PPC ups pressure on Ahlada mine operator for better lignite supply terms

The main power utility PPC is increasing its pressure on the operator of northern Greece’s Ahlada lignite mine, feeding the utility’s nearby Meliti power facility, for improved supply terms.

The existing contract, which does not secure price and quantity stability, was seen as a drawback by participants of PPC’s failed sale of lignite units, relaunched today. The Meliti unit is included in the bailout-required sale’s package.

PPC will pursue measures, including loss of earnings charges, against the Rozas family, operating the Ahlada mine, if the existing agreement’s supply terms are not improved, Manolis Panagiotakis, the power utility’s boss, has warned.

Late in 2018, the Greek State extended state-controlled PPC’s agreement with the Ahlada mine’s operator until 2023 with an option for a further five-year extension.

However, Panagiotakis has condemned the operator for under-producing and not fully utilizing the Ahlada mine’s potential, which, he supports, is prompting price instability.

The mine’s operator has supplied PPC’s Meliti facility at price levels ranging between 19 and 23 euros per ton, but these can be reduced to 18 euros per ton, leading to annual savings of 12.5 million euros, the PPC chief noted.

Panagiotakis claims flawed mining practices are being applied at Ahlada as the operator is avoiding expropriation costs concerning three settlements in the region. As a result, potential for better-quality lignite is not being realized, the PPC boss said. Expropriation costs are estimated at between 25 and 30 million euros.

“The operator can choose between the roads of understanding and conflict. Opting for the latter will lead to defeat,” Panagiotakis warned, adding successful negotiations would offer the operator an opportunity to sell considerably greater lignite amounts to Meliti’s prospective new owner.



PPC acts against Ahlada mine operator for better supply terms

The main power utility PPC has taken extrajudicial action against a family-run enterprise licensed by the utility to operate the Ahlada mine supplying the nearby Meliti lignite-fired power station in northern Greece in an effort to secure improved terms for prospective buyers of the power station. It is included in the utility’s bailout-required disinvestment of lignite assets.

The existing agreement between PPC and the Rozas family enterprise,  licensed to operate the mine, does not secure price and quantity stability. Prices vary depending on the yield offered by extracted lignite. Also, PPC believes development at the mine is too reserved. It is anticipated that greater output would lower the price of lignite per ton.

Prospective buyers who took part in PPC’s recently failed first attempt at completing its lignite package sale identified the Ahlada mine’s current supply agreement for Meliti as a disincentive. A team comprising China’s CHN Energy and the Copelouzos group was particularly troubled. The supply agreement will be passed on to Meliti’s prospective owner.

Two other requests forwarded by prospective buyers – staff cuts and the adoption of a profit-and-loss sharing mechanism for the units sold – are in the process of being added to the follow-up sale effort’s new terms.

PPC is currently supplied Ahlada lignite at a price of 23 euros per ton for its Meliti mine but wants the price level reduced by five euros per ton, which would generate annual savings of approximately 12.5 million euros.