Hydrogen factor needed for financing of South Kavala UGS

Development of an underground natural gas storage facility (UGS) in the almost depleted South Kavala offshore natural gas field will require a solution incorporating hydrogen into the investment, estimated between 300 and 400 million euros, which would categorize the project as eco-friendly and facilitate European Investment Bank financing.

As has been made clear by the energy ministry, Greek privatization fund TAIPED, currently conducting a cost-benefit analysis, will need to consider this prospect and plan for a storage facility holding hydrogen or a mix of this fuel with natural gas. Installation of carbon-capture and storage technology may also be helpful.

The EIB will stop financing conventional natural gas projects as of 2022. The bank may exempt from this rule projects limiting their emissions to 250 grams per KWh of energy produced.

This emission limit can only be achieved if natural gas is mixed with hydrogen, a prospect requiring higher-cost technologies but aligning the UGS with EU policies for full decarbonization in Europe by 2050.

The privatization fund has just launched an international tender for the South Kavala UGS in an effort to achieve EU funding for the project before a crucial EU funding deadline expires.

As a Project of Common Interest, this UGS is eligible for funding through the EU’s Connecting Europe Facility, vital for the investment’s sustainability. However, investors behind the project will need to submit their CEF application by the end of 2020.

The UGS South Kavala is intended to serve as energy infrastructure that will enhance supply security in the Greek market as well as  southeastern Europe.


Tender launched for South Kavala underground gas storage facility

The Hellenic Republic Asset Development Fund (HRADF), following the decision of its Board of Directors, has launched an international public tender process for the concession of the use, development and operation of an underground natural gas storage facility (UGS) in the almost depleted natural gas field of “South Kavala”, it has announced in a statement.

The almost depleted natural gas field “South Kavala” is located in the southwestern part of the Prinos-Kavala basin, in 52 meters of water depth in the North Aegean Sea, about 6 km off the west coast of Thassos.

The duration of the concession agreement will be up to 50 years following the licensing of the UGS in South Kavala. The conversion of the natural gas field “South Kavala” into a UGS will be carried out by the concessionaire within a binding period to be determined in the concession agreement.

The UGS South Kavala is intended to serve as an energy infrastructure that will enhance the security of supply in the Greek market as well as in southeastern Europe ensuring gas supply to end users and facilitating the security-of-supply obligations of power producers and natural gas suppliers.

Tender process

The tender process for the award of a concession agreement for the use, development and operation of the UGS South Kavala will be held in two phases: a) submission of expressions of interest and pre-qualification of interested parties and b) submission of binding offers and selection of concessionaire.

The details of the tender process are described in the Invitation to submit an Expression of Interest which is available on HRADF’s website. Interested parties are invited to submit their expression of interest by no later than August 31st, 2020, 14:00 (GR time).

PriceWaterhouseCoopers Business Solutions S.A. (Financial), ROKAS Law Firm (Legal) and Seal Energy Pty Ltd (Technical) act as advisors to the Fund regarding the tender process.

Seven bidders through to DEPA Commercial sale’s final round

The Board of Directors of the Hellenic Republic Asset Development Fund (HRADF), during today’s meeting decided, that seven interested parties meet the criteria to participate in Phase B (Binding Offers Phase) of the tender process for the acquisition of 65% of the share capital of DEPA Commercial (Trade) S.A., with an option of acquiring the total of its issued share capital by virtue of a Memorandum of Understanding (MoU) between DEPA S.A. shareholders, HRADF and Hellenic Petroleum S.A. (HELPE), the development fund has announced in a statement.

The prequalified interested parties to participate in Phase B of the tender are (in alphabetical order):


Following the signing of the relevant Confidentiality Agreement, the prequalified interested parties will receive the documents of Phase B (Binding Offers Phase) and will grant access to the virtual data room (VDR), where data and information related to DEPA Commercial S.A. are uploaded, the statement added.





Post-lignite plan to Boston Consulting, Grant Thorton

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

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

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

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

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

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

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

Decarbonization an independent business plan linked to NSRF

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

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

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

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

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

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

ELPE privatization headed for delay, lenders have approved

A privatization plan for part of the Greek State’s 35.48 percent stake in Hellenic Petroleum (ELPE) will be delayed for next year as current market conditions are not favorable, while the procedure could even be reassessed from scratch, sources have informed.

This delay, sources said, has already been approved by the country’s lenders, who have admitted the ELPE privatization has never represented a restructuring plan for the Greek economy, but, instead, is a cash-collecting initiative incorporated into the wider effort to reduce public debt.

A government plan to sell the Greek State’s ELPE stake through the Athens bourse was recently reported as finalized and ready for implementation next month.

The Latsis group’s Paneuropean Oil, ELPE’s main shareholder with a 45.5 percent stake, has been allowed a more influential administrative role at ELPE since the summer’s Greek election brought in a new government.

Energy minister Costis Hatzidakis, speaking in Greek Parliament, has noted there is no intention to sell the Greek State’s entire ELPE stake. It remains unclear what the level of the Greek State’s percentage in ELPE could be following the privatization.

TAIPED, the privatization fund, holds the Greek State’s stake in ELPE. A sale of this stake through the bourse would require a legislative revision.

Energy ministry pushing for swift completion of DEPA privatization

Swift completion of gas utility DEPA’s privatization procedure is a key objective for the energy ministry, whose choice of sale model will be strongly influenced by the time needed for implementation.

Opting to continue with the previous Syriza government’s unfinished DEPA sale procedure, instead of adopting a more recent New Democracy administration proposal that would entail the establishment of a holding company, appears to be the likeliest way to go, energy ministry sources have underlined.

Energy ministry and privatization fund TAIPED officials, along with legal consultant Potamitis Vekris and financial adviser UBS, held a meeting yesterday to discuss the DEPA privatization.

The previous government’s DEPA sale plan, involving a company split designed to offer investors separate stakes in two new entities, DEPA Trade and DEPA infrastructure, appears to be the favored option at this stage, with one big difference, this being to offer majority 65 percent stakes in each of the two new companies.

Under the Syriza version, investors would have been offered a majority 50.1 percent stake of DEPA Trade and 14 percent minority stake of DEPA infrastructure.

The government’s newer and less likely option, entailing the establishment of a holding company as a platform for two to three companies representing DEPA’s trading, network and international activity interests, has not been completely ruled out.

The recently elected government wants the DEPA privatization to be among its first sales. It intends to launch a tender in autumn for completion as soon as possible.

Upcoming endorsement of new DEPA leadership first of 3 steps

The privatization fund TAIPED’s anticipated approval, on August 30, of the new leadership at gas utility DEPA represents the first of three key step leading towards a new era for the company.

Earlier this month, Konstantinos Xifaras, a former managing director at gas grid operator DESFA, was named for the equivalent post at DEPA, while Giannis Papadopoulos, managing director at venture capital firm Attica Ventures, was announced as the gas utility’s new company president.

DEPA shareholders will immediately follow up with an extraordinary meeting to offer their approval of the company’s new two-pronged leadership.

Around the same time, a second key step is planned to be taken in the form of an amendment to be submitted to Parliament for a revision of the previous Syriza government’s DEPA split plan. It had envisioned the establishment of two new corporate entities, DEPA Trade and DEPA Infrastructure, as a prelude to the sale of a 50.1 percent stake in the former and a 14 percent stake in the latter.

The recently elected conservative New Democracy government appears determined to pursue a more aggressive DEPA sale policy that will offer majority stakes in both the utility’s trade and network interests. However, finalized decisions on a new company model, the third key step, have yet to be made.

Tender offering DEPA Trade majority to be launched April 8

A tender offering a majority stake (50% plus one share) of DEPA Trade, one of two new corporate entities to emerge from gas utility DEPA’s split as part of its privatization plan, is expected to be launched on April 8, one month after tomorrow’s anticipated ratification of a related draft bill.

Investors will be offered a minority stake in DEPA Infrastructure, the split’s other new entity, at a latter date.

The privatization fund is now working on the tender’s documents, energypress sources have informed.

DEPA Trade’s minority for the Greek State will be transferred to the country’s privatization fund, according to the procedure.

The Greek State’s stake in DEPA Infrastructure, no less than 51 percent, will be handled by the energy ministry, according to the privatization plan.

Also, the transfer of DEPA Infrastructure’s minority stake will not be able to take place until procedures have been completed for the transfer of DEPA Trade’s majority stake.



PPC, under privatizations fund control until 2047, advised to shape up

The main power utility PPC, like all other Greek State assets transfered to the country’s new privatizations superfund, the Hellenic Corporation of Assets and Participations (HCAP), has been included in a 25 billion-euro guarantee offered to the country’s lenders for an 86 billion-euro loan received by Greece three years ago though the third bailout.

This effectively means that HCAP will maintain the right to liquidate its stake held in PPC, like all other Greek assets transferred to the privatization fund, until 2047 if the Greek State requires support to achieve its fiscal obligations.

For the time being, the privatizations superfund’s plan for PPC is moving away from such a prospect and aiming to restructure the power utility as a more efficient and profitable enterprise that will offer improved services to customers at the lowest possible cost.

A few months ago, the new privatizations superfund forwarded a strategic plan to PPC administration underlining the power utility’s widely known issues, as well as new proposals, to help the firm enter a new chapter in its corporate history.

Proposals include a voluntary exit program for all employees eligible for retirement. PPC’s boss Manolis Panagiotakis has also pointed out this need on a number of ocassions. The HCAP strategic plan also underlines the need for PPC to reexamine its overtime and seasonal employment policies, as well as the utility’s overall workforce. PPC currently employs 3,433 staff members at mines, 4,671 at power stations, 971 in the commerce division, and 1,515 in administration.

HCAP also wants the utility to reexamine a plan that would offer private-sector companies a slice of utility’s customer base. This plan has stalled.

The privatization fund has also advised PPC to reexamine its retail network and pricing policies.

Detailed reference has also been made to a series of challenges faced by the power utility such as its extraordinarily high level of unpaid receivables, a bailout-required market share contraction and a subdued cashflow. Reduced operating profits between 2018 and 2020 are possible at PPC as a result of these issues, the privatization fund noted.

PPC needs to reduce its retail and production market shares to less than 50 percent by 2020 and also disinvest mines and power stations representing 40 percent of its lignite capacity. In addition, the utility will need to adapt to an EU policy aiming to increase the share of renewable energy in the continent’s energy mix. The wholesale market also needs to be reformed in line with the Target Model, aiming to harmonize the electricity wholesale market with EU standards.

Given all these factors, the privatization fund has advised PPC to reexamine its investment plan and reshape as a modern energy company. This plan anticipates an entry into the natural gas market and a reduction of the utility’s unpaid receivables figure, currently estimated between 2.3 and 2.7 billion euros.




Number of privatization fund orders for PPC not in business plan

A list of super privatization fund orders for the main power utility PPC, published yesterday and intended to help restructure the company and boost its performance, include a number of demands that have not been included in the power utility’s business plan.

These include a voluntary retirement plan for older personnel at a retirement age, as well as an end to overtime pay, additional shifts and seasonal hirings.

The fund has also called for a restructuring of the power utility’s workforce. At present, 3,433 workers are employed at PPC’s mines, 4, 671 in production, 971 in trade, amd 1,515 in administration.

The privatization fund is also demanding a reassessment of the firm’s network of retail outlets.


Privatization fund advises PPC to reexamine investment plan

The country’s new super privatization fund has advised the main power utility PPC to reexamine its investment plan and transform into a modern multi-faceted energy company that will enter the natural gas market, offer wide-ranged energy services and improve its handling of unpaid receivables, estimated at between 2.3 and 2.7 billion euros, in an effort to overcome numerous challenges ahead.

In its report, the privatization fund does not rule out the possibility of reduced operating profit levels between 2018 and 2020 as a result of the power utility’s elevated unpaid receivables, bailout-required electricity market share reductions to levels of less than 50 percent by 2020, obligation to disinvest its lignite capacity and limited liquidity.

The fund makes extensive reference to PPC’s needto adapt amid a changing environment shaped by the imminent energy mix change, on a European level, as a result of the EU’s policy shift favoring the renewable energy sector and the transformation of the wholesale market in accordance with the target model plan, aiming to harmonize EU wholesale markets.

In the privatization fund’s report, PPC has also been advised to seek alternative financing solutions for 1.3 billion euros worth of loans maturing in 2019 and to proceed with environmental upgrades of old lignite-fired power plans, such as the Amynteo facility in the country’s north.

The report divides PPC’s needs into six categories. One of these recommends a bolstering of the utility’s financial position. In another category, the report calls for PPC to respond to regulatory demands for the establishment of a sustainable energy model. The completion of the lignite disinvestment plan is included in this section. In the third category, the report stresses the need for new products and services, including a natural gas market entry. A fourth category focuses on the need for pricing policy revisions, the aim being to retain customers servicing their electricity bills. In the fifth category, the privatization fund places emphasis on the need for a more dynamic RES sector presence. The sixth category calls for PPC to achieve economies of scale at all levels.








Privatization fund advises urban rail firm to seek lower electricity prices

STASY, the urban rail transport company managing the Greek capital’s tram, suburban rail and metro services, has been advised, by the country’s new super privatization fund, to renegotiate for lower-price electricity from suppliers. Electricity represents the transportation firm’s second largest operating cost.

The privatiation fund sees a reduction in electricity costs as essential for the sustainability of STASY, its parent company OASA (Athens Urban Tranpsort Organization), as well as fellow subsidiary OSY (bus service company).

At STASY, the company payroll, its main expense, amounted to 78.5 million euros in 2016, representing 60.8 percent of the firm’s total operating expenses. The firm’s electricity cost totalled 20.5 million euros in 2016, representing 15.9 percent of total operating costs.

The electricity-cost reduction advice for STASY was included in a 48-page strategic plan drafted recently by the privatization fund. The plan does not specify whether reduced electricity tariffs should be sought from the main power utility PPC or independent suppliers.

Besides the public transportation sector, energy costs represent the main cost for most utilities now controlled by the privatization fund. Similar cost-reduction advice has been extended by the fund to all state-controlled enterprises under its control.

Further mild market share loss at PPC, ELTA gains ground

The main power utility PPC appears to have lost approximately one percentage point of its retail electricity market share in February, down to 84 percent from 84.9 percent in January, unofficial data suggests.

This latest retreat adds to half a percentage point shed by PPC in January, following an upward trajectory over three consecutive months in the fourth quarter of 2017.

Even so, PPC’s market share contraction remains insufficient, and, at such a rate, the end-of-year target included in the bailout will not be achieved.

The power utility missed the target set for the end of 2017 by more than ten percentage points, meaning it will need to move particularly fast to make up this lost ground and also cover the target set for 2018.

The February results for other suppliers were assorted. Market share increases and decreases were registered, according to the unofficial data.

Hellenic Post (ELTA), still hovering with a small market share, gained ground, especially in the mid-voltage category. The state-controlled postal company, seeking needed additional revenue in the retail electricity market, is competing fiercely through low-price offers, especially in the mid and high-voltage categories. Subsequently, ELTA is primarily attracting new customers from independent suppliers rather than PPC.

Company officials at rival suppliers have reported that ELTA is offering below-cost packages, which will lead to inevitable losses for the firm.

The Greek State holds a 90 percent stake in ELTA. Eurobank controls the firm’s other 10 percent.

The country’s new super privatization fund, now controlling ELTA, has warned the firm that its entry into Greece’s retail electricity market constitutes a high-risk venture. The privatization fund is not expected to tolerate further losses at ELTA.



Ailing ELTA, eyeing electricity market entry, warned of risks

ELTA, Hellenic Post, making plans to enter the retail electricity market as a move that could generated additional, and needed, revenue from an alternative source, has been warned by the country’s new super privatization fund, now controlling the enterprise, that such an initiative carries considerable risk, which could lead to repercussions if the endeavor is not successful.

The fund, in a report listing business proposals for ELTA, makes clear that the country’s retail electricity market offer opportunities as a result of its liberalized conditions, lower wholesale electricity prices, and NOME auctions as lower-cost purchase platforms for suppliers. However, the fund also warns of a high risk entailed as a result of price fluctuations and electricity bill collection difficulties.

Struggling to remain afloat, ELTA, cannot affort to make any wrong moves. The Greek State’s 90 percent stake in the enterprise is now controlled by the privatization fund. Eurobank holds the firm’s other 10 percent.

ELTA, already covering its own energy needs through electricity amount purchases at previous NOME auctions – introduced late in 2016 to offer suppliers access to the main power utility PPC’s low-cost lignite and hydropower sources – is now preparing to utilize its extensive nationwide retail network for a wider entry into the electricity market in 2018, according to sources.

The firm aims to sell an electricity amount of 72,500 MWh in 2018, including to company employees and associates, which could provide revenues of 20 million euros.

At present, ELTA employs 6,418 persons, operates 690 retail outlets, 694 agencies, 81 distribution centers as well as 10 processing units around Greece. It posted a turonover figure of 311.8 million euros last year, down 40 percent from 521.1 million euros posted in 2010, when the recession had just begun to impact the country. Profit fell from 3.2 million euros to just 400,000 euros last year.

Mytilineos makes Amynteo upgrade offer for power deal

The Mytilineos corporate group’s chief executive Evangelos Mytilineos has made a 110 million-euro offer to upgrade the main power utility PPC’s ageing Amynteo lignite-fired power plant in exchange for a favorable long-term electricity supply agreement. This initiative comes as one of three key moves promised but not disclosed by the CEO earlier this week.

The offer, a written statement, was forwarded to state-controlled PPC’s head official Manolis Panagiotakis, energy minister Giorgos Stathakis and the country’s new privatizations superfund director Ourania Ekaterinari.

The Amynteo facility has been excluded from a bailout-required sale package of PPC lignite units.

In the offer, Mytilineos highlights the key role played by PPC over the years in supporting the industrial sector, adding that the time has now come for industry to support PPC.

The industrialist’s offer requests the establishment of an electricity supply agreement with PPC, offering between 300 and 400 MW per year, until 2030, as well as the right to use 90 percent of this supply. Mytilineos left open the possibility of other industrial enterprises also taking part in the agreement.

Such an agreement would secure competitively priced electricity for energy-intensive Greek industries.

Mytilineos noted that such an agreement could be utilized to help the utility reach bailout-term objectives by factoring in the mid-voltage share (up to 20 percent) into PPC’s retail electricity market share contraction requirement.

As part of the agreement, METKA, a Mytilineos group subsidiary providing a complete range of Engineering-Procurement-Construction (EPC) services for energy and infrastructure projects, could take on the Amynteo upgrade project without delay, the group’s CEO noted in the offer.

Such a development would enable PPC to continue operating its ageing Amynteo plant, whose lifespan is currently limited, and save PPC capital for other needed investments. Also, an upgraded Amynteo facility would be eligible for CATs and offer job security for staff working at the facility.

Mytilineos has asked PPC to confirm whether the utility is interested or not in the proposal by February 28, so negotiations may begin.


Privatization fund’s binding strategic plan for PPC ready

The new privatization superfund’s strategic plan for the main power utility PPC will enforce a number of measures, including stricter cost control and a more effective electricity bills collection policy, as part of an effort to improve the power utility’s profitability and overall efficiency. The fund now controls a 34 percent stake of PPC.

Officials representing the new privatization superfund, which has taken its precursor TAIPED under its wings as a subsidiary, are expected to meet with PPC’s leadership within the next few weeks and present their strategic plan for the power utility. A date for this meeting has yet to be set.

PPC will need to adapt its business plan in accordance with the requirements set in the fund’s strategic plan. However, acknowledging the immense pressure PPC is now under to meet bailout-required measures, the fund is not expected to push for immediate implementation of its strategic plan. PPC is moving to sell lignite units and must also reduce its dominant market share by offering rival suppliers lower-cost electricity through NOME auctions.

Also, PPC, along with two other utilities now transferred to the fund – EYDAP, the Athens water utility, and EYATH, the Thessaloniki water utility – are all listed firms, meaning the presence of minority shareholders from the private sector will somewhat limit the extent of changes that can be made.

Even so, regardless of the aforementioned factors seen restraining the fund in its handling of PPC for a while, old and ineffective ways practiced at the power utility will definitely be ended. The payroll, for example, infamously burdened by issues such as excessive overtime pay, will be subject to particular scrutiny.

The new superfund’s chief official, Ourania Ekaterinari, is very familiar with PPC’s strengths and weaknesses as she had served as the utility’s deputy chief between 2010 and 2015.

The boards of all utilities, whether listed or not, including PPC’s leadership, will also be evaluated from scratch. Any members believed to be underperforming will be replaced. The term of PPC chief executive Manolis Panagiotakis is set to expire in less than three months, on April 7.




PPC social policy to require privatization fund approval

Main power utility PPC’s social policy, offering subsidized electricity to underpriviledged households, will be cost-assessed by the country’s lenders from early in 2018, when utilities will be tranferred to a new super-privatization fund, energypress sources have informed.

All other utilities offering similar-minded social policies, which, along with PPC will be transferred to the new super-privatization fund, will also be scrutinized.

The new super-privatization fund will control PPC with a majority 51 percent stake.

Overall, the Greek State’s social policies for underprivileged groups, supported by consumers for decades through various surcharges imposed on utility bills, will now be subject to the approval of the country’s lenders.

Though the energy ministry appears to be planning to reduce the RES-supporting ETMEAR surcharge appearing on electricity bills as well as a supplier surcharge, moves believed to be feasible as a result of expected RES special account surplus figures, any intended initiave will first need to be endorsed by the new super-privatization fund.

According to sources, the energy ministry’s planned reductions of the aforementioned surcharges, which feed the RES special account, have disgruntled the country’s lenders. The lenders fear that any such cuts could lessen amounts being provided for Public Service Compensation (YKO), which would then create offsetting needs.

The YKO surcharge is imposed on electricity bills to primarily subsidize high-cost electricity production on Greece’s non-interconnected islands and also support the Social Residential Tariff (KOT) program.

According to super-privatization fund sources, the Greek State will need to be able to fully cover the cost of any social policies practiced by PPC or any other utility.