Hellenic Petroleum ELPE and Italian business partner Edison have reached an advanced stage in talks on whether to jointly bid for a majority stake of DEPA Trade, one of two new entities that emerged from a recent split at gas utility DEPA.
Edison’s existing association with ELPE through electricity retail firm Elpedison makes the Italian company a clear favorite for a role as the petroleum group’s bidding partner for DEPA Trade.
However, if the two sides end up not joining forces for the DEPA Trade tender, ELPE will need to decide on whether to pursue this sale alone or seek an alternative partner, sources at the petroleum group told energypress.
Many details still need to be resolved for the DEPA split. The privatization fund TAIPED has yet to set a launch date for the DEPA Trade tender. Officials at the fund believe the procedure can commence in Maym even if some of DEPA’s split details are not completed this month.
On the other hand, pundits believe investors cannot seriously consider the DEPA Trade tender if the details of what exactly is being sold remain unclear.
DEPA’s shareholders have requested assurances that a DEPA board decision for a transfer of approximately 70 million euros to DEPA Infrastructure, the company split’s other new entity – the Greek State will retain a majority stake in this venture – as a bonus, will not undermine DEPA Trade or force this venture to seek credit solutions. Shareholders may even seek expert advice on whether DEPA Trade could face sustainability issues. Hellenic Petroleum ELPE holds a 35 percent stake in DEPA. The Greek State maintains a controlling 65 percent share through the privatizations fund.
Given the shareholder uncertainties, the DEPA board has promised to offer substantiated backing for its wider plan with support from consulting firm PwC before May 31. A general shareholders’ meeting needs to be held by this date for the DEPA split plan to be completed.
Gas utility DEPA is currently engaged in talks with the professional services domain’s four biggest players, PwC, KPMG, Ernst & Young and Deloitte, as part of its preparations for new legal action against troubled ELFE (Hellenic Fertilizers and Chemicals), through which a forced administration request will be made.
DEPA is believed to be examining offers received from each one of the Big Four firms, as they are known, to act as administrators of ELFE, now owing close to 130 million euros to the gas utility.
Just days ago, an Athens Court of First Instance lifted temporary protection measures offered to ELFE, which had enabled the beleaguered producer to issue six-month post-dated cheques to cover DEPA gas supply since 2016, despite DEPA demands for cash payments, based on a decision by company shareholders.
The court verdict paves the way for DEPA to request that ELFE be placed under forced administration. This will enable an administrator to act in the best interest of creditors.
ELFE’s debt owed to DEPA has continued to rise as it is subject to a 7.25 percent interest creating additional amounts of approximately 200,000 euros per month.
A PWC consulting firm study on main power utility PPC’s industrial tariffs is expected to propose incorporating CO2 emission right costs and determine an average high-voltage revenue figure that ensures a fair profit margin for the utility while also serving as a base for tariff negotiations with industrial consumers leading to new supply agreements.
The plan should be ready by mid-March but the full list of criteria to be applied in the the calculations determining the average revenue figure remains unclear.
The PWC study, requested by the country’s privatization fund, according to PPC’s chief executive Manolis Panagiotakis, is expected to include a proposal for a two-year extension of a volume-based and punctuality discount, while the prospect of a 10 percent industrial tariff increase remains possible.
Early this year, PPC’s boss had made clear the utility’s intention to increase industrial tariffs, adding these revisions would be accompanied by a “small gift”, without elaborating further.
Energy costs have already risen considerably for industrial consumers as CO2 emission right costs, which have been on the rise, are added as a separate cost to mid and high-voltage electricity bills by the utility.
CO2 emission right costs rose to 14 euros per MWh in December from half this amount six months earlier, and increased to 18 euros per MWh in January.
A PWC consulting firm study requested by the country’s privatization fund on main power utility PPC industrial tariffs proposes a two-year extension of a volume-based and punctuality discount, while the prospect of a 10 percent industrial tariff increase remains possible.
This plan echoes a similar-minded proposal presented by the alternate minister of economy and development Stergios Pitsiorlas last November, which was rejected by industrial consumers. Subsequently, it remains unclear if industrial consumers will accept the new PWC-shaped proposal.
Less than a fortnight ago, PPC’s chief executive Manolis Panagiotakis suggested a 10 percent tariff increase would be accompanied by a “small gift”, without elaborating further.
These matters will be presented for approval at a PPC shareholders’ meeting expected to take place late in February.
The terms of a new electricity agreement reached between the troubled state-controlled nickel producer Larco, owing PPC over 300 million euros, and the power utility, also state-controlled, will also be presented for approval at this meeting. Industrial producers will be watching closely.
Larco has accepted a production cutback of approximately 20 percent as a means of lowering its monthly electricity costs. According to sources, Larco has been offered an 18 percent volume-based discount and , as was the case in the past, no discount for punctuality of electricity bill payments. The two sides are expected to sign their agreement by no later than January 31.
In the lead-up to the PPC shareholders’ meeting, the PPC board will need to summon high-voltage industrial electricity consumers to negotiations, during which the power utility will present specific proposals based on the PWC study.