PPC, IPTO see big potential in broadband development PPPs

Power utility PPC and power grid operator IPTO, both seeing enormous potential in the further utilization of their thousands of kilometers of distribution and electricity transmission networks covering the entire country, have emerged as contestants in a tender for a broadband network expansion project, one of Greece’s biggest Public Private Partnerships (PPPs) to date.

PPC and IPTO know well their existing nationwide infrastructure is a treasure whose potential is far from fully realized. Fiber optics and a large range of telephone and internet services can be added to this infrastructure.

The PPP tender is offering contracts for the development of ultra-fast broadband networks in seven parts of Greece that have not been included in investment plans shaped by telephony providers. The project is budgeted at 870 million euros.

Besides PPC and IPTO, three telecom companies, OTE, Vodafone and Wind, four construction firms, Terna Energy, Mytilineos, Intrakat and AVAX, as well as the Sultanate of Oman’s Oman Fiber Optic SAOC have emerged as first-round contenders for the tender.

Partnerships could be established between some of these ten participants, or with other investors who may be emerge later on.

According to the tender’s initial terms, bidders or bidding teams are entitled to be awarded up to three regions.

ELPE roadshow ahead of bond issue, €300-400m sought

Hellenic Petroleum ELPE has organized a series of meetings with institutional investors over the next few days to pitch an imminent five-year bond issue aiming to attract a capital amount of between 300 and 400 million euros at an interest rate, according to some sources, of just under 3 percent.

The ELPE bond issue could take place this week, sources have informed.

The listed petroleum group has asked participating banks to organize a series of presentations, the first in London today. Zurich and Paris follow tomorrow, while an Athens session is planned for Thursday.

ELPE officials are optimistic on the prospects of the bond issue, whose objectives include premature settlement of a bond with a 4.875 percent interest rate, expiring October 2021. This bond is worth 449.53 million euros.

The new ELPE bond issue comes amid a favorable time for the Greek economy and following a successful bond issue by Hellenic Telecommunications OTE.

A privatization plan to offer part of the Greek State’s 35.48 percent stake of ELPE has yet to be finalized, according to energy minister Costis Hatzidakis. Sources insist the privatization will take place through the Athens bourse.

New minister set to present PPC recovery plan details

Hydropower units belonging to the power utility PPC will not be sold; NOME auctions will be abandoned; and electricity costs for consumers will not rise, the newly appointed energy minister Costis Hatzidakis is expected to announce later today when the New Democracy party presents its wider  policy program.

The minister is also expected to present details of a plan to seek strategic investment into distribution network DEDDIE once control of the network is transferred from PPC to the subsidiary with the permission of creditor banks.

Prime Minister-elect Kyriakos Mitsotakis is expected to make a general announcement on this network sale plan before his energy minister follows up with further details. The procedure will offer full protection for PPC’s interests, including compensation for the sale, the government officials are expected to stress.

The minister’s plan for an end of NOME auctions, launched about three years ago to offer independent parties access to the power utility’s lower-priced lignite and hydropower sources, was approved by the country’s lenders last week at a meeting between the two sides in Athens.

A transition plan leading to the launch of the target model, to offer market coupling, or harmonization of EU wholesale markets, is expected to be reached between the minister and the lenders when they next return to Athens for official talks in September. The transition plan will be designed to ensure that supply markets remain fully operational ahead of the target model’s launch.

The energy minister’s promise of no electricity cost increases for consumers will be accompanied by details of the state-controlled power utility’s more ruthless handling of unpaid receivables owed by consumers believed to be able, even affluent, but unwilling to cover their power bill debts. PPC is under financial pressure.

The government intends to reshape PPC along the lines of the transformation of telecommunications company OTE, a corporation in which the Greek State now holds just 5 percent, Deutsche Telekom being the main shareholder with a 45 percent stake.

Besides preventing a systemic crisis posed by PPC’s current financial woes, a rebound by the power utility would also send out a positive message for the Greek market to domestic and foreign institutional investors.




Energy deputy: ‘OTE should serve as an example for PPC’

The electricity market’s liberalization will help the power utility PPC restructure, as was the case with the Hellenic Telecommunications Organization OTE, the newly elected centre-right New Democracy government’s deputy energy minister Gerassimos Thomas supports.

The official, backed by experience as a deputy at the European Commission’s Directorate-General for Energy, has not specified what action should be taken if PPC’s current bailout-required disinvestment of lignite units fails to deliver.

But he is in favor of a national policy for the energy system’s decarbonization that would take initiatives and move a step ahead of bailout requirements rather than simply observe them.

It remains to be seen if further measures – beyond PPC’s lignite units disinvestment and the NOME auctions – will be needed for the electricity market’s liberalization, Thomas had commented late last year, adding, at the time, that the country has spent the last 8 years relying on the bailout program as its guide. Irrespective of this, the country needs to look at where it is heading and take initiatives as the market is changing completely, he added.

Thomas is a firm supporter of renewable energy and is expected to give priority to this sector.

On the NOME auctions, the official believes that their failure, so far, to break PPC’s market dominance must first be analyzed before any further action is taken.



OTE, Eunice removals a wider warning for NOME bidders

LAGIE, the Electricity Market Operator, has eliminated two firms, OTE and Eunice, from tomorrow’s NOME auction for insufficient provision of electricity load data, sending a wider message to all participants that monitoring rights will be fully resorted to in order to combat various irregularities and problems.

Both OTE and Eunice described their eliminations as unfair and declared they would appeal.

Some pundits believe these eliminations also serve as warnings for traders believed to be preparing to bid aggressively at tomorrow’s auction for electricity amounts to be exported to markets where wholesale electricity prices are higher.

Aggressive bidding by export-minded traders would force local suppliers to purchase NOME electricity amounts at higher prices offering narrower profit margins for supply activity in the local market.

Besides the role of traders, officials also fear prices at tomorrow’s NOME auction could be boosted to higher levels as a result of the increasing cost of CO2 emission rights and elevated wholesale electricity prices around Europe.

A starting price of 36.34 euros per MWh has been set for tomorrow’s auction, up from the previous level of 32.05 euros per MWh.

Thoughts by officials to introduce new measures limiting NOME-acquired electricity exports, a planned phasing out of the auctions in accordance with the main power utility PPC’s bailout-required disinvestment of lignite units, as well as an uncertainty surrounding the auctions following the target model’s implementation, are all factors expected to impact tomorrow’s session.

Some pundits believe participants will stretch themselves to their limits to acquire the biggest possible electricity amounts tomorrow given the tougher, and uncertain,  NOME conditions ahead.

As for industrial consumers, NOME price levels of between 42 and 43 euros per MWh tomorrow will enable independent energy firms to also enter the high-voltage market and supply small-scale customers. If prices rise to levels of around 47 euros per MWh, then the main power utility PPC’s price levels for industrial consumers will remain more competitive.





OTE entry into electricity market to impact conditions

A decision by Greek telecommunications market leader OTE to make a full-fledged entry into the retail electricity market, according to energypress sources, promises to make an enormous impact on the market and create new market conditions.

OTE already holds a supply license, which the company has so far utilized for self-supply purposes concerning facilities and stores. This activity alone represents a 0.3 percent share of the retail electricity market.

The company’s press office, contacted by energypress, insisted OTE intends to continue using its electricity supply license to service its own needs.

However, market officials informed that the telecommunications giant is already maneuvering to consolidate its place as an electricity supplier in the wider market and may have already secured agreements with certain mid-voltage customers. A turn by OTE to the low-voltage market appears to be the next step.

An application submitted by OTE for registration at ESEPIE, the Hellenic Association of Electricity Trading & Supply Companies, which suggests the firm is planning to become an active electricity supplier, has been approved. ESEPIE represents electricity supply firms that are not vertically integrated, or do not own electricity generation facilities.

OTE possesses an enormous network, a strong brand name, a wide customer base, as well as advanced retail knowhow.

Questions have been raised as to whether the smaller electricity suppliers will be able to remain independent now that Greece’s retail electricity market appears to have gained another major independent player in addition to three vertically integrated companies and the natural gas firms.

Conditions are currently extremely challenging for players in Greece’s retail electricity market. The number of punctual customers has been significantly reduced and the mid-voltage sector does not offer a respectable profit margin. So far, the market’s 18 independent players have managed to capture a collective 18 percent of the market. The lion’s share is still held by PPC, the main power utility.