Mytilineos upbeat for 2016, Iran solar farm project revealed

The Mytilineos corporate group’s leadership, speaking with market analysts via a conference call yesterday, presented an upbeat picture for 2016, noting that second-half results will be better than those of the first half, and also disclosed that group member METKA, a leading international contractor and industrial manufacturing group, has been awarded a project to develop Iran’s first solar farm, a 10-MW capacity facility.

Evangelos Mytilineos, chief executive at the Mytilineos corporate group, stressed that the group’s financial performance in 2016 will exceed analyst forecasts. Last year, the Mytilineos group had performed better in the first half than in the second.

Evangelos Mytilineos was particularly optimistic about the corporate group’s energy division results for the second half of this year. He told analysts that the Mytilineos group is striving to make gradual and steady progress and highlighted a strategic agreement established by the group’s subsidiary firm Protergia with Cosmote, the country’s leading mobile telephony retailer, to serve the retail electricity market. Cosmote controls an extensive network of Germanos and Cosmote retail outlets around Greece.

CAT mechanism payments, which local electricity producers were deprived of during the first four months of the year as a result of the delayed implementation of the country’s temporary CAT system, will boost the Mytilineos group’s second-half results, the corporate group’s administration informed analysts.

As for the group’s metallurgy division, the chief executive informed that increased Chinese supply to the global market is lowering aluminium prices. Mytilineos said a new cost-cutting program would be implemented at group member Aluminium of Greece in 2017 and 2018, following two previous cost-cutting initiatives taken by the subsidiary.

Giannis Mytilineos, the head at METKA, announced the news of the company’s agreement to develop Iran’s first solar farm. Already underway, it is scheduled to be completed by the end of this year.

Also for Iran, the company has signed a Memorandum of Understanding (MOU) to develop a 900-MW power station and is currently engaged in talks concerning financing options.

Banking restrictions in Iran have yet to be overcome despite the lifting, early this year, of western-imposed trade sanctions on the country. Once the banking hurdle is cleared, the power station’s development is expected to make swift progress and significantly boost METKA’s results.

Protergia, Germanos deal to reshape power retail market

A strategic partnership established by two of the country’s largest corporate groups, OTE (Hellenic Telecommunications Organization) and the Mytilineos Group, a leading independent energy producer in Greece, promises to reshape the local retail electricity market.

The deal, just announced and to come into effect within July, brings together Mytilineos Group subsidiary Protergia, Greece’s biggest private-sector energy producer with a portfolio measuring over 1,200 MW, and the wholly-owned OTE subsidiary firm Cosmote, the country’s leading mobile telephony retailer, which controls the extensive network of Germanos and Cosmote retail outlets around Greece.

The two firms plan to offer customers competitively priced electricity packages. Protergia products will be available at Comsote and Germanos outlets within July, the partners noted.

On the strength of this strategic agreement for the retail electricity market, Cosmote and Germanos retail outlets promise to enhance their range of services offered to customers, while, at the same time, Protergia will bolster its retail presence and promotion of products through over 450 Cosmote and Germanos outlets around Greece, the partners announced in a joint statement.

PPC considers excluding production from partnerships

The main power utility PPC’s administration wants the utility’s potential partnerships with private-sector enterprises, an initiative intended to reduce its dominant market shares, to be limited to trade and supply activity, without the inclusion of any production units in future consortiums, according to energypress sources.

PPC officials contend that the bailout-related need to reduce the utility’s share of electricity production to less than 50 percent, from the current level of roughly 60 percent, can be easily attained through the withdrawal of some of its old  producing facilities.

This alone would suffice, which makes the establishment of partnerships with private-sector partners in the production domain, with the latter holding majority stakes, unnecessary, according to the utility’s administration.

It is a different story for the utility’s electricity supply business activities, where PPC’s market share reaches levels as high as 98 percent. Partnerships in this domain, in which PPC would hold minority stakes of between 30 to 40 percent, would help reduce its market share, as is demanded by the bailout agreement. PPC must reduce its market share in electricity supply to less than 50 percent by 2020.

According to sources, PPC’s administration is already engaged in talks with certain private-sector major players currently active in Greece’s retail electricity market.

Should PPC choose to neglect production in its partnerships plan, it will leave unresolved another requirement concerning the need for the utility to offer third parties access to its lignite sources. The inclusion of private-sector partners in both electricity production and supply activity would fulfill this requirement. PPC has had to confront legal challenges at European courts over its refusal to liberate the lignite market.

Two major private-sector players, Elpedison and Mytilineos, have both already publically expressed an interest to establish partnerships with PPC in electricity production and supply. Heron, the Greek market’s other vertically integrated energy corporation, is believed to be interested. It remains unknown how these firms could react if PPC decides to limit its partnership proposals to the supply sector.

Local industrialists set to invest as soon as conditions stabilize

A large number of local entrpreneurs, especially industrialists active in the fields of energy, infrastructure and manufacturing, are keen to make investments as soon as conditions allow, judging by the content of speeches, as well as the sideline talk, at a SEV (Hellenic Association of Industrialists) conference staged at the Athens Hilton.

Mihalis Stasinopoulos, chief at Elval (Hellenic Aluminium Industry) and the Viohalco group, who usually avoids public events, as well as other prominent entrepreneurs, among them Evangelos Mytilineos, chief exectutive at the Mytilineos corporate group, participated.

Political stability and Greek State consistency are essential factors for improved conditions that can once again attract capital and investments, it was reiterated.

Mytilineos pointed out that the ruling Syriza leftist-led coalition and main opposition conservative New Democracy party’s shared pro-EU outlook and support for reforms offers stability and a predictable business environment, necessary traits for long-term investments.

Industrialist Spyros Theodoropoulos, head of Chipita, underlined that the managerial ability, versatility, decisiveness, and strength displayed by Greek enterprises that managed to establish themselves internationally amid the crisis stands as their greatest asset.

A number of entrepreneurs appear ready to invest, conditions permitting. The Mytilineos group, for example, is preparing to invest 110 million euros in renewable energy (RES) projects within the next two months as long as economic and political stability prevails with the completion of the first review of Greece’s third bailout package. Elval, too, seems set to proceed with a major investment, backed by EU funding support, that will double the aluminium industry’s production capacity.

Certain macroeconomic factors, the most noteable being the handling of Greece’s debt issue, a constant threat for the economy’s sustainability, will need to be addressed if the country’s investment climate is to improve, it was pointed out at the conference.

At a practical level, entrepreneurs are waiting to see positive impact from last night’s agreement at the Euro Working Group, in the form of a further fall in Greek bond interest rates from the current levels of 7.5 percent to about 5 percent. This will help reduce the extraordinarily high cost of capital for Greek enterprises, compared to levels enjoyed by competitors abroad.

Interest for PPC partnerships widening but questions remain

Though still at a preliminary stage, the Greek energy ministry’s plan for PPC, the main power utility, to establish partnerships with private-sector enterprises is beginning to open up and widen as a prospect.

Yesterday, Evangelos Mytilineos, chief executive officer at the Mytilineos corporate group, declared that his group is open to the idea of forming partnerships with PPC, making it the second of the country’s three major independent players, following Elpedison, to do so. This additional interest promises to influence the overall balance of the plan’s developments.

The administration at PPC, up against the wall as a result of its rising level of unpaid receivables, and facing a bailout-linked obligation to reduce the utility’s market share to 50 percent by 2020, appears to have accepted the partnerships prospect as the least devastating of various options.

Not too long ago, PPC had refused to consider including its hydropower facilities in the package, but now appears willing, as a means of avoiding the worst – privatization procedures. An older part-privatization plan entailing the formation, split and sale of a slice of PPC – locally dubbed “Little PPC” – would be a far more complicated procedure. Also, Genop, PPC’s main union group, seems to have accepted the partnerships option.

Certain factors, including the European Commission’s ultimate stance, remain unclear despite the fact that EU officials have expressed strong consideration for energy minister Panos Skourletis’s PPC partnerships plan. Offiicals in Brussels know that the imminent NOME auctions, alone, will not prompt a serious market share reduction at PPC. (The NOME plan will provide third parties with access to main power utility PPC’s low-cost lignite and hydropower sources as part of the bailout-related obligation to help break the utility’s dominance).

Even so, the road ahead is long as the European Commission’s Directorate-General for Competition examines the Greek PPC partnerships proposal and, in doing so, seeks clarification of issues.

At this stage, it remains unknown whether the European Commission will consider the establishment of PPC partnerships without tenders. Also, in theory, PPC appears keen but may express various reservations once negotiations begin in earnest. In addition, the picture remains blurry as to which PPC units could be included in the partnerships plan and, crucially, who will be responsible for the number and type of units to be chosen. Finally, the possible equity make-up of PPC’s partnerships also remains unspecified, despite the fact that the energy minister has indicated private investors will be offered majority stakes of at least 51 percent and control of management.

Reform needs, not additional taxes, Mytilineos stresses

The European Commission needs to intervene more firmly on the Greek bailout program and apply pressure on the government for further reforms needed by the economy instead of tax increases, as is being demanded by the IMF, Evangelos Mytilineos, the chief executive officer at the Mytilineos corporate group, has told Euractiv, a news portal focused on European news.

Mytilineos believes that the European Commission is not applying as much pressure as it should to stop tax increases and instead shift the focus to structural reforms.

“Unfortunately, the bailout agreement is being driven by taxes. The IMF’s position on increasing taxes has dominated over reforms, which Greece’s public administration is continuing to strongly object to without an interest to alter decades-old habits,” Mytilineos noted. “The European Commission has a role to play here, which it is currently not playing, and this is to push for further structural reforms.”

Following a turbulent year in 2015, the Greek government has had no choice but to learn fast from mistakes, Mytilineos believes. “Any government, whether left-wing or right-wing, needs to comply with regulations if it wants the country to remain a member of the EU,” Mytilineos said. “There is not much leeway for maneuvering.”

The need for structural reforms was also highlighted in the latest Economic Cooperation and Development (OECD) report on Greece, released last week.

Energy sector reforms included in Greece’s first bailout agreement back in 2010, intended to generate competition in the electricity market and limit monopolies, have been severely delayed. However, there has ben no holding back on taxes imposed on energy. They have risen dramatically during the bailout era. Taxes imposed on natural gas consumed by the industrial sector amount to 40 percent.

“How can a Greek industrial enterprise remain competitive when tax levels in other countries, both within and beyond the EU, are 5%, 8%, 10%, 12%,” Mytilineos questioned.

The European Commission has set itself the objective of reviving the continent’s industrial sector, which it aspires will represent 20 percent of European GDP by 2020, from 15 percent at present.

This seems like a utopian target, especially if applied to countries such as Greece, where the industrial sector represents just nine percent of the country’s GDP and energy costs remain high despite the plunge in international crude oil prices.

Asked to comment on unchanging electricity prices in the local market, Mytilineos attributed the case to the structures of Greece’s economy and, especially, the energy sector. However, the corporate head said he expects to see gradual benefits for consumers within the next few months from the developing competition between main power utility PPC and privately run suppliers.

At present, PPC controls 94 percent of the local electricity market while several independent enterprises share the remainder.

Mytilineos would like to see a fall in electricity prices. Aluminium of Greece, a member of his corporate group, ranks as PPC’s largest power consumer and requires about five to six percent of the country’s total electricity production to operate.

Responding to a question on whether he considers Greece as being detached from the European energy sector’s wider developments, Mytilineos noted that gradual change was now occurring. DEPA, the Public Gas Corporation, is no longer the country’s exclusive natural gas importer as M&M, a member of the Mytilineos group, has now also entered the market. Also, new electricity interconnections with neighboring countries are being developed to increase Greece’s options.

ELPE, part of mission in Tehran, to sign NIOC deal today

Officials representing ELPE (Hellenic Petroleum) and NIOC, the state-run National Iranian Oil Company, are set to endorse a recent agreement reached between the two sides at a ceremony in Tehran today, marking the resumption of bilateral trade following the lifting, just weeks ago, of western-imposed sanctions on Iran.

A 70-member Greek delegation headed by Prime Minister Alexis Tsipras and energy minister Panos Skourletis, has arrived in Tehran to discuss prospective additional business deals over the coming days, including in energy.

Besides ELPE managing director Grigoris Stergioulis, the Greek delegation includes Theodoros Kitsakos, chief executive at DEPA, the Public Gas Corporation, and Panagiotis Kanellopoulos, chief executive of M&M Gas, a wholesale trading venture involving the Mytilineos Group and Motor Oil Hellas.

Unlike the ELPE boss, the DEPA and M&M Gas officials have not traveled to Iran to sign deals but to explore future possibilities. Iran boasts the world’s second largest quantity of natural gas desposits, following Russia.

Based on infrastructure plans, it is anticipated that Greece will be able to supply Turkey and fellow European countries between 10 billion and 20 billion cubic meters of natural gas annually by 2020.

For the time being, the ELPE-NIOC agreement is at the forefront of Greek-Iranian energy developments. Many of the deal’s details have already been disclosed in recent reports.

ELPE expects to cover between 20 to 30 percent of its daily crude needs through Iranian supply. The exact proportion remains to be announced.

The Greek refinery’s repayment of outstanding debt owed to NIOC as a result of banking restrictions prompted by the sanctions on Iran in 2011, estimated at 600 million euros, will be settled over a four-year period to expire in 2019.

Also, the Greek company will cover 50 percent of its debt owed to NIOC through the supply of an equivalent amount of finalized products. It is not yet clear whether these products will be sold directly by ELPE to NIOC or through traders.

In addition, a further 10 percent of the debt amount will be covered through engineering services to be offered to Iran by Asprofos, an ELPE subsidiary firm. The work may include refinery unit revamps.

Various other details, including the credit period’s duration, are expected to be settled at a meeting today between the ELPE and NIOC chiefs.

It remains to be seen whether Iranian officials will reiterate their interest to acquire an equity share of ELPE. Just weeks ago, Iran’s deputy oil minister Amir Hossein Zamaninia, speaking on Iranian state radio, noted Iran is keen to acquire an equity share of ELPE. At the time, ELPE sources responded by claiming that the issue had not been raised during talks with Zamaninia in Athens. Skourletis, Greece’s energy minister, backed these ELPE claims.

The Greek state holds a 35 percent stake in ELPE. It has been transferred to TAIPED, the State Privatization Fund. The Latsis group, which owns a 42.6 percent equity share of ELPE through Paneuropean Oil, has officially rejected any chance of selling its interests in ELPE.

‘More caution needed when talking of private investments’

Critics talking of opportunist investors in Greece’s electricity market, as well as of the need for private-sector investments by companies seeking to participate in a liberalized market, need to be more cautious with their words as the private sector has already poured significant amounts into the sector, Dinos Benroubi, Deputy Managing Director at Protergia, a member of the Mytilineos corporate group, remarked yesterday during a speech at the Athens Energy Forum.

Benroubi was responding to claims made on a regular basis by the main power utility PPC for the need of greater private-sector investment in electricity production. Most recently, the argument was also adopted by the energy ministry.

The Protergia official noted that private-sector investors have placed greater amounts into electricity production than PPC, noting the overall sum invested in recent times exceeds 2.5 billion euros, while adding that Protergia, alone, has invested over one billion euros of private capital, not public money, over the past few years.

Benroubi pointed out that consumers do not care whether electricity is being produced by PPC or private-sector companies, noting that their primary concern is lower prices and better services.

He said offers superior to PPC’s ten percent discount for punctual professional category consumers, announced earlier this week, have been offered by private-sector companies for years.

“Private-sector suppliers have been selling at even lower prices and discounts greater that ten percent for quite a while. PPC followed the trend,” Benroubi said. “Private-sector suppliers have been rewarding punctual consumers over the past year or two. So let’s not contend that prices would not have been reduced had it not been for PPC. Prices were driven down by competition, which is what led PPC to offer the discounts,” he continued.

Benroubi challenged PPC to rise amid the developments and propose realistic solutions for the market’s liberalization and also press ahead with adjustments meeting bailout demands. These include the introduction of NOME auctions, to offer third parties access to PPC’s low-cost lignite sources, as well as a 50 percent reduction of PPC’s dominant market share by 2020. Rather than focus on points of disagreement, PPC could table its own realistic proposal that could be accepted, Benroubi noted.

The Protergia official said that the NOME auction plan, as it stands, would not be implemented as players will not reach an agreement.

Benroubi also described the “Little PPC” plan, or partial sale of the power utility, as not realistic, adding that IPTO, the power grid operator, needs to comply with European standards rather than change opinion on the system’s needs each year.

Existing gas infrastructure must be better utilized, M&M chief tells

Until now, Greece’s goal of becoming a regional gas hub has been based on the prospect of developing new infrastructure projects but, in actual fact, the most important objective should be to better utilize existing facilities such as the Revythoussa LNG terminal on the islet just off Athens, being utilized at a level of 15 percent, and also to create appropriate conditions for a liberalized market in which consumers may have access to the supplier of their choice, Panagiotis Kanellopoulos, chief executive of M&M Gas, a wholesale trading venture involving the Mytilineos Group and Motor Oil Hellas, has stressed at the Athens Energy Forum.

Kanellopoulos pointed out that although conditions provided by both Greece and DEFSA, the gas grid operator, are ready to fulfill consumer needs for importing natural gas through pipelines from the country’s northern borders, the needed legal infrastructure for such an initiative does not exist in Bulgaria. The official added that a small section of pipeline infrastructure linking Bulgaria with Romania has yet to be constructed, depriving the region from access to central European markets.

The market will determine which new infrastructure projects are truly needed and sustainable, the M&M Gas chief told the energy event.

Both the Greek and regional Balkan market are small, but clever ways need to be found to utilize the exisiting infrastructure and increase their usefulness, Kanellopoulos noted.

Mytilineos posts €34.9m net profit for 9-month period, €130.5m energy turnover

The Mytilineos Group has posted solid financial results for the nine-month period, despite pressure caused by a weak financial domestic environment, negative developments in the global commodities market, and delays in investments for new energy projects as a result of geopolitical developments in various markets.

Acknowledging these challenges, the corporate group has taken timely steps to adapt its strategy accordingly focusing on strict cost controls, ensuring increased liquidity and strengthening the competitiveness of its Metallurgy and Energy Sectors, as well as Metka’s furher penetration in new global markets with high growth rates.

The group’s turnover in the nine-month period for 2015 reached 884.4 million euros, from 927.6 million euros during the equivalent period in 2014, a 4.7% drop. Earnings before interest, tax, depreciation and amortisation (EBITDA) reached 150.3 million euros, from 184.1 million euros for the nine-month period in 2014, an 18.3% percent decline, while net profit after tax and minority rights amounted to 34.9 million euros, down 22.4% from 44.9 million euros for the equivalent period in the previous year.

The group’s results for the nine-month period of 2015 were adversely affected by several external factors that have had a negative impact on its three activity sectors. More specifically, the timing in the execution of contracts had a temporary effect on the performance of METKA in the thrird quarter of the year. Also, a sharp drop in the prices for commodities and basic metals, in particular, following the year’s first quarter, negatively impacted the Metallurgy Sector. Finally, delays in the government’s completion of its domestic energy policy, which had been expected in the previous months, has held back the energy sector’s growth potential. The delay in the introduction of a new capacity assurance mechanism resulted in the non-payment to the group of 44.6 million euros representing fees for the Capacity Availability Certificates (CACs) covering the entire year. The energy ministry has pointed out that the CAC compensation mechanism will be re-introduced as of January 2016.

As for the corporate group’s individual activity sectors, the Metallurgy & Mining Sector, despite its reduced performance in the third quarter of this year, emerged as the strongest performer compared to the previous year. This division’s turnover amounted to 421.0 million euros, compared to 344.0 million euros in 2014, a 22% increase. Earnings before interest, tax, depreciation and amortisation (EBITDA) reached 85.9 million euros, against 55.0 million euros during the equivalent period in 2014.

This performance is considered quite satisfactory, as it was achieved during a period characterised by particularly low prices for aluminium, as developments in emerging economies, especially China, adversely affected the metals markets. The “all-in” prices for aluminium dropped by 20 percent during the third quarter of 2015 compared to the first half of 2015, plummeting to new 6-year lows. On the other hand, the decline in oil and natural gas prices and, most importantly, the strengthened performance of the US dollar against the euro, have had a boosting effect on results, especially fully vertically integrated producers such as Aluminium of Greece. In the light of the severe pressures brought on by these developments in the global markets, the corporate group is continuing its efforts for a new, drastic streamlining of its cost structure by launching its “Excellence” Program in the wake of the MELLON cost-cutting program applied in 2013 and 2014. The successful conclusion of the “Excellence” Program, scheduled for completion by the end of 2016, will establish operating cost levels at Aluminium of Greece that promise to transform the enterprise into one of the world’s most competitive and cost-efficient plants, while also creating conditions that will help avoid further turbulence during the current deep crisis and put in place the foundations for future long-term growth.

The EPC Projects division registered a more subdued performance, with ΜΕΤΚΑ posting a turnover of 338.3 million euros for the nine-month period of 2015, from 468.3 million euros during the equivalent period in 2014. Earnings before interest, tax, depreciation and amortisation (EBITDA) reached 52.2 million euros, down from 78.3 million euros for the equivalent period in 2014. Net profit after tax and minority rights reached 30.5 million, against 67.4 million for the nine-month period in 2014. The decline in METKA’s results is considered to be temporary. The company’s continuous branching out into new products, the establishment of METKA-EGN, active in the growing global solar power market, being a recent such example, coupled with its penetration into new geographical regions of increased interest, such as Sub-Saharan Africa, are expected to yield immediate results, from the fouth quarter of this year onwards.

The corporate group’s energy division posted a turnover of 130.5 million euros for the nine-month period of 2015, against 121.9 million euros for the equivalent period in 2014. Earnings before interest, tax, depreciation and amortisation (EBITDA) amounted to 13.3 million against 57.8 million euros for the nine-month period in 2014, a drop attributed almost entirely to the delay in the introduction of the new capacity assurance mechanism that had been expected for 2015 and, consequently, the inability to collect a fee for the capacity made available to the national grid by the group’s power plants the year. In contrast, the decline in natural gas prices, combined with the high efficiency of the group’s units and its ability to purchase natural gas from the LNG market, boosted its electricity production by 14% during the nine-month period of 2015. A further decline in natural gas prices expected during the coming months, along with the anticipated finalisation of the framework for the operation of the market, will strengthen the prospects for a quicker increase of the group’s current share of the wholesale and retail electricity market, which is a key strategic goal for Protergia.

New venture METKA EGN striving for global PV dominance

Mytilineos group member METKA, a leading international EPC (Engineering-Procurement-Construction) contractor and industrial manufacturing group active within the energy, infrastructure and defense sectors, has announced the establishment of a new subsidiary firm, METKA EGN, through a joint venture with the EGNATIA group, with the aim of bolstering its portfolio of activities, including in the rapidly growing solar energy market. METKA holds a 50.1 percent stake in the new venture.

METKA EGN will seek to combine EGNATIA’s experience in EPC projects for solar PV systems and related projects with METKA’s overall energy-sector knowhow, widespread geographical presence, and organizational strength. The new venture will strive to capture a leading international place in the solar PV market.

METKA EGN will mainly focus on serving the needs of major international clients, especially in European, Middle East, African, and Latin American markets. Subsidiary firms fully controlled by METKA EGN have already been formed in the UK and Cyprus, while further expansion is planned within 2015 in main markets of Latin America and the Middle East.

Taking into account works already completed and prospective new projects, it is estimated that METKA EGN’s portfolio will be comprised of projects with a total installed capacity of up to 500 MW by the first quarter of 2016.

METKA signs first major deal in sub-Saharan Africa

METKA, a leading international EPC (Engineering-Procurement-Construction) contractor and industrial manufacturing group active within the energy, infrastructure and defense sectors, has signed a deal for its first major project in sub-Saharan Africa concerning fast-track EPC development of a 250-MW power station in Ghana.

A five-year project to be taken on by a fully-owned METKA subsidiary firm, Power Projects Sanayi Insaat Ticaret Limited Sirketi (Power Projects Limited), it will be based on a BOOT (Build, Own, Operate and Transfer) model.

The deal constitutes part of an emergency plan being pursued by the Ghanese government to tackle electricity shortages in Ghana. It also secures METKA’s first EPC and O&M project in sub-Saharan Africa’s developing energy market.

The project adds over 350 million US dollars to METKA’s current backlog of projects and represents further progress in the company’s strategic objective of capitalizing on its broadened presence in the Middle East and North Africa regions in order to establish itself as a leader in the sub-Saharan energy market.

To facilitate this effort, METKA, a member of the Mytilineos Group – a leading independent energy producer in Greece – has launched a regional office in Accra, the Ghanese capital.

Mytilineos: Gas-fuled power stations rivaling lignite units

Mytilineos Group, a leading independent energy producer in Greece, expects its natural gas-fueled power stations to benefit from lower gas prices, which are making these electricity production units more competitive.

Dinos Benroubi, executive manager at the corporate group’s energy company Protergia, yesterday informed analysts that the current decline of natural gas prices has made gas-fueled power stations competitive against lignite-fired stations. In some cases, the thermal stations have become even more competitive than lignite-fired stations, Benroubi noted.

Traditionally, lignite-fired stations have stood as the lowest-cost option for electricity production in Greece.

The corporate group’s CEO Evangelos Mytilineos elaborated on the wider prospects amid current market conditions. Mytilineos noted current shifts in the Greek market were having a devastating impact, overall. However, the CEO underlined that the imposition of capital controls in Greece has not changed his group’s objectives and financial results to large degree as the Mytilineos Group is internationally positioned.

Commenting on group member Metka – a leading international EPC (Engineering-Procurement-Construction) contractor and industrial manufacturing group active within the energy, infrastructure and defense sectors – the group’s officials noted it is making satisfactory progress with regards to projects gained in sub-Saharan Africa. More details will be announced within the next few weeks, the officials noted.

As for aluminium prices in the international market, the group’s officials admitted these were under pressure, adding, however, that the strong US dollar is offering an advantage to aluminium producers not operating in the USA. The Mytilineos Group operates Aluminium of Greece. Lower oil and natural gas prices are also offering an advantage, the officials noted.

The drop in international aluminium prices has already led to production unit closures in various countries, including China, while these closures amount to a two million-ton decrease in overall production, Mytilineos officials noted. They expect the decrease in aluminium supply will eventually boost prices.


Mytilineos net profit up 36%, energy turnover at 86m euros

Mytilineos Group, a leading independent energy producer in Greece, has reported a 636.5 million-euro total turnover figure for the first half of 2015, a slight 2.5 percent reduction from 653 million euros posted for the equivalent period in 2014.

The corporate group’s EBITDA (earnings before interest, taxes, depreciation, and amortization) reached 118.7 million euros in the first half of 2015, down by 1.3 percent from 120.3 million euros posted for the equivalent period a year earlier.

Net profit following minority interests rose by 35.9 pecent to reach 32.8 million euros from 24.1 million euros a year earlier.

These figures do not include 22.3 million euros worth of CATs (Capacity Availability Tickets) as a result of ministerial delays. Had this amount been factored into the group’s financial results, its EBITDA figure would have been 22.3 million euros greater, while a further 18 million euros would have been added to the net profit figure.

The corporate group’s Metallurgy and Mining division reported the strongest increase with a total turnover of 297.7 million euros for the first half of 2015 compared to 204.8 million euros a year earlier, a 45 percent increase. The division’s EBITDA figure reached 65.4 million euros from 23.7 million euros in the first half of 2014, a 176 percent increase. These figures reflect the success of the division’s decisions to drastically decrease costs and increase the international competiveness of the Aluminium of Greece company. During the first half of 2015, aluminium prices were similar to those of 2014, the US dollar gained considerably against the euro currency, and petrol and natural gas prices deescalated.

The corporate group’s EPC (Engineering-Procurement-Construction) reported a slower performance. Metka posted a total turnover figure of 257.6 million euros in the first half of 2015, down from 361.9 million euros in the equivalent period a year earlier, primarily as a result of a slowdown of projects in Syria.

As for the group’s energy division, which is highly exposed to domestic conditions, it reported a total turnover of 86 million euros for the first half of 2015, down from 90 million euros in the equivalent period of 2014. Increased productivity at the division’s energy stations, combined with access to the LNG market, led to a 5.9 percent increase in electricity production during the first half of 2015. Overall electricity production in the Greek market during this period fell by 8.2 percent, while imported electricity increased by 85 percent. The division’s EBITDA figure fell to 6.6 million euros from 42.4 million euros in the first half of 2014. The decrease was attributed to an ongoing delay by authorities in finalizing new energy market regulations, including a mechanism for capacity assurance and a new mechanism to compensate flexibility.

According to the corporate group’s latest and revised forecast, following the imposition of capital controls, the Greek recession is expected to continue through 2015 for a seventh consecutive year.

Despite these adverse conditions, possibly the harshest faced by the Greek economy in decades, the Mytilineos group has continued to increase its profit performance, strengthen its financial standing, and maintain thousands of jobs, both direct and indirect, all as a result of the corporate group’s export-oriented nature, diversified activity, strict cost control, and continual management of various dangers.

In the immediate future, the corporate group plans to further strengthen its standing in international markets.



Heatwave brings privately run power stations back into play

In recent public debate on Greece’s electricity market, certain participants have contended that privately operated power stations are not necessary as the grid can meet the country’s needs through main power utility PPC’s production capacity, along with the support of imported power. This theory has not proven true amid the high electricity demand generated by the current heatwave in Greece.

Although electricity demand during this current heatwave has admittedly not reached levels struck prior to the recession, when summertime demand rose to levels of as high as 12,000 MW between 2004 and 2008, the system has had to resort to privately run stations and renewable energy sources (RES) for complementary support to PPC’s production.

Demand yesterday, according to official data, peaked at 9,674 MW, while demand for today has been forecast to reach 9,732 MW.

Demand was covered by PPC’s lignite-fired power stations, minus its damagaed stations in Ptolemaida, northern Greece, which all operated at full capacity, as well as PPC plants in Komotini, also in the north, and the utility’s modern stations Lavrio 5 and Megalopoli 5, along with support from privately run stations operated by Heron (Terna-Suez-QPI group, Enthes, Thisvi (Elpedison), Protergia (Mytilineos) and Korinthos Power (Mytilineos, MOH).

Imported electricity is expected to remain extremely limited, while, during certain parts of the day, hydropower stations will also contribute to a certain extent owing to their limits in the summer.

The RES sector has contributed significantly, providing over 2,000 MW during peak-hour demand, primarily through the contribution of photovoltaics.

The marginal price level exceeded 60 euros yesterday and is expected to fall slightly today to 58.873 euros.




Last year’s domestic slump in gas demand rolls over into 2015


The decline of natural gas demand in Greece, which fell by 25 percent, year-on-year, in 2014 has continued into the present year with demand during the first three-and-a-half months down by roughly eight percent compared to the equivalent period last year, according to figures provided by DEFSA, the Natural Gas Transmission System Operator.

The DESFA figures showed that demand during the current year’s first three-and-a-half months amounted to 10.55 million megawatt hours, from 11.47 million MWh during the equivalent period in 2014. In cubic meter terms, consumption reached about 907 million cubic meters for the period, down from 980 million cubic meters in the equivalent period last year.

The drop has been primarily attributed to a considerable reduction in gas-fueled electricity production as a result of regulatory revisions made mid-way through 2014.

DESFA’s latest figures showed that the country’s power stations – both those run by the PPC power utility and independent units – are aborbing 25 percent less natural gas than they were a year ago. The drop for PPC’s power stations, alone, is even greater, at 40 percent.

Demand for natural gas was essentially supported by the industrial sector, small-scale consumers, and, to a lesser degree, certain independently run power stations, whose consumption drop has been fare more restricted than that of PPC’s.

It should be noted that the declining demand for natural gas has coincided with falling natural gas prices, tagged to crude oil price levels.

Officials at DEPA, the Public Gas Corporation, are hoping that a recently announced 16 percent tariff reduction for natural gas in Greece, for all consumer categories, effective as of April 1, may boost demand in the sector.

Should this downward trajectory in natural gas demand be sustained, and no contractual revisions are made between DEPA and its suppliers, primarily Russia’s Gazprom, then a new round of take-or-pay claims will most certainly arise.

Greece overestimated its gas order from Russia for 2014, which subsequently activated a take-or-pay clause in the natural gas agreement between the two sides. The resulting cost for Greece is believed to exceed 100 million euros, if the take-or-pay clause is strictly upheld.

Domestic gas demand last winter was partially covered by LNG imports made by M&M Gas, a Mytilineos Group and Motor Oil Hellas wholesale venture, which capitalized on attractive international LNG market opportunities. Taking this into account, the drop in sales at DEPA is far greater than the overall drop in demand.



DG Comp rejects PPC appeal for tariff to Aluminium SA

The European Commission’s Directorate General for Competition has rejected an appeal by PPC, the Public Power Corporation, which has sought to lift a court-imposed electricity tariff for its electricity supply to Aluminium SA, a member of the Mytilineos Group.

In its appeal, PPC argued it is being forced to supply electricity to Aluminium SA at below-cost levels, based on preceding court decisions, and, therefore, was offering the industrial giant an unfair advantage over fellow EU producers.

Reached on March 25, the Directorate General for Competition decision comes as the fourth successive rejection of PPC action, at an EU level, taken in a bid to lift the imposed electricity tariff for supply to Aluminium SA.

Margrethe Vestager, the European Commission’s antitrust boss, noted that PPC’s price level for Aluminium SA, set at 40.7 euros per megawatt hour by a European Court verdict, neither represents a case of state aid nor offers an unfair advantage for the industrial giant.

According to the Directorate General for Competition, the average price of electricity supplied to similar metal-industry operations in the EU is 30.87 euros per MWh, meaning that Alumunium SA is not enjoying an unfair advantage over competitors when supplied electricity at a rate of 40.7 euros per MWh.

In its latest decision, the Directorate General for Competition noted that PPC maintains monopolies in the power supply and production markets, adding that large-scale industrial enterprises such as Alumunium SA have no other options to turn to. Aluminium SA ranks as PPC’s largest electricity consumer, absorbing five percent of the country’s total amount consumed, and 40 percent of all high-voltage consumption in Greece.

The Directorate General for Competition noted that, based on the scale of its power requirements, Aluminium SA, and all other energy-intensive consumers, cannot rely on any private-sector electricity supplier or imports. It added that, in Greece, PPC controls all of the country’s hydropower and lignite stations, which offer the lowest-cost means for power production. Importing electricity does not stand as a reliable alternative for consumers such as Aluminium SA, entirely dependent on PPC, the Directorate General for Competition noted.


Mytilineos Group quadruples its net profit in 2014

Mytilineos Group, a leading independent energy producer in Greece, has posted a consolidated total turnover figure of 1.233 billion euros for 2014, compared to 1.403 billion euros in 2013.

The corporate group entirely attributed the turnover decline to regulatory changes made in the energy market.

The group’s operating pretax profitability (EBITDA) reached 253.9 million euros in 2014 from 225.3 million euros in 2013. The increase was primarily attributed to the improved performance of the group’s metallurgical division and consistently high performance figures of its EPC (Engineering-Procurement-Construction) division.

Net profit after tax and minority interests quadrupled to 64.9 million euros from 15.9 million euros in 2013.

Providing the group’s most improved year-on-year financial results, the metallurgical division reported a total turnover figure of 470.8 million euros in 2014 from 435.9 million euros in 2013. The division’s EBITDA figure amounted to 87 million euros from 41.6 million euros in 2013, a 109 percent year-on-year rise.

The group’s completion of its “Mellon” investment plan, which offered a drastic reduction of expenses, combined with favorable developments in the international market during the second half of 2014, such as the rise of the US dollar against the euro currency, the drop in oil prices, as well as the stabilization of all-in aluminium prices at higher levels, all contributed to the considerably improved results of the corporate group’s metallurgical division.

The group’s EPC division continued along its positive course for yet another year. Group member Metka, a leading international EPC contractor and industrial manufacturing company active within the energy, infrastructure and defense sectors, posted a total turnover figure of 609.3 million euros in 2014 from 606.5 million euros in 2013. Its EBITDA figure reached 103.9 million euros from 101.9 million euros in 2013. Net profit after taxes and minority interests amounted to 90.2 million euros from 91.7 million euros in 2013.

For yet another year, Metka managed to maintain its financial performance at a high level despite the unstable environment that emerged in Middle East markets. As for the immediate future, Metka plans to continue focusing its efforts on expanding into new foreign markets, with increasing emphasis on the African region, while also increasing its share of the Greek market, backed by its extensive experience and high-level knowhow.

The group’s energy division posted a total turnover of 167.5 million euros in 2014 from 369.1 million euros in 2013, as a result of lower demand and regulatory revisions in the market. Its EBITDA figure reached 74.3 million euros from 89.1 million euros in 2013. The group’s Protergia energy company plans to continue investing in the renewable energy sources (RES) market while also bolstering its presence in the retail market. The recent price reduction of natural gas has increased the level of competitiveness of the group’s power stations, which are expected to play a key role in the grid’s stability over the next few years.

In an accompanying statement released with its financial results, the Mytilineos group noted that, operating amid Greece’s ongoing six-year recession, it has managed to complete a major investment plan in the energy sector, steadily continue with industrial investments that have helped it acquire significant cost advantages in the metallurgical sector, and gradually expand into new markets for energy and EPC projects. The strategy’s overall success, the group statement noted, is reflected by the high-level financial results reported for 2014, a steady debt level reduction, which has fallen by more than 370 million euros over the past two years, as well as the group’s maintenance of a workforce numbering 2,500 employees as well as a far greater number of external associates.


PPC, Aluminium SA pricing policy dispute intensifies

A new chapter has been added to an ongoing pricing policy dispute between PPC, the Public Power Corporation, and Aluminium SA, a member of the Mytilineos Group, following the former’s delivery of an ultimatum, last Friday, demanding that the corporate group find a new electricity supplier within a ten-day period.

The Mytilineos Group’s response to the demand, and whether it will take legal action, remains unknown as, until early today, it had not announced any course of action.

Aluminium SA insists that it should be charged an electricity rate of 42 euros per megawatt hour (36.6 euros per MWh for electricity plus surcharges), based on a decision delivered by RAE, the Regulatory Authority for Energy. PPC, however, claims that the validity of the decision expired several months ago, while contending that it offers a pricing policy for industrial high-voltage consumption based on a board decision, this being 56 euros per MWh, which works out to 53 euros per MWh following certain discounts. Both Aluminium SA and PPC dispute each other’s claims.

PPC contends its accumulated demands from Aluminium SA for 2014 total 67.4 milliion euros, which is being questioned by the latter. Aluminium SA considers that it has paid the State-run company the necessary monthly amounts throughout the year.

Besides the actual figures, the political factor is also at play in this dispute. No government official would desire the closure of an industrial facility amid the pre-election campaign. On the other hand, though, the government is keen to show it will not yield to any pressure from the industrial sector.

Company officials at Aluminium SA have warned that if PPC believes it has the right to cut off electricity supply to a leading customer, then it can go ahead, but, in doing so, it will pay the price of its action.

Without a doubt, the dispute has reached its limits and further developments are expected within the next few days, with all scenarios considered possible.

In October, Aluminium SA won an appeal over electricity tariffs and state aid at the European Court, which ruled as invalid a preceding decision by the Competition Committee, which had ruled that lower electricity rates enjoyed by the company were illegal.


Fairfax subsidiaries buy new round of Mytilineos shares

Subsidiary firms of Fairfax Financial Holdings, a major global financial player, have followed up on a series of recent purchases of Mytilineos Group equity capital by acquiring a further 308,000 common shares worth a total of 1,675,797.20 euros.

This latest move into the equity capital of the Mytilineos Group, one of Greece’s leading industrial groups with activities in the sectors of EPC (Engineering-Procurement-Construction), Metallurgy & Mining, and Energy, was announced as Wade Burton concurrently holds the position of Vice President and Portfolio Manager at Hamblin Watsa Investment Counsel Ltd, a subsidiary firm controlled entirely by Fairfax, while also managing assets of various Fairfax subsidiary firms.

On November 12, Fairfax subsidiary firms had bought 60,000 shares of the listed Mytilineos Group, a purchase worth a total of 339,060 euros. Over the previous two days, on November 10 and 11, the Fairfax subsidiaries purchased 242,000 shares worth a total of 1,352,007.20 euros, after having acquired 185,000 shares worth a total of 1,050,892.50 euros on November 7.

Mytilineos Group net profit increases to € 44.9m for 9-month period

Mytilineos Group, a leading independent energy producer in Greece, has posted an 11.9 percent increase of its operating profitability (EBITDA) for the nine-month period in 2014, to 184.1 million euros from 164.5 million euros in the equivalent period last year.

The corporate group attributed this increase to an improved performance in its mettalurgy and EPC (Engineering-Procurement-Construction) divisions.

Mytilineos forecast that its improved financial figures for the nine-month period pave the way for even better results at the end of the year.

The corporate group also announced an increase in net profit after tax and minority interest of 44.9 million euros for the nine-month period from 24.8 million euros for the equivalent period last year. Extraordinary income provided for Aluminium SA, a member of the Mytilineos Group, following a recent European Court ruling against PPC, the Public Power Corporation, over an electricity tariffs and state aid dispute, was not taken into account for this year’s nine-month net profit figure.

Consolidated group turnover at Mytilineos for the nine-month period reached 927.6 million euros from 1,051.2 million euros during the equivalent period in 2013, a reduction attributed to regulatory changes in the energy market.

The corporate group’s Metallurgy and Mining division posted the biggest improvement, compared to both the previous quarter and nine-month period. The division posted a turnover figure of 344 million euros for the nine-month period from 339.1 million euros during the equivalent period in 2103. Its EBITDA figure reached 55 million euros from 30.1 million euros in the nine-month period of 2013, an 82.7 percent increase. The successful completion of a cost-cutting initiative, combined with favorable developments in international markets, such as the rise of the US dollar and the stabilization of all-in aluminium prices at higher levels, were the contributing factors behind the division’s improved performance.

The Energy division posted a turnover figure of 121.9 million euros for 2014’s nine-month period, down from 311.3 million euros during the equivalent period last year, as a result of lower demand and regulatory changes in the market. The division’s EBITDA figure reached 57.8 million euros from 72.5 million euros, for the nine-month period. In the immediate future, the corporate group’s Energy division will focus its activities on establishing the market position of its Protergia company in the retail market, while also continuing investments in the renewable energy source (RES) sector, in anticipation of the market’s gradual liberalization.

Mytilineos group expresses interest in Larco and PPC

The Mytilineos group’s interest in general mining and metallurgical firm Larco, as well as part of DEI, the public power corporation, has been confirmed by the group’s head, Mr. Evangelos Mytilineos, at a general shareholders meeting.

Commenting on Larco, Mr. Mytilineos noted that its privatization process had been delayed, while also adding that the firm has benefited considerably from the Indonesian crisis, which has prompted an increase in the price of nickel from 13,000 dollars a ton to 19,000 dollars a ton.

As for DEI, the Mytilineos chief said the group would wait for the government’s moves concerning the firm’s corporate break-up before proceeding with any decisions. The power corporation’s break-up will lead to the establishment of what is being referred to as “Little DEI”, a new corporate entity to assume 30 percent of the electricity firm’s production capacity, or between 2,400 and 2,500MW.

Moreover, Mr. Yannis Mytilineos, head of METKA, a member of the Mytilineos group, announced a decision by the firm to renew its drive for infrastructure projects in Greece. It has already secured a 270-million euro project from ERGOSE, a subsidiary of the railway company OSE. METKA plans to take part in tenders for co-financed projects, such as airports and waste management. The firm’s strategy also includes expanding into new territories, especially Africa, where market prospects are substantial for energy and infrastructure projects. According to Mr. Yannis Mytilineos, the firm intends to transfer to Greece earnings generated by its international business activity.