privatizations

DEPA Comm VDR open; 5-year stay for Infrastructure buyer

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The video data room for the privatization procedure of DEPA Commercial, one of two new gas utility DEPA entities placed for sale, is now open to prospective bidders, but initial information made available is limited to non-financial details.

Financial details on DEPA Commercial will be made available as a second step to all consultants representing the potential buyers, while a third and final stage will follow to conditionally offer bidders confidential information in person at the DEPA headquarters.

As previously reported, the second-round, binding-bids deadline for the DEPA Commercial sale, offering investors a 65 percent stake, has been extended to March, 2021.

The field of second-round qualifiers is comprised of two partnerships, Hellenic Petroleum (ELPE) with Edison and power utility PPC with Motor Oil Hellas, plus Mytilineos, TERNA, the Copelouzos group, Shell, and the Swiss-based MET Group.

As for DEPA Infrastructure, the other new DEPA entity up for sale, energy minister Costis Hatzidakis is preparing a legislative revision that will require the winning bidder to retain its company shares for a period of at least five years.

This condition will also apply for the DEPA Infrastructure subsidiaries EDA Attiki, EDA Thess and DEDA, the gas distributors covering the wider Athens area, Thessaloniki-Thessaly and rest of Greece, respectively. DEPA fully owns DEDA and EDA Attiki and holds a 51 percent stake in EDA Thess.

The DEPA Infrastructure binding-bids deadline has also been extended to the end of February, 2021. Italgas, EPH, First State Investments, KKR, Macquarie and Sino-CEEF have qualified for the final round.

 

RAE issues undermining DEPA Infrastructure privatization

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Delays, instability and flawed intervention by RAE, the Regulatory Authority for Energy, on important operating issues concerning gas utility DEPA’s subsidiaries EDA Attiki, EDA Thess and DEDA – the three distributors covering the wider Athens area, Thessaloniki-Thessaly and rest of Greece, respectively – are undermining the privatization procedure for DEPA Infrastructure, a new DEPA entity placed for sale, DEPA Infrastructure has warned in a letter to the authority.

In the letter, also forwarded to privatization fund TAIPED and the energy ministry, DEPA Infrastructure complains of a RAE delay in endorsing EDA tariffs for 2019 to 2022, which has consequently placed the gas company’s development plan in turmoil.

Besides not having reached a decision on gas distribution pricing policy, the authority has changed the WACC level three times since last year, including recently, which has negatively impacted the yields of DEPA subsidiary investments, sources noted.

Also, RAE regards initiatives taken by the three gas distributors to attract more consumers to the natural gas market as a form of state aid, DEPA Infrastructure protests in the letter, referring to distribution network connection fee discounts offered by the distributors, as well as subsidy support for natural gas system installations.

Any moves to curb these initiatives promoting gas usage would derail the natural gas sector’s energy-mix penetration target for 2030, as specified in the National Energy and Climate Plan, DEPA Infrastructure contends.

These unfavorable conditions threaten to delay the DEPA Infrastructure privatization, company sources stressed.

The sale procedure’s video data room is still lacking vital information for prospective bidders, who could begin seeing the DEPA Infrastructure privatization as a high-risk investment, the sources noted, adding that WACC level reductions will ultimately reduce the market value of DEPA Infrastructure and the subsidiaries.

DEPA Commercial, DEPA Infrastructure binding-bid deadlines extended

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The second-round, binding-bid deadlines for the privatizations of gas utility DEPA’s two new entities, DEPA Commercial and DEPA Infrastructure, have once again been reset for latter dates despite the government’s recent approval of privatization fund TAIPED’s revised Asset Development Plan.

According to sources, the new binding-bids deadline for DEPA Commercial, a privatization expected to draw major interest as a result of the company’s strong market standing and potential, has been reset for March, instead of December.

According to some sources, TAIPED wants to include improved DEPA Commercial results anticipated for the third quarter into the sale’s video data room, whose data will be assessed by prospective bidders once they sign confidentiality agreements.

TAIPED will, as a result, aim to achieve a higher selling price for DEPA Commercial, which has recaptured market share losses.

Other sources insist the rescheduled date is linked to an uncertainty felt by investors over DEPA’s ongoing legal dispute with ELFE (Hellenic Fertilizers and Chemicals).

A DEPA appeal of a court verdict that disapproved the utility’s pricing policy for ELFE is scheduled to take place in January, while a ruling will be delivered even later. Investors want clarity on this front before they can submit binding bids.

DEPA Infrastructure’s deadline for binding bids has now been rescheduled for February instead of January.

Pundits have attributed this development to a failure by RAE, the Regulatory Authority for Energy, to finalize a gas distribution network pricing policy by September, as had been planned. The authority has yet to offer a new date for the new network pricing policy, sources said.

Prospective bidders consider this pricing detail crucial as it determines the earnings level of DEPA Infrastructure.

 

Revision to ensure HEDNO framework for privatization

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A legislative revision set to be submitted to parliament by the energy ministry will enable the implementation of a new regulatory framework for DEDDIE/HEDNO, the distribution network operator, as of January 1, 2021, as planned by a revised schedule.

The operator’s new framework, including two four-year periods covering 2021 to 2024 and 2025 to 2028, was initially scheduled to be approved by June 30 but this date was missed as a result of the pandemic’s impact and a leadership change at RAE, the Regulatory Authority for Energy.

Besides being crucial for the market’s operation, the new regulatory framework is a prerequisite for the announcement of the operator’s privatization, to offer prospective buyers a 49 percent stake.

The operator’s WACC rate is expected to be announced in the lead up, either this month or next, if no further delays hamper the overall procedure.

DEDDIE sale launch awaiting RAE approval of framework

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Distribution network operator DEDDIE/HEDNO is awaiting the approval of its new regulatory framework by RAE, the Regulatory Authority for Energy, needed for the launch of a tender concerning the operator’s privatization, to offer investors a 49 percent stake.

As things stand, RAE is expected to give the green light within October, energypress sources informed.

The operator’s new regulatory framework, to be valid for a four-year period, from 2021 to 2024, and feature an option for a four-year extension, was forwarded for public consultation in June, but a change of leadership at RAE early in July delayed the process.

The operator’s new WACC level, determining the yield for potential buyers, is expected to be announced in October or November so that the privatization’s tender can be announced before the end of the year.

At present, the operator’s annual revenue totals 800 million euros.

It remains to be seen if the overall plan will be carried out as planned as the framework’s approval is a complicated task requiring plenty of work, while RAE faces no legal obligation to deliver on schedule.

Last week, energy minister Costis Hatzidakis, speaking at an Economist conference, assured the DEDDIE/HEDNO privatization will begin in November. However, certain pundits contend the current schedule is overoptimistic.

The new DEDDIE/HEDNO business plan – envisaging an increase of investments to a level of between 350 and 400 million euros, annually, considerably higher than previous levels of around 150 million euros; as well as the recruitment of 1,000 staff members for technical posts – cannot be considered complete without a new regulatory framework.

Storengy exits UGS tender, partners seek new operator

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France’s Storengy appears to have stepped back from an upcoming tender for the privatization of an underground natural gas storage facility (UGS) at an almost depleted South Kavala offshore natural gas field in the country’s north, energypress understands.

Storengy, a subsidiary of the Engie group, had formed a three-member consortium with Energean Oil & Gas, holder of the South Kavala field’s license, and construction firm GEK-Terna for this tender.

Storengy’s apparent decision to withdraw from the South Kavala tender may be linked to a decision reached two years earlier by Engie for a revision of its international interests and investment plans.

Energean Oil & Gas and GEK-Terna, Storengy’s two partners for the South Kavala tender, remain interested in expressing first-round interest by a September 30 deadline, but to do so, they must find a new partner, a certified gas grid operator, as required by the tender’s regulations.

The two players have subsequently moved closer to gas grid operator DESFA, already eyeing this tender. According to sources, talks between the two sides have commenced. DESFA will need to hold a stake of at least 20 percent in any partnership formed.

Both sides are also believed to be considering other partnership options. Storengy’s withdrawal could also bring in unanticipated European operators.

Investments of approximately 300 to 400 million euros will be needed to develop the South Kavala UGS.

Business plan, better results, new activities in DEPA Commercial VDR

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The virtual data room for a forthcoming privatization to offer a 65 percent stake in DEPA Commercial, an offshoot of gas utility DEPA, expected to be opened for potential buyers to assess by the end of this week, will present a business plan, improved financial figures at DEPA, new company activities envisaged, as well as DEPA’s outlook on the course of the country’s natural gas market and the company’s position within it.

According to privatization fund TAIPED’s revised Asset Development Plan, participants will submit binding bids in December.

The field of first-round entries, comprising two consortiums and five companies, will have roughly three months to prepare binding bids, according to the schedule.

Hellenic Petroleum ELPE and Italy’s Edison are one of the privatization’s two participating consortiums, the other formed by power utility PPC and Motor Oil Hellas. The five individual participants are: Mytilineos, TERNA, Copelouzos group, Shell and the Swiss-based MET group.

New partnerships could be established by the field of participants as long as they do not affect the sale’s competition standards and have been approved by TAIPED.

The sale of DEPA Commercial is a major attraction for potential buyers as it offers a big slice of the wholesale and retail markets, including gas supplier Fysiko Aerio Attikis, a subsidiary covering the wider Athens area. Fysiko Aerio Attikis already serves close to 400,000 households and 10,000 businesses.

DEPA Commercial VDR expected to open for bidders by end of week

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A virtual data room offering financial and technical information concerning the privatization of DEPA Commercial, an offshoot of gas utility DEPA, will be opened to prospective bidders by the end of this week, sources have informed.

A final meeting between DEPA Commercial’s administration and privatization fund TAIPED may be staged today or tomorrow before the VDR is opened up for investors.

The sale of DEPA Commercial, expected to be fiercely contested by the country’s major energy players, should produce a result by December, according to an updated TAIPED schedule for its Asset Development Plan. This plan has already been approved by KYSOIP, the Government Council for Economic Policy.

A VDR for DEPA’s other privatization, DEPA Infrastracture, was opened in late August. Despite its earlier launch, binding offers are expected sooner for DEPA Commercial, whose conclusion has been scheduled for January, 2021 by TAIPED.

Well-informed sources have attributed this differing pace of schedules to a more complex sale procedure demanded for DEPA Infrastructure, requiring intervention by RAE, the Regulatory Authority for Energy. In addition, EU authorities will need to provide certification, needed for transfers of distribution networks and energy transmission systems.

For the time being, all of the country’s energy players are expected to gain access into the DEPA Commercial VDR as a first step before deciding on whether to place binding bids. Partnerships could be sought.

 

 

 

Clearer framework needed for new gas distribution networks

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RAE, the Regulatory Authority for Energy, has identified the need for clear-cut, objective terms, based on technocratic criteria, for an improved strategy to help take natural gas to regions around the country without distribution network access at present.

Approval procedures for development plans submitted by gas distribution companies are currently in progress, and, in addition, the distribution sector is being restructured.

The energy ministry has made clear it wants a consistent and modern framework to facilitate the development of new distribution networks in as many parts of Greece as possible, a government objective.

Gas sector conditions also need to be made as clear as possible ahead of the privatization of DEPA Infrastructure, owning gas distributor EDA Attiki, servicing the wider Athens area; 51 percent of EDA Thess, covering the Thessaloniki area; and DEDA, distributing to all other regions not serviced by the two aforementioned firms.

RAE is now preparing a new framework concerning the appraisal and approval of development plans by gas distribution companies, as well as a formula for their earnings.

 

 

 

DEPA Infrastructure VDR open, DEPA Commercial data soon

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A virtual data room has just been opened for the six bidding teams preparing to make second-round offers in the privatization of gas company DEPA Infrastracture, an offshoot of gas utility DEPA.

Czech company EPH, Italy’s Italgas, the Australian investment funds First State Investments and Macquarie, US firm KKR and China’s Sino-CEEF & Shanghai Dazhong Public Utilities now have access to all relevant data concerning the DEPA Infrastructure sale.

Another VDR is expected to be opened within the next few days for bidders participating in the privatization of DEPA Commercial, DEPA’s other entity up for sale.

The participants in this sale, seven entries in total, are: Motor Oil Hellas-PPC, ELPE-Edison, Mytilineos, GEK-TERNA, the Copelouzos group, Dutch company Shell and the Swiss-based MET Group.

VDR information for the DEPA Commercial sale will be made available over three phases as a protective measure intended to ensure competition. The first phase, offering non-sensitive data, will be open for all. Access to VDR information during the second stage, offering sensitive data, will be restricted to consultants. Bidders will be offered conditional access to confidential information in the third phase.

Greece’s privatization fund TAIPED is aiming to declare preferred bidders for both sales in the final quarter of this year. Market officials, however, believe this is more likely to occur in the first quarter of 2021.

DEPA Commercial bidders are allowed to team up and establish consortiums but partnerships for the DEPA Infrastructure sale are not permitted.

Bidders participating in the DEPA Commercial sale are mainly eyeing the company’s prized asset, retail gas supplier and subsidiary Fysiko Aerio Attikis, covering the wider Athens area. This company already serves close to 400,000 households and 10,000 businesses.

Remaining energy utility sales, DEDDIE and IPTO, nearing

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The time is nearing for Greece’s two remaining energy utility  privatizations, those of electricity distribution network operator DEDDIE/HEDNO and power grid operator IPTO.

An energy ministry official yesterday updated journalists on the progress of both sales at a presentation of gas distributor DEDA’s five-year investment plan.

All details concerning the sale of a 49 percent stake in DEDDIE/HEDNO, a fully owned power utility PPC subsidiary, will be ready and finalized in September, enabling the announcement of a tender that month, according to the ministry official.

Preparations for this sale include the evaluation and transfer of assets used by DEDDIE/HEDNO from PPC to the operator.

As for the IPTO sale, talks between the operator and China’s SGCC – already holding a 24 percent stake in IPTO and first-offer rights in the event of the sale of a further stake in the operator – are still at an early stage.

The energy ministry is moving carefully in an effort to comply with fine details of EU directives concerning the entry of non-EU members into European enterprises and infrastructure.

Distribution network operator sale next big challenge for PPC

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Power utility PPC’s next major challenge, following a second securitization package of unpaid receivables, will be the privatization of fully owned subsidiary DEDDIE/HEDNO, the distribution network operator, a procedure expected to be pitched to prospective bidders towards the end of the year before a tender is launched in the first quarter of 2021.

A plan to sell a 49 percent stake with increased managerial rights remains intact, but officials are also considering to lower the stake. In addition, some thought is being given to offering DEDDIE/HEDNO buyers the stake through two rounds, but the basic plan, to offer 49 percent as one sale package, remains likeliest.

A new regulatory framework for DEDDIE/HEDNO will need to be approved over the next few months, and, in addition, the government must also fine-tune the privatization’s details.

A leadership renewal at RAE, the Regulatory Authority for Energy, responsible for the operator’s new regulatory framework, has, not unexpectedly, delayed a series of matters on the authority’s agenda, including the new regulatory framework for DEDDIE/HEDNO. It was forwarded for consultation until June 19.

Revisions concerning the operator’s permitted earnings were proposed, while a four-year period is planned for the new framework, from 2021 to 2024, with an option for a four-year extension until 2028.

The new framework is expected to include bonuses for objectives achieved at the distribution network operator and vice versa. The DEDDIE/HEDNO business plan includes goals such as the replacement of conventional power meters with smart meters, as well as operating cost and electricity theft reductions.

PPC triggers options for 2021 gas orders from DEPA, Prometheus Gas

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Power utility PPC has activated options to extend, by an additional year, its 2020 gas supply contracts with gas utility DEPA and Prometheus Gas, a joint venture involving the Copelouzos group and Russia’s Gazprom, for respective gas orders of 2 million MWh and 2.5 million MWh, according to sources.

PPC expects to require a total gas amount of between 17 million and 18 million MWh for its electricity generation needs in 2021, unchanged compared to the estimate for this year.

A nine-year gas supply agreement between PPC and DEPA securing the power utility approximately 11 million MWh of gas, annually, expires at the end of this year. As a result, PPC will need to reshape its gas supply policy from scratch.

The gas supply prices secured by PPC through its aforementioned one-year contract extensions with DEPA and Prometheus Gas are roughly 8 to 9 percent lower compared to the prices of the power utility’s long-term agreement with DEPA.

The cost of PPC’s additional one-year gas order from DEPA is believed to be about 30 million euros, while the 2021 order from Prometheus Gas is estimated to be worth 36 million euros, sources said.

Early this year, PPC purchased additional gas amounts totaling 4.5 million MWh from DEPA and the Copelouzos group, through a competitive procedure, to primarily cover needs at its Aliveri and Megalopoli power stations.

PPC is also covering this year’s gas needs through supplementary LNG orders. The power utility has so far brought in three shipments of 2 million MW each, and may order a further 2 million MWh in the second half.

Natural gas market forecasts for 2021 remain hazy. RAE, the Regulatory Authority for Energy, has yet to determine the manner in which slots will be distributed at gas grid operator DESFA’s LNG terminal on the islet Revythoussa, just off Athens. In addition, the sale of DEPA Commerce, a new DEPA entity established for the gas utility’s privatization, is expected next year.

 

Ministry, responding to Syriza MPs, lists reasons for further sale of IPTO

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A government decision to further privatize power grid operator IPTO is linked to the EU’s objective for carbon neutrality by 2050 as well as a national decarbonization target by 2028, efforts requiring big investments for greater emphasis on new and innovative technologies and systems; an upgrade of existing networks as smart networks; as well as the development of new business models, the energy ministry has noted in response to recent questioning, in Greek Parliament, by MPs of the main opposition leftist Syriza party.

Also, swift development of electricity transmission networks promises to significantly contribute to a speedy recovery of the pandemic-hit national economy, the ministry noted.

In addition, the sale of an additional stake in IPTO is a pre-election pledge made by the New Democracy party, the ministry response reminded. ND was elected into power one year ago.

IPTO’s initial privatization, shaped and carried out by the previous Syriza government, is unusual as the Greek State may have maintained a majority 51 percent stake but its powers for strategic decision-making are limited and require the approval of the minority partner, China’s SGCC, holding a 24 percent stake, the energy ministry pointed out.

SGCC has been given the right to block strategic decisions at IPTO and priority rights in any further privatization of the power grid operator.

DEPA Commerce 5-year business plan includes turn to RES sector

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Gas company DEPA Commerce’s five-year business plan for 2020-2024, containing investments estimated at 200 million euros, aspires to broaden the company’s interests by also incorporating renewable energy projects totaling 200 MW, either through independent development or acquisitions of mature plans.

Privatization fund TAIPED and the energy ministry are expected to approve the DEPA Commerce business plan within July.

DEPA Commerce was formed by gas utility DEPA as a new entity for its privatization procedure.

Besides RES projects, the DEPA Commerce business plan also includes hydrogen and biomethane projects, as well as electromobility initiatives.

The company’s expansion of business activities is expected to lead to greatly increased EBITDA and profit figures.

Once finalized and approved, the DEPA Commerce five-year business plan will be included in the due diligence package for prospective bidders.

Government moving to replace entire IPTO Holding board

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The government intends to soon replace all five board members of listed IPTO Holding, its representative in power grid operator IPTO with a controlling 51 percent stake. IPTO was ownership unbundled three years ago.

The energy ministry is expected to propose, as replacements, five new officials on July 16, when IPTO Holding is scheduled to hold its annual general shareholders’ meeting, energypress sources have informed.

A shareholders’ decision on a new five-member IPTO Holding board is one of eight issues on the upcoming meeting’s agenda.

The term of the current board, comprising Iason Rousopoulos, the chief executive, Giannis Kabouris, its deputy, and board members Alexandros Nikolouzos, Konstantinos Karakatsanis and Evaggelos Darousos, expires on December 11 this year.

The existing board has asked shareholders to submit resumes of candidates they wish to propose for the new board no later than 48 hours prior to the July 16 meeting.

The IPTO Holding board change is not expected to impact – at least initially – work proceedings at power grid operator IPTO. Rousopoulos and Kabouris, IPTO Holdings’ chief and deputy, respectively, are also members of the IPTO power grid operator board.

DES ADMIE, the IPTO public holding company, holds a 25 percent share of IPTO and China’s SGCC the other 24 percent.

IPTO’s chief executive Manos Manousakis, who has the faith of the energy ministry and the Chinese shareholder, is expected to remain at his post, despite the changes at IPTO Holding, and orchestrate the sale of a further stake in IPTO. SGCC maintains priority rights in any prospective IPTO privatization procedure.

 

 

Tender launched for South Kavala underground gas storage facility

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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.

DEPA Commerce sale may change gas, electricity markets

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Ongoing procedures in the sale of DEPA Commerce could serve as a catalyst for major changes in the retail gas and electricity markets, leaving fewer players in these markets.

Challenges of the new era, from electromobility to renewable energy, are expected to soon lead to the establishment of various energy-sector mergers and partnerships in Greece.

Talks between company officials for potential partnerships have proliferated since seven consortiums were confirmed as the qualifiers through to the second and final round in the sale of gas utility DEPA’s commercial division.

Hellenic Petroleum (ELPE) chief executive Andreas Siamisiis, during a press conference yesterday, left open the prospect of an entry by an additional partner into the consortium formed by ELPE and Italy’s Edison. This consortium is among the sale’s seven qualifiers.

Such a development could even influence the line-up of electricity supplier Elpedison, a joint venture formed by ELPE and Edison for Greece’s retail market, Siamisiis admitted.

It is believed that fellow qualifiers Motor Oil and Greek power utility PPC, who also joined forces for the DEPA Commerce sale, are moving to expand their consortium for this sale.

Highlight the importance of the DEPA Commerce sale, and its potential to lead to sweeping changes, six major Greek energy companies are involved in the DEPA Commerce sale, a record level of interest for any local energy-market sale in recent years.

Besides the three aforementioned Greek players, Mytilineos, GEK-TERNA and Copelouzos are also vying for DEPA Commerce.

Electricity producers are the market’s biggest gas consumers, which entwines the interests of gas and electricity players.

‘Energy ministry policies crucial in effort to revitalize economy’

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The energy ministry’s policies promise to play a pivotal role in the challenge faced by the government to revitalize the national economy following lockdown, energy minister Costis Hatzidakis has noted in an article featuring in GREEK ENERGY 2020, the energypress team’s latest annual publication covering the Greek energy sector.

Action is already being taken by the ministry through a decisive energy-sector agenda that aims for growth and is fully aligned with the European Green Deal, now a key economic growth tool throughout Europe, the minister notes.

New financial tools such as an EU recovery fund, worth 750 billion euros, according to a European Commission proposal, are designed to help the EU achieve its goal of transition towards a zero-emission economy through support for the gradual elimination of fossil-fuel dependence, RES growth and energy savings, the minister writes.

Greece is ready to make the most of this EU support package, effectively an additional NSRF funding program for the country promising capital worth around 32 billion euros, in order to achieve sustainable green-energy growth, according to Hatzidakis.

Besides decarbonization and RES development, other aspects incorporated into the energy ministry’s wider plan include:  electromobility growth; a third Saving at Home subsidy program for domestic energy-efficiency upgrades; reforms for greater competition, transparency and more attractive price offers in the energy market; reduced industrial energy costs; and energy-sector privatizations, the minister notes.

 

Six Greek heavyweights among DEPA Commercial contenders

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Six major Greek energy market players are among the contenders through to the second round of the DEPA Commercial sale, the biggest domestic turnout for an energy-sector tender in recent years, highlighting the gas market’s significance and prospects over the next decade.

The country’s energy transition plan is aiming for zero emissions by 2030.

Hellenic Petroleum (ELPE), joined by Italian partner Edison, a Motor Oil and power utility PPC partnership, Mytilineos, Gek-Terna and the Copelouzos group are the six Greek contenders, among a list of seven bidding teams shortlisted for the DEPA Commercial sale’s final round, entailing binding bids.

Gas utility DEPA, from which DEPA Commercial has been established for the utility’s privatization, may have lost its monopoly in the natural gas market, but its assets and market share promise the new owner a leading position during Greece’s decade of decarbonization, electric vehicle market growth and drastic reduction in fuel consumption.

As a result, fierce bidding for DEPA Commercial is expected.

The company’s acquisition will provide the new owner with a portfolio of 350,000 customers plus DEPA Commercial’s international supply contracts with Russia’s Gazprom, supplying pipeline gas to the Greek company for years; Algeria’s Sonatrach, supplying LNG; and Turkey’s Botas.

Gas quantities from Azerbaijan have also been reserved by DEPA Commercial via the imminent TAP route.

 

 

 

Seven bidders through to DEPA Commercial sale’s final round

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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):

  1. C. G. GAS LIMITED
  2. Consortium HELLENIC PETROLEUM SA & EDISON INTERNATIONAL HOLDING N.V
  3. Consortium MOTOR OIL HELLAS CORINTH REFINERIES SA & PPC SA
  4. GEK TERNA SA
  5. MET HOLDING AG
  6. MYTILINEOS SA
  7. SHELL GAS BV

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.

 

 

 

 

DEPA sales progressing, DEPA Infrastructure VDR in a fortnight

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Gas utility DEPA’s double privatization effort involving DEPA Infrastructure and DEPA Trade appears to be making progress.

The sale’s authorities expect to make accessible a DEPA Infrastructure video data room to prospective buyers between late June and early July. Then, approximately a month later, once a shortlist of final-round qualifiers has been announced, authorities plan to also open a VDR for DEPA Trade.

Meanwhile, DEPA has agreed to a new pricing formula with Russian supplier Gazprom, sources have informed.

The current pricing formula, indexing 40 percent of supply to the Dutch gas trading platform TTF, one of Europe’s biggest hubs, and 60 percent to oil prices, will be reversed.

DEPA and Gazprom also appear to have reached an agreement on an amount the Greek utility will need to pay its Russian supplier for natural gas not absorbed in 2019. A take-or-pay clause is included in their supply contract.

DEPA will pay a little over 40 million euros, well below a figure of 130,000 million euros believed to have been initially tabled. The take-or-pay amount that may result for 2020 remains to be discussed.

DEPA’s agreement with Gazprom is particularly significant for the prospects of the DEPA Trade privatization, as besides its retail gas market presence, this company will also pitch the details of its supply contracts as an important company asset.

DEPA Trade’s list of nine first-round bidders include Shell, which had sold its 49 percent share in EPA Attiki and EDA Attiki to DEPA in 2018 but is again interested in reentering the Greek gas market. The other bidders are: fellow-Dutch company Vitol; Qatar’s Power Globe; Met Holding, a subsidiary of Hungarian group MOL; C.G GAS; as well as four Greek bidders, Motor Oil Hellas with power utility PPC, a surprise partnership; Gek Terna; ELPE-Edison; and Mytilineos.

 

DEPA Trade sale short list this month, sooner than expected

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Privatization fund TAIPED is expected to announce its short list of final-round qualifiers in a tender offering a stake of at least 65 percent, possibly even 100 percent, of DEPA Trade – a new entity formed by gas utility DEPA as part of its privatization – within the next few weeks, far sooner than expected.

Deteriorated international investment conditions have prompted fears of a slower sale procedure.

The privatization fund, now close to finalizing its appraisals of nine first-round bids, has requested clarification from participants.

The DEPA Trade privatization was expected to drag well behind that of DEPA Infrastructure, seen as a lower-risk sale effort offering investors regulated earnings, but the two privatization efforts now appear likely to move ahead almost concurrently, or a few weeks apart.

A list of six final-round qualifiers in the DEPA Infrastructure sale was announced a week ago. Authorities are aiming to complete this sale towards the end of the year.

As for DEPA Trade, this entity promises the winning bidder an immediate advantage in Greece’s natural gas market as more than 200,000 customers around the country will be gained.

DEPA Trade’s wholesale gas trading activity is another appealing factor, despite the fact that it shrunk to 40 percent of the market’s total last year, as the growing southeast European market offers huge potential.

DEPA Trade’s nine first-round bidders are: C.G GAS LIMITED; MET HOLDING AG; POWER GLOBE LLC; SHELL GAS B.V.; VITOL HOLDING B.V.; GEK TERNA; HELLENIC PETROLEUM (ELPE) & EDISON INTERNATIONAL HOLDING N.V. consortium; MOTOR OIL HELLAS & GREEK POWER UTILITY PPC (consortium); MYTILINEOS.

 

DESFA trio may return to DEPA Infrastructure sale, Italgas link-up seen

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Italgas, one of six bidders through to the second round of a tender offering DEPA Infrastructure, a new entity established by gas utility DEPA as part of its privatization, intends to join forces with Snam, Fluxys and Enagas, the three members of the Senfluga consortium that acquired a 66 percent of Greek gas grid operator DESFA late in 2018.

The trio of companies controlling DESFA had expressed first-round interest in the DEPA Infrastructure sale but failed to show up for the procedure’s second round.

Snam, head of the Senfluga consortium with a 60 percent stake, is associated with Italgas as it has held a 13.5 percent stake since 2016.

Italgas is widely tipped to emerge victorious in the DEPA Infrastructure sale.

Besides Italgas, the five other qualifiers through to the second round of the DEPA Infrastructure sale are: EP Investment Advisors; First State Investments (European Diversified Infrastructure Fund II); KKR (KKR Global Infrastructure Investors III L.P.); Macquarie (MEIF 6 DI Holdings); and the Sino-Cee Fund & Shanghai Dazhong Public Utilities consortium.

Once they have signed confidentiality agreements, the six qualifiers will receive second-round texts and access to a virtual data room hosting DEPA Infrastructure data and information.

DEPA Infrastructure privatization shortlist minus some initial candidates

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Fewer than nine of the initial candidates expressing interest in the sale of DEPA Infrastructure, a new entity formed by gas utility DEPA as part of its privatization, will make the second round’s short list, which could be announced early next week by the privatization fund TAIPED, energypress sources informed.

One or two funds that had emerged for the first round will not remain contenders as a result of the pandemic’s impact on their investment plans, representatives have informed Greek privatization authorities.

Also,  another candidate not fulfilling qualification criteria will be excluded from the next round, sources said.

A shortening of the initial list of candidates is normal for any sale, privatization officials noted, stressing there is no reason for concern about the DEPA Infrastructure sale.

DEPA Infrastructure, backed by a fixed WACC rate of between 7 and 8 percent, one of Europe’s highest in this sector, is regarded as one of Greece’s most secure privatization prospects, local officials noted.

Investors will be offered a full 100 percent stake in the company.

The privatization’s initial list of nine candidates is comprised of: ANTIN INFRASTRUCTURE PARTNERS SAS; CHINA RESOURCES GAS (HONG KONG) INVESTMENT LIMITED; EP INVESTMENT ADVISORS; FIRST STATE INVESTMENTS (European Diversified Infrastructure Fund II); ISQUARED CAPITAL ADVISORS (UK) LLP; ITALGAS SpA; KKR (KKR Global Infrastructure Investors III L.P.); MAQOUARIE (MEIF 6 DI HOLDINGS); SINO-CEE FUND & SHANGHAI DAZHONG PUBLIC UTILITIES (GROUP) Co., Ltd.

 

Flight reconnections, geopolitics key for IPTO sale rescheduling

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Rescheduling details of a privatization plan for the sale of an additional stake in power grid operator IPTO will depend on the restart of the Athens-Beijing flight route, the reestablishment of face-to-face contacts blocked by the pandemic, as well as a reduction in geopolitical tension between China and the west.

IPTO’s strategic partner State Grid Corporation of China (SGCC), holding a 24 percent stake in the Greek operator, has expressed interest to boost this share. The Chinese company maintains first-offer rights in the event of a further sale.

Skillful diplomacy will clearly be needed to overcome any EU and US objections to an increased SGCC share in IPTO. Video conferences would prove insufficient. Greek foreign ministry officials will need to make at least one trip to China for related talks.

Greek governmnent officials intend to travel to Beijing for work on various matters following the summer, sources informed energypress. Bilateral issues have accumulated during the several months of lockdown. Many cancelled meetings need to be rescheduled.

More crucially, in the lead-up, the Greek side will need to prepare for these Beijng meetings by working through related matters with officials in Brussels and Washington.

PPC picks Goldman Sachs as consultant for DEDDIE sale

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The board at power utility PPC has reached a decision to hire US financial services company Goldman Sachs as privatization consultant for the sale of a 49 percent stake in distribution network operator DEDDIE/HEDNO, a subsidiary, sources have informed.

This appointment is seen as the first step in preparations leading to the partial privatization, while the choice of a heavyweight consultant reflects the importance of the sale for both the government and state-controlled PPC.

The prospective entry of an investor with a 49 stake raises hopes for a major network upgrade, including digitization. Modernized infrastructure will help intensify competition in the domestic electricity market. However, enormous sums are needed.  A project entailing the installation of smart meters, alone, is budgeted at one billion euros.

European operators as well as foreign funds investing in energy networks and infrastructure expressed strong interest in DEDDIE prior to the outbreak of the coronavirus crisis.

The operator’s regulated earnings and steady yield serve as a safe and profitable haven for capital investment, while DEDDIE’s tremendous asset base expansion potential adds to the appeal for investors.

RAE, the Regulatory Authority for Energy, and DEDDIE are currently working together to further modernize the operator’s regulatory framework.

Also, DEDDIE is currently finalizing a new business plan, covering 2020 to 2028. It envisions a gradual increase of annual investments to 350 million euros, more-than-double the current level of 150 million euros.

 

DEPA Trade, Infrastructure sales delayed for after summer

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The final rounds of privatization procedures for DEPA Infrastructure and DEPA Trade, two new entities formed by gas utility DEPA to facilitate its sale, will be postponed until after summer as a result of the pandemic’s impact on global economic activity and investments, pressuring asset values, sources have informed.

Investors are being offered the Greek State’s 65 percent stake and Hellenic Petroleum ELPE’s 35 percent share of DEPA Infrastructure and DEPA Trade.

However, the privatization fund TAIPED, combining its efforts with the energy ministry and RAE, the Regulatory Authority for Energy, intends to press ahead with a June launch of a privatization procedure for a depleted offshore gas field south of Kavala planned to be developed as an underground gas storage facility.

An appraisal of first-round offers submitted by nine investment teams for DEPA Infrastructure and that many more for DEPA Trade is expected to be completed within June.

Barring unexpected developments, TAIPED should announce its list of finalists for both sales next month. This will be followed by the opening of a virtual data room facilitating due diligence procedures for both companies.

DEPA Infrastructure bidder shortlist expected end of month

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A shortlist of second-round bidders for DEPA Infrastructure, a new entity formed by gas utility DEPA ahead of its privatization, is anticipated towards the end of May, while the cut for DEPA Trade bidders, the utility’s other new division being privatized, could be announced a month later, government sources have informed.

DEPA Infrastructure, whose earnings are regulated by RAE, the Regulatory Authority for Energy, is less vulnerable to the impact of the pandemic, which is not the case for DEPA Trade, fully exposed to market forces.

“We will not rush, for any reason, to take action that would lead us to much lower offers than the prices we are seeking,” Aris Xenofos, president of the privatization fund TAIPED, told Reuters yesterday.

Weighted Average Cost of Capital (WACC) levels set for network operators by RAE before the coronavirus crisis emerged offer protection to certain privatizations against the global economic uncertainty, government sources told energypress.

Though absolute safety can never be assured, DEPA Infrastructure, whose WACC level has been set at around 7 to 8 percent, is less susceptible to financial volatility compared to other companies on Greece’s privatization list.

DEPA Trade, Hellenic Petroleum ELPE, and power grid operator IPTO – its earnings are regulated but the company is listed through IPTO (ADMIE) Holding – are all far less resilient.

‘Firm steps for privatizations but pandemic’s impact considered’

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Decisive steps are being taken for Greece’s energy-sector privatizations, representing two thirds of the country’s overall privatization program, but the pandemic’s impact on international markets will not be neglected, energy minister Costis Hatzidakis has pointed out in an interview with Greek daily To Ethnos.

There is no need to rush a plan to reduce the Greek State’s stake in Hellenic Petroleum (ELPE) as this sale is not one of restructuring character, the minister noted.

A government decision to sell stakes in DEPA Infrastructure and DEPA Trade, two new entities emerging from a split at gas utility DEPA, is moving ahead as planned, Hatzidakis informed.

First steps have been taken to reduce, below 51 percent, the Greek State’s share in power grid operator IPTO, “but this does not mean we will proceed tomorrow morning,” he said.

State-controlled power utility PPC is preparing terms of an international tender for the sale of at least 49 percent of distribution network operator DEDDIE/HEDNO, a subsidiary, the minister said. This procedure is scheduled to commence in the third quarter of this year, he added.