PPC chief Manolis Panagiotakis to drop from a recent board meeting’s agenda the subject of a closure of the now-expired Amynteo lignite-fired power station is believed to have added to the ambiguity surrounding the utility’s relaunched sale package of lignite units.

Panagiotakis’ unexecuted announcement has been interpreted as an attempt to send out a positive message to investors as Anynteo’s eventual withdrawal from the grid would make other power stations units included in PPC’s sale package more competitive.

PPC is not planning an immediate withdrawal of Amynteo. The power plant’s closure is expected in late 2020 or early 2021, when a 32,000-hour extension offered by the government through a ministerial decision last November – as a further extension to Brussels’ 17,500 hours – should expire.

Investors eyeing PPC’s sale package, whose initial sale effort failed to produce a result, are still waiting for clarity on a number of issues.

Details remain pending on a profit and loss sharing mechanism expected to apply for the Meliti and Megalopoli units offered in the package. Investors are waiting to see these details in an updated SPA.

Also unclear are the developments of PPC’s effort for an improved lignite supply agreement with Lignitorihia Ahladas, the operator of the Ahlada mine feeding the Meliti power station. Improved price and quantity terms are being sought. Energy minister Giorgos Stathakis is mediating these talks.

PPC ‘Amynteo closure’ news intended for investors, Brussels

The main power utility PPC’s plan to discuss the closure of its now-expired Amynteo lignite-fired power station ended up not being included on the agenda of a board meeting last Friday, as the company chief Manolis Panagiotakis had announced ahead of the session, the official reason, according to the company boss, being the need for an additional study on the matter.

However, other underlying reasons were at play, it can be safely presumed. Investors eyeing PPC’s bailout-required sale of the Meliti and Megalopoli power stations were one of the audiences targeted by the utility chief’s Amynteo-related announcement, as it is anticipated this plant’s closure will make Meliti and Megalopoli more competitive and generate better sale price prospects. This sale has been relaunched after an initial effort failed to excite investors.

Panagiotakis’ Amynteo announcement was also aimed at the European Commission as an indication of the power utility’s intention to conform amid reports of a launch of infringement procedures by Brussels against Greece for PPC’s overtime usage of the power plant. A 17,500-hour Amynteo lifeline extension offered by the European Commission expired early last winter but the unit is still operating.

Domestic political interests are another factor behind the board’s avoidance of a discussion on Amynteo’s future at last Friday’s PPC meeting. Given the fact that some 1,000 jobs could be lost if Amynteo is shut down, state-controlled PPC would rather delay any talk on the subject until after the upcoming local, regional and European elections.

PPC is not planning an immediate withdrawal of Amynteo. The power plant’s closure is expected in late 2020 or early 2021, when a 32,000-hour extension offered by the government through a ministerial decision last November – as a further extension to Brussels’ 17,500 hours – should expire.

PPC to withdraw Amynteo in support of effort to sell Meliti, Megalopoli

The main power utility PPC’s board is expected to reach a decision today to withdraw its now-expired Amynteo lignite-fired power station from the grid in order to improve the clarity and market conditions for investors in the utility’s bailout-required disinvestment package that includes two other lignite units, Meliti and Megalopoli.

An Amynteo facility withdrawal, combined with an ongoing effort by PPC for improved supply terms from the operator of the Ahlada mine feeding the Meliti power station, would boost the incentive of investors considering the PPC disinvestment package. Its initial sale effort did not produce a result.

PPC’s chief executive Manolis Panagiotakis wants an Amynteo withdrawal decision from the board today in an effort to avoid Brussels sanctions against the utility for its continued operations of the outdated facility.

Amynteo is currently operating beyond a 17,500-hour lifeline extension granted by the European Commission in 2016.

Last week, Kostas Skrekas, the main opposition New Democracy party’s shadow energy minister, told a Power & Gas Supply Forum in Athens that the European Commission has begun infringement procedures against Greece for this overtime usage.

The Amynteo withdrawal will not be instant but, instead, made in late 2020 or early 2021, when a 32,000-hour extension offered by the government through a ministerial decision last November is expected to expire.

This extension, which effectively added 14,500 hours to Brussels’ 17,500-hour extension in 2016, had not received any approval from the European Commission.

Brussels had set its 17,500-hour extension limit as part of the EU decarbonization policy.

Genop, the power utility PPC’s main union, is planning action against the planned closure of Amynteo in Greece’s north, with support from local and regional authorities. The plan casts doubts over the jobs of 1,000 PPC workers and could also affect the region’s telethermal needs and economic activity.

PPC had received four different Amynteo environmental upgrade proposals from the Mytilineos, Copelouzos, Peristeris and Intrakat groups prior to this latest decision for the facility’s eventual withdrawal.

 

 

 

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.

 

 

Czech offer to serve as lower limit in new PPC sale attempt

The main power utility PPC’s recently failed bailout-required sale of lignite units is headed for a relaunch rather than an extension, which will enable the entry of new candidates, as well as a market-based evaluation rather than a book value estimate of assets, as was the case with the first attempt, ongoing negotiations between the energy ministry and the European Commission are strongly indicating.

Bids submitted by participants in the initial sale attempt are expected to be taken into account for the new evaluation.

The Mytilineos group had offered 25 million euros for PPC’s Meliti unit while a Greek-Czech bidding team comprising Gek Terna and Seven Energy submitted a 103 million-euro offer for Meliti and two Megalopoli units.

However, this latter offer was rejected as it included a profit-and-loss sharing condition that had not been included in the sale’s terms. Authorities are now looking at including a profit-and-loss sharing mechanism to the new sale’s terms. Also, the amount offered by Gek Terna and Seven Energy is expected to be adopted as a lower limit.

Energy ministry officials are aiming for a finalized agreement by this Thursday’s Eurogroup meeting of eurozone finance ministers. PPC’s lignite disinvestment is a key bailout commitment that remains pending. A one-billion euro tranche for Greece depends on this sale procedure.

PPC’s chief official Manolis Panagiotakis believes that a renewed sale attempt cannot take place sooner than May, given the preparations required.

Greek officials are hoping for a sufficient time period that will enable the completion of a staff reduction demand made by prospective buyers for the sale package’s units.  Local authorities also hope PPC’s lignite units will qualify for CAT remuneration by May.

Athens given second chance by Brussels for PPC lignite sale

Energy ministry officials are busy preparing a follow-up proposal for the main power utility PPC’s bailout-required disinvestment of lignite units, expected to be forwarded to the European Commission within the current week, sources have informed.

The new proposal, which follows a recently failed first sale attempt whose terms did not fully convince investors and subdued offers, is seen as a second chance for Greece to meet its lignite-related bailout commitments, intended to break PPC’s dominance in the sector.

The new sale effort could head in one of two directions. The initial tender, whose package includes units at PPC’s Megalopoli and Meliti power stations, could be given an extension with improved terms for potential buyers, such as a 50 percent staff reduction at the units up for sale, as well as more favorable lignite supply terms for the Meliti unit, in the country’s north, from the nearby Ahlada mine. Investors had tabled both these demands in the lead-up to the first sale effort.

A second scenario that could emerge would entail relaunching the sale with new terms and open doors for new participants. PPC appears to favor this option believing a greater number of contenders will increase the likelihood of better offers and a successful sale.

 

PPC lignite control, market shares, EC hydropower probe an explosive mix

When the Syriza party, as chief partner of the country’s coalition government formed early in 2015, decided to nullify legislation ratified by a previous administration for the establishment and sale of “Small PPC”, a new company that was to be carved out of the power utility to represent 30 percent of its production capacity – including lignite and hydropower units – customers and debt commitments, it trumpeted a political victory for nullifying, in an unprecedented move, a bailout-related law, but, at the same time, was taking on a big risk.

This PPC initiative now appears to be backfiring as the EU’s ensuing decarbonization policies – the basic reason behind last week’s failure of Syriza’s alternative plan, a sale offering PPC lignite units – progressed at a more rapid pace than the government had anticipated.

A successful sale by PPC of Meliti and Megalopoli power station units included in its disinvestment package was crucial for the prevention of further measures by the European Commission.

Instead, the current combination of three pivotal factors in Greece’s electricity market makes for an explosive mix.

PPC’s ongoing monopoly of the country’s lignite resources, offering the utility unfair advantages over rivals in the wholesale and retail electricity markets; the power utility’s stubbornly high electricity market shares; as well as a developing Brussels investigation of PPC over suspicions it has abused its market dominance and manipulated Greece’s energy market through its hydropower units could prompt major developments.