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.

 

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.

PPC takes on expropriation plan for Meliti unit’s sustainability

The main power utility PPC’s board is expected to approve, at a session today, a self-financed expropriation plan designed to ensure lignite quantity and quality standards are met for the sustainability of the utility’s Melti power station, included in a bailout-required disinvestment package.

PPC had reached an improved lignite price agreement with the operator of the Ahlada mine supplying the utility’s Melti power station, at 16.5 euros per ton between 2020 and 2025. However, lignite quality and quantity standards demanded by the sale’s participants were pending.

PPC’s decision to finance the expropriation of the village Giourouki promises the extraction of better and greater amounts of lignite from the Ahlada mine, an initiative expected to make the Meliti power station sustainable.

The Ahlada mine operator, citing high expropriation costs, stopped expanding its mining activities for better-quality lignite and instead dug deeper around Giourouki. The resulting lower-quality lignite affected yield rates at the Meliti power station.

A pre-contractual agreement signed by PPC and Giourouki village residents promises an immediate expropriation payment of 60 percent, while the remaining 40 percent, according to the agreement, will be provided as soon as the precise compensation amount is finalized.

Participants of PPC’s sale of lignite units, relaunched after an initial sale failed to produce a result, face a May 28 deadline for binding bids. PPC’s expropriation plan for the village Giourouki has raised hopes at PPC of a successful follow-up sale.

Meanwhile, the Meliti power station’s eligibility for CAT remuneration remains unclear. PPC has no control over this issue. It is being handled by the energy ministry. The European Commission will have the final say.

 

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 Elvalhalcor 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 Elvalhalcor 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.

PPC sale contenders embrace coal cost cut, await SPA terms

Prospective buyers considering the main power utility PPC’s bailout-required sale package of lignite units, relaunched after an initial effort failed to produce a result, have responded favorably to news of a lignite supply cost reduction for Meliti, one of the stations up for sale, but they remain on hold awaiting the sale’s finalized SPA terms before reaching conclusions.

PPC has secured a lignite supply cost reduction of 28 percent for its Meliti power station following an agreement with the operator of the Ahlada mine feeding the power station. The lignite supply price has come down to 16.5 euros per ton from 23 euros per ton.

“The finalization of any pending issue is positive news [for the sale], but we will take positions once we see the SPA,” one source noted.

A total of six bidding teams are participating in the sale. Beijing Guohua Power Company Limited, joined by Damco Energy; China Western Power Industrial; the Czech Republic’s Sev.En Energy – Indoverse Coal Investments Limited; GEK Terna; Elvalhalcor; and Mytilineos make up the field of contenders.

 

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.

 

 

 

Gov’t, employees on edge amid PPC, Ahlada mine operator dispute

An ongoing effort by the main power utility PPC for improved terms of its supply agreement with Lignitorihia Ahladas, the licensed operator of the Ahlada lignite mine exclusively supplying the utility’s Meliti power station in northern Greece, has led to escalated tension between the two sides.

PPC has opted to stop payments to the operator for its lignite supply as a means of offsetting lower-than-expected output and pressuring Lignitorihia Ahladas for a lower supply price that would help the Meliti power station become sustainable.

Meliti is included in PPC’s bailout-required disinvestment package of lignite units, whose sale has just been relaunched following the initial effort’s failure to excite prospective buyers.

The government needs to intervene in an effort to resolve the dispute between state-controlled PPC and Lignitorihia Ahladas but must tread carefully as it knows well the power utility’s disinvestment could prompt political damage if its relaunch fails to produce a result.

The operator has dismissed eight of 600 employees amid its clash with PPC. Workers at the mine and Meliti power station fear the ongoing dispute could lead to more job losses.

Lignitorihia Ahladas contends it will not be able to continue operating the Ahlada mine should it succumb to PPC’s pressure for a supply price reduction to 18 euros per ton from the present level of 23 euros. The operator has counter-proposed reducing its supply price as of 2020, when its expropriation procedure concerning the Ahalda settlement, needed to facilitate output, is expected to have been completed.

PPC claims the supplier’s current price does not reflect actual conditions and potential at the mine, noting inefficient practices applied by the operator are increasing production costs.

 

PPC set for legal action to resolve mine supply concerns

The main power utility PPC is preparing to take legal action against the operator of the Ahlada lignite mine feeding the utility’s nearby Meliti power station in northern Greece in an effort to overcome issues with the existing supply contract that have kept prospective buyers away from Meliti.

The facility, included in PPC’s bailout-required sale of of lignite assets, just relaunched following the initial sale effort’s failure, is seen as a major drawback for the overall sale effort.

The existing agreement with Lignitorihia Ahladas, the Ahlada mine’s operator, is regarded as unappealing by investors as it does not secure price and quantity stability.

One of the sale’s participants, a consortium comprised of the Copelouzos group and CHN Energy, did not submit an offer to the initial sale effort, citing Ahlada mine supply contract concerns.

Late last year, the energy ministry extended the Ahlada lignite mine operator’s contract until 2023 with an option for a further five-year extension.

However, state-controlled PPC’s chief executive Manolis Panagiotakis has condemned the mine operator for under-producing and not fully utilizing the Ahlada mine’s potential.

In 2007, PPC signed an agreement with the operator for 2,000 tons of lignite per year at a price of 13.4 euros per ton. Focusing on a high-yield mine area, the operator was able to honor these terms until the end of 2009. However, since 2010, the operator has mined at lower-yield areas to avoid expropriation costs.

PPC ups pressure on Ahlada mine operator for better lignite supply terms

The main power utility PPC is increasing its pressure on the operator of northern Greece’s Ahlada lignite mine, feeding the utility’s nearby Meliti power facility, for improved supply terms.

The existing contract, which does not secure price and quantity stability, was seen as a drawback by participants of PPC’s failed sale of lignite units, relaunched today. The Meliti unit is included in the bailout-required sale’s package.

PPC will pursue measures, including loss of earnings charges, against the Rozas family, operating the Ahlada mine, if the existing agreement’s supply terms are not improved, Manolis Panagiotakis, the power utility’s boss, has warned.

Late in 2018, the Greek State extended state-controlled PPC’s agreement with the Ahlada mine’s operator until 2023 with an option for a further five-year extension.

However, Panagiotakis has condemned the operator for under-producing and not fully utilizing the Ahlada mine’s potential, which, he supports, is prompting price instability.

The mine’s operator has supplied PPC’s Meliti facility at price levels ranging between 19 and 23 euros per ton, but these can be reduced to 18 euros per ton, leading to annual savings of 12.5 million euros, the PPC chief noted.

Panagiotakis claims flawed mining practices are being applied at Ahlada as the operator is avoiding expropriation costs concerning three settlements in the region. As a result, potential for better-quality lignite is not being realized, the PPC boss said. Expropriation costs are estimated at between 25 and 30 million euros.

“The operator can choose between the roads of understanding and conflict. Opting for the latter will lead to defeat,” Panagiotakis warned, adding successful negotiations would offer the operator an opportunity to sell considerably greater lignite amounts to Meliti’s prospective new owner.

 

 

PPC chief informs Brussels of crucial factors in lignite units sale

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

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

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

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

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

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

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

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

 

 

PPC acts against Ahlada mine operator for better supply terms

The main power utility PPC has taken extrajudicial action against a family-run enterprise licensed by the utility to operate the Ahlada mine supplying the nearby Meliti lignite-fired power station in northern Greece in an effort to secure improved terms for prospective buyers of the power station. It is included in the utility’s bailout-required disinvestment of lignite assets.

The existing agreement between PPC and the Rozas family enterprise,  licensed to operate the mine, does not secure price and quantity stability. Prices vary depending on the yield offered by extracted lignite. Also, PPC believes development at the mine is too reserved. It is anticipated that greater output would lower the price of lignite per ton.

Prospective buyers who took part in PPC’s recently failed first attempt at completing its lignite package sale identified the Ahlada mine’s current supply agreement for Meliti as a disincentive. A team comprising China’s CHN Energy and the Copelouzos group was particularly troubled. The supply agreement will be passed on to Meliti’s prospective owner.

Two other requests forwarded by prospective buyers – staff cuts and the adoption of a profit-and-loss sharing mechanism for the units sold – are in the process of being added to the follow-up sale effort’s new terms.

PPC is currently supplied Ahlada lignite at a price of 23 euros per ton for its Meliti mine but wants the price level reduced by five euros per ton, which would generate annual savings of approximately 12.5 million euros.

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.

 

PPC fate in hands of Brussels, hydropower units addition a fear

The main power utility PPC’s future corporate make-up, following the apparent debacle of its bailout-required disinvestment of lignite units, now lies in the hands of the European Commission, whose intentions are soon expected.

Even if the Mytilineos group does submit an improved follow-up offer today, as has been requested, for PPC’s Meliti facility in Florina, northern Greece, and the unit is sold, the country’s commitments to the European Commission will not have been fulfilled.

Two units of PPC’s Megalopoli facility failed to attract investors, meaning the sale’s objective of reducing PPC’s lignite market share by 35.6 percent cannot be attained.

The initial offer made by the Mytilineos group for Meliti is believed to be well under the price tag set by an independent evaluator for the facility.

Another offer made by Seven Energy and Terna, for Megalopoli, was apparently rejected for not meeting terms, while the sale’s third contender, a team comprised of the Copelouzos group and CHN Energy, ended up not submitting any offers.

The crucial question, as things have turned out, is whether Brussels will bring Greece’s hydropower units into the picture, as an addition to the lignite package.

The energy ministry is definitely worried about such a prospect and insists this remains a red-line issue for energy minister Giorgos Stathakis.

Greece will be under considerable pressure should Brussels and the country’s other lender institutions decide to associate the lignite unit sale’s apparent debacle with Greece’s slow progress in opening up the retail electricity market to competition.

Data provided by the energy exchange for December showed PPC’s retail market share rose to 80.29 percent from 78.63 percent in a month. According to bailout terms on the matter, PPC’s market share at the end of 2018 was supposed to have dropped to 62.24 percent before reaching 49.24 percent by the end of 2019.

 

 

Export limit among factors seen subduing NOME prices today

Export limits imposed by RAE, the Regulatory Authority for Energy, on electricity amounts acquired by bidders at NOME auctions are expected to play a fundamental role in subduing prices at today’s first session for the year, despite the relatively modest electricity amount of 350 MWh/h offered and the currently elevated System Marginal Price (SMP), or wholesale, levels.

The new NOME electricity export limits, being implemented for the first time today, will severely limit the ability of players to transmit amounts to regional markets.

Lower price levels in neighboring markets, where SMP levels are currently lower than they are in Greece and are expected to drop further as a result of greater hydropower output generated by heavy rainfall this winter, are also expected to play a role in restricting Greek electricity export activity.

A third factor seen keeping NOME prices low today is the main power utility PPC’s seemingly failed attempt to sell its lignite-fired power stations at Megalopoli and Meliti, a bailout-required disinvestment. If speculation of the sale’s failure is made official, electricity amounts at the ensuing NOME auctions will not be reduced.

Today’s NOME price level stands no chance of reaching the lofty level of 54.74 euros per MWh registered at the previous auction as a result of the three aforementioned factors, pundits have asserted. Instead, they forecast a forty-something price level.

PPC units sale close to failure, call for improved sole valid offer

The main power utility PPC’s bailout-required sale of units at Meliti in Greece’s north and Megalopoli in the south could end up being half successful, at best, but a full debacle is considered most likely, the disclosure of binding bids submitted yesterday, the sale’s deadline day, has indicated.

Sale authorities have requested an improved bid from just one participant, the Mytilineos group, for its offer concerning the Meliti facility, while another offer made by Seven Energy and Terna for Megalopoli has apparently been rejected as it does not meet the tender’s terms, energypress has understood following a thorough cross-examination of incoming information.

According to one of Greece’s bailout commitments, based on a European Court verdict, the sale effort requires a disinvestment representing 40 percent of PPC’s lignite capacity. Meliti I and II and Megalopoli III and IV need to be sold if this disinvestment target is to be achieved.

PPC has suggested it will strive for an imminent follow-up sale in an effort to honor the European Court disinvestment decision. If this is permitted, problems that have made the current sale unattractive to investors will need to be resolved. The current composition of the Megalopoli package, in particular, is virtually unsellable, investors agree.

PPC remains determined to achieve decent sale prices for Meliti and Megalopoli, despite the fact that both facilities have been assessed as loss-incurring by investors. In recent comments, the power utility’s chief Manolis Panagiotakis noted that PPC is “selling not selling out.”

PPC lignite units sale stands little or no chance of success

Latest developments concerning the main power utility PPC’s ongoing effort to sell its Megalopoli and Meliti power stations strongly suggest the sale stands little or no chance of attracting even just one offer by tomorrow, when the procedure’s extended binding bids deadline expires.

Indicative of the friction that has simmered between the seller and buyers, PPC’s chief executive Manolis Panagiotakis, speaking yesterday at a company event for the New Year, remarked: “We don’t expect private-sector investors to offer amounts that will take 25 years to recover, as has been the case with PPC. Let them recover these amounts in half the time.”

The utilization of electricity quantities promised by the acquisition outweighs the importance of profit margins, the PPC boss contended.

“In markets and countries of far greater maturity and economic development enterprises do not rely on big profit margins but product quantity,” Panagiotakis said.

PPC will do whatever possible for a successful outcome in the sale, he stressed, thereby suggesting the power utility should not be held accountable if the procedure fails to produce a result.

PPC may need to deal with European Commission pressure for the inclusion of hydropower facilities into an expanded sale package if the current effort sinks.

Potential buyers have adamantly pushed for improved sale terms in the lead-up and remain dissatisfied, reminding that Megalopoli and Meliti are both loss-incurring units.

 

 

PPC lignite units sale failure highly likely, day after examined

The main power utility PPC’s ongoing effort to sell its Megalopoli and Meliti power stations as part of a bailout-required disinvestment of lignite units appears increasingly likely to fail as possible buyers are maintaining an unfavorable view of the prospects of the units on offer.

An extended deadline for binding bids is nearing and expires on February 6.

PPC has planned a series of meetings for today with the sale’s three possible buyers – CHN Energy-Copelouzos group, Seven Energy-Gek Terna and Mytilineos – to update on the progress of its voluntary exit plan offered to employees at the Megalopoli and Meliti units and transfer of 400 employees to other units.

PPC believes these changes will transform the loss-incurring units into profitable ventures but the buyers remain tentative. Their analysis of data made available paints a darker picture.

The sale’s participants have called for the implementation of a profit-and-loss sharing system for Megalopoli and Meliti. The European Commission has rejected a plan forwarded by PPC but the investors contend it was very different to a preliminary plan embraced by Brussels. The buyers also want a more drastic reduction of employees at the two plants to 480 from the previous combined total of 1,248. They are also demanding clarity on the CAT remuneration eligibility of the two plants and a clearer picture on the lignite price for supply from the Ahlada mine to the Meliti unit.

The energy ministry is believed to already be examining options based on EU regulations should the sale effort fail. If so, the ministry believes the forthcoming European Parliamentary elections, to be held May 23-26, will hold up and thrust forward the sale to a future date.

Finalized CAT agreement expected within fortnight

Greece and the European Commission are no more than a fortnight’s time away from reaching a deal on the country’s CAT mechanism, reliable sources closely following ongoing negotiations on the matter between the energy ministry and Brussels officials have informed.

Once an agreement is finalized, Brussels will deliver its notification, in other words a finalized list of observations on the Greek CAT plan. Its finalized look, to emerge following any needed adjustments, could be announced by the end of March, barring unexpected developments.

A certain period of time, depending on the pace of bureaucratic procedures in Brussels, will then be needed for the plan’s approval by the European Commission. This will enable preparations for the first CAT auction, expected, without a doubt, within 2019.

The nucleus of the Greek CAT plan, based on an Italian model that has already been endorsed, complies with EU directives, the European Commission has already recognized. Brussels officials have apparently requested revisions from Greece that will result in a CAT mechanism version sharing an even greater amount of similarities with its Italian equivalent.

Greece’s new CAT plan mainly concerns private-sector thermal electricity producers and the main power utility PPC as it will greatly shape their operating conditions over the next decade.

Investors considering PPC’s Megalopoli and Meliti power stations included in an ongoing bailout-required disinvestment of lignite units are also monitoring developments as the resulting CAT plan will greatly determine the earning potential of these units.

The PPC’s Ptolemaida V power station, now under construction, is expected to be among the units to qualify for CAT remuneration.

Meliti, Megalopoli units still a profit challenge for buyers

Transforming the Meliti and Megalopoli lignite-fired power stations into profitable ventures continues to represent a major challenge, latest data acquired by investors on the two units included in the main power utility PPC’s bailout-required sale of lignite units has indicated.

Investors contend their calculations based on fresh data do not result in better financial prospects for the two units, both loss-incurring at present, despite certain incentives. A voluntary exit plan offered to employees as a means of cutting payroll costs and other sales and purchase agreement (SPA) term revisions do little to ensure the sustainability of Meliti and Megalopoli, investors have pointed out.

On the contrary, PPC insists appropriate sale term adjustments will generate profit potential for both units.

According to data examined by possible buyers, turnover and operating cost figures concerning Meliti last November produced a deficit of approximately 10 euros per MWh. Earnings of 64.5 euros per MWh were outweighed by operating costs totaling 74.9 euros per MWh and pushed higher primarily by increased CO2 emission right costs.

Revenue and cost figures for Megalopoli have fluctuated wildly, data showed. This facility underwent maintenance on many occasions and often did not contribute to the grid. Last July, revenues at the unit were 64.2 euros per MWh and operating costs reached 68.9 euros per MWh. In September, revenue rose slightly to 66 euros per MWh while operating costs rose sharply to 96 euros per MWh.

Last week, authorities decided to extend a January 23 binding bids deadline to February 6. Investors considering the sale expect new sale-term improvements beyond certain incentives already offered, they have made clear.

 

Electricity suppliers facing challenges despite good news

Despite certain favorable developments emerging for the country’s independent electricity suppliers in 2019, such as the abolishment of a RES-supporting supplier surcharge and the main power utility PPC’s plan to reduce a 15 percent discount offered to punctual customers, independent suppliers face challenging times as a result of a gradual rise of the system marginal price (SMP), or wholesale electricity prices, driven up by increased CO2 emission right and fuel costs, as well as the diminished role of NOME auctions.

NOME auctions will become a less effective source for lower-cost electricity as amounts to be offered to participants will be greatly reduced, starting prices will be sharply higher, and electricity export restrictions planned by RAE, the Regulatory Authority for Energy, promise to confine the quests of players for new customers in other markets.

RAE has planned a 1,444 MWh/h electricity amount offering through NOME auctions in 2019. According to sources, the prospect of an additional 520 MWh/h offering, as a penalty against PPC for its failure to meet a market share contraction target set for 2018, will be dropped as the power utility is now downsizing its assets through a bailout-required disinvestment of lignite units.

Instead, the 1,444 MWh/h NOME amount allotted by RAE for 2019 is expected to be reduced by approximately 520 MWh/h, presuming the PPC disinvestment effort goes according to plan.

Should PPC successfully sell its Meliti and Megalopoli lignite-fired power stations, both part of the lignite disinvestment package, then the country’s electricity amount to be offered through NOME auctions in 2019 will be reduced to represent 13 percent of total consumption, from the previous level of 22 percent, according to a bailout term. This would reduce the NOME amount for 2019 to approximately 920 MWh/h.